Question 1

A five-cent deposit on beer bottles

Accepted Answer

A)  provides a positive incentive because it rewards people for recycling. 
B)  provides a negative incentive because it punishes people who do not recycle. 
C)  is an irrational policy, because it adds to the prices of beer. 
D)  is an irrational policy, because it fails to take into account self-interest. 
A)  provides a positive incentive because it rewards people for recycling. 
B)  provides a negative incentive because it punishes people who do not recycle. 
C)  is an irrational policy, because it adds to the prices of beer. 
D)  is an irrational policy, because it fails to take into account self-interest.

Question 2

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.

Accepted Answer

A)  This is an example of a positive incentive for students to attend class. 
B)  This is an example of a negative incentive for students to attend class. 
C)  The teacher is assuming that students are irrational, and she must force them to attend class. 
D)  Students who miss more than three classes are irrational. 
A)  This is an example of a positive incentive for students to attend class. 
B)  This is an example of a negative incentive for students to attend class. 
C)  The teacher is assuming that students are irrational, and she must force them to attend class. 
D)  Students who miss more than three classes are irrational.

Question 3

According to economic theory, how do people make decisions?

Accepted Answer

A)  They make decisions in the same manner as their parents did. 
B)  They make decisions by looking at what others have done in the same situation and then doing the opposite. 
C)  They make decisions by looking at what others have done in the same situation and then doing the same. 
D)  They make decisions based on their own self-interest. 
A)  They make decisions in the same manner as their parents did. 
B)  They make decisions by looking at what others have done in the same situation and then doing the opposite. 
C)  They make decisions by looking at what others have done in the same situation and then doing the same. 
D)  They make decisions based on their own self-interest.

Question 4

Economics

Accepted Answer

A)  is a social science. 
B)  is concerned with limited resources. 
C)  is concerned with unlimited wants. 
D)  All of the above are correct. 
A)  is a social science. 
B)  is concerned with limited resources. 
C)  is concerned with unlimited wants. 
D)  All of the above are correct.

Question 5

Economists assume people are motivated by

Accepted Answer

A)  unlimited resources. 
B)  pride. 
C)  self-interest. 
D)  social justice. 
A)  unlimited resources. 
B)  pride. 
C)  self-interest. 
D)  social justice.

Question 6

Modern economists are increasingly using microeconomic analysis in macroeconomics because

Accepted Answer

A)  microeconomic theory is more scientific. 
B)  aggregate outcomes stem from decisions made by individuals, business firms and government. 
C)  macroeconomic subjects such as inflation affect all individuals. 
D)  macroeconomics is older and more outdated. 
A)  microeconomic theory is more scientific. 
B)  aggregate outcomes stem from decisions made by individuals, business firms and government. 
C)  macroeconomic subjects such as inflation affect all individuals. 
D)  macroeconomics is older and more outdated.

Question 7

Economics deals with

Accepted Answer

A)  how to profit from the stock market. 
B)  how to satisfy limited human wants. 
C)  how society allocates unlimited resources. 
D)  how individuals allocate scarce resources to satisfy unlimited human wants. 
A)  how to profit from the stock market. 
B)  how to satisfy limited human wants. 
C)  how society allocates unlimited resources. 
D)  how individuals allocate scarce resources to satisfy unlimited human wants.

Question 8

Prices provide signals about resource allocation to all individuals in a ________ system.

Accepted Answer

A)  market 
B)  command and control 
C)  central planning 
D)  political 
A)  market 
B)  command and control 
C)  central planning 
D)  political

Exam 1: The Nature of Economics

A five-cent deposit on beer bottles

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.

According to economic theory, how do people make decisions?

Economics

Economists assume people are motivated by

Modern economists are increasingly using microeconomic analysis in macroeconomics because

Economics deals with

Prices provide signals about resource allocation to all individuals in a ________ system.

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters