Question 1

Which of the following goods would be considered scarce?

Accepted Answer

A) ​iPods 
B) ​crude oil 
C) ​tax preparation services 
D) ​all of the above 
A) ​iPods 
B) ​crude oil 
C) ​tax preparation services 
D) ​all of the above

Question 2

Most disagreements among economists stem from normative issues.

Accepted Answer

A) True 
 B)False

Question 3

Economics is a science that:

Accepted Answer

A) ​typically uses controlled experiments to learn about consumer and firm behavior. 
B) ​uses models that cannot be tested empirically due to the complex nature of the economy. 
C) ​explores how choices are made between conflicting wants and desires in a world of scarcity. 
D) ​relies entirely upon normative analysis. 
A) ​typically uses controlled experiments to learn about consumer and firm behavior. 
B) ​uses models that cannot be tested empirically due to the complex nature of the economy. 
C) ​explores how choices are made between conflicting wants and desires in a world of scarcity. 
D) ​relies entirely upon normative analysis.

Question 4

An economic theory:

Accepted Answer

A) ​should be as detailed as possible in order to model the complexity of an economy. 
B) ​is an abstraction from reality. 
C) ​is only useful if it rests on realistic assumptions. 
D) ​is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy. 
A) ​should be as detailed as possible in order to model the complexity of an economy. 
B) ​is an abstraction from reality. 
C) ​is only useful if it rests on realistic assumptions. 
D) ​is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.

Question 5

Which of the following lies primarily within the realm of macroeconomics?

Accepted Answer

A) ​a study of the elasticity of demand for gasoline 
B) ​a study of how tax cuts stimulate aggregate production 
C) ​an analysis of supply and demand conditions in the electricity market 
D) ​a study of the impact of "mad cow" disease on the price of beef worldwide 
A) ​a study of the elasticity of demand for gasoline 
B) ​a study of how tax cuts stimulate aggregate production 
C) ​an analysis of supply and demand conditions in the electricity market 
D) ​a study of the impact of "mad cow" disease on the price of beef worldwide

Question 6

Scarcity:

Accepted Answer

A) ​occurs only in centrally planned economies. 
B) ​will likely be eliminated by technological progress. 
C) ​exists only in poor nations. 
D) ​occurs if there are insufficient resources to provide for human wants. 
A) ​occurs only in centrally planned economies. 
B) ​will likely be eliminated by technological progress. 
C) ​exists only in poor nations. 
D) ​occurs if there are insufficient resources to provide for human wants.

Question 7

Microeconomics primarily models:

Accepted Answer

A) ​the overall economy. 
B) ​the behavior of firms but not households. 
C) ​the behavior of households but not firms. 
D) ​the behavior of both firms and households and how they interact in the marketplace. 
A) ​the overall economy. 
B) ​the behavior of firms but not households. 
C) ​the behavior of households but not firms. 
D) ​the behavior of both firms and households and how they interact in the marketplace.

Question 8

Which of the following is correct?

Accepted Answer

A) ​"Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
B) ​A hypothesis may result from a tested and confirmed theory. 
C) ​A theory may result from a tested and confirmed hypothesis. 
D) ​A hypothesis is a theory whose formulation relies on mathematics. 
A) ​"Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
B) ​A hypothesis may result from a tested and confirmed theory. 
C) ​A theory may result from a tested and confirmed hypothesis. 
D) ​A hypothesis is a theory whose formulation relies on mathematics.

Question 9

In economic terms, religious and spiritual services are treated as:

Accepted Answer

A) ​goods that people desire. 
B) ​resources or inputs. 
C) ​marginal benefits. 
D) ​priceless commodities. 
A) ​goods that people desire. 
B) ​resources or inputs. 
C) ​marginal benefits. 
D) ​priceless commodities.

Question 10

Which of the following is a positive statement?

Accepted Answer

A) ​The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B) ​An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C) ​30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D) ​all of the above 
A) ​The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B) ​An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C) ​30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D) ​all of the above

Question 11

A hypothesis is a normative statement.

Accepted Answer

A) True 
 B)False

Question 12

When two variables repeatedly change at the same time, there must be a causal relationship between them.

Accepted Answer

A) True 
 B)False

Question 13

The real core of the economic problem is to:

Accepted Answer

A) ​increase the amount of leisure time available to people. 
B) ​guarantee everyone on the planet a minimum level of food, shelter and clean water. 
C) ​allocate limited resources among competing uses. 
D) ​eliminate scarcity. 
A) ​increase the amount of leisure time available to people. 
B) ​guarantee everyone on the planet a minimum level of food, shelter and clean water. 
C) ​allocate limited resources among competing uses. 
D) ​eliminate scarcity.

Question 14

Positive statements are:

Accepted Answer

A) ​prescriptive, making claims about how the world ought to be. 
B) ​descriptive, making claims about how the world is. 
C) ​optimistic, putting the best possible interpretation on things. 
D) ​affirmative, justifying existing economic policy. 
A) ​prescriptive, making claims about how the world ought to be. 
B) ​descriptive, making claims about how the world is. 
C) ​optimistic, putting the best possible interpretation on things. 
D) ​affirmative, justifying existing economic policy.

Question 15

What are the two parts of the economic problem?

Accepted Answer

A) ​economics explains many things, but only things that are related directly to money. 
B) ​natural resources are scarce but human-made resources are not. 
C) ​scarcity forces us to choose and choices are costly because we must give up other opportunities that we value. 
D) ​we have unlimited wants and unlimited resources. 
A) ​economics explains many things, but only things that are related directly to money. 
B) ​natural resources are scarce but human-made resources are not. 
C) ​scarcity forces us to choose and choices are costly because we must give up other opportunities that we value. 
D) ​we have unlimited wants and unlimited resources.

Question 16

When economists use the term "ceteris paribus," they mean that:

Accepted Answer

A) ​the causal relationship between two economic variables cannot be determined. 
B) ​the analysis is true for the individual but not for the economy as a whole. 
C) ​all other variables except the ones specified are assumed to be constant. 
D) ​their conclusions are based on normative rather than positive economic analysis. 
A) ​the causal relationship between two economic variables cannot be determined. 
B) ​the analysis is true for the individual but not for the economy as a whole. 
C) ​all other variables except the ones specified are assumed to be constant. 
D) ​their conclusions are based on normative rather than positive economic analysis.

Question 17

Which of the following is an example of an individual motivated by self-interest?

Accepted Answer

A) ​a student volunteering at a soup kitchen 
B) ​an attorney providing free legal service to low income families 
C) ​a man buying a new Camaro 
D) ​all of the above 
A) ​a student volunteering at a soup kitchen 
B) ​an attorney providing free legal service to low income families 
C) ​a man buying a new Camaro 
D) ​all of the above

Question 18

Macroeconomics:

Accepted Answer

A) ​is narrower in scope than microeconomics. 
B) ​analyzes mergers and acquisitions between firms. 
C) ​is concerned with the expansion and contraction of the overall economy. 
D) ​is primarily concerned with the decisions of individual households. 
A) ​is narrower in scope than microeconomics. 
B) ​analyzes mergers and acquisitions between firms. 
C) ​is concerned with the expansion and contraction of the overall economy. 
D) ​is primarily concerned with the decisions of individual households.

Question 19

The best test of an economic theory is:

Accepted Answer

A) ​the rigor of its mathematical formulation. 
B) ​its ability to explain and predict. 
C) ​the accuracy of its assumptions. 
D) ​the level of real-world detail it captures. 
A) ​the rigor of its mathematical formulation. 
B) ​its ability to explain and predict. 
C) ​the accuracy of its assumptions. 
D) ​the level of real-world detail it captures.

Question 20

Theories and models are explanations of how things work that help us understand and predict how and why economic agents like consumers, producers, firms, government, etc. behave they way they do.

Accepted Answer

A) True 
 B)False

Exam 1: The Role and Method of Economics

Which of the following goods would be considered scarce?

Most disagreements among economists stem from normative issues.

Economics is a science that:

An economic theory:

Which of the following lies primarily within the realm of macroeconomics?

Scarcity:

Microeconomics primarily models:

Which of the following is correct?

In economic terms, religious and spiritual services are treated as:

Which of the following is a positive statement?

A hypothesis is a normative statement.

When two variables repeatedly change at the same time, there must be a causal relationship between them.

The real core of the economic problem is to:

Positive statements are:

What are the two parts of the economic problem?

When economists use the term "ceteris paribus," they mean that:

Which of the following is an example of an individual motivated by self-interest?

Macroeconomics:

The best test of an economic theory is:

Theories and models are explanations of how things work that help us understand and predict how and why economic agents like consumers, producers, firms, government, etc. behave they way they do.

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

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