Question 1

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Accepted Answer

Since it is a testable proposi

Question 2

Which of the following is an example of a normative statement?

Accepted Answer

A) ​Higher unemployment rates are common among young people. 
B) ​Young people should learn how to prepare their own taxes. 
C) ​Auto insurance rates are generally lower for younger 
D) ​Persons under the age of 30 watch more movies than those over the age of 30. 
A) ​Higher unemployment rates are common among young people. 
B) ​Young people should learn how to prepare their own taxes. 
C) ​Auto insurance rates are generally lower for younger 
D) ​Persons under the age of 30 watch more movies than those over the age of 30.

Question 3

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Accepted Answer

A) True 
 B)False

Question 4

Indicate whether each of the following is a positive or normative economic statement:
I.The imposition of a price ceiling below equilibrium price will lead to a shortage of housinG.II.The local government should control the rate of increase in rents so that low-income residents are not forced to move from the areA.​

Accepted Answer

Statement I is a positive econ

Question 5

Economic models are of limited use since they cannot be tested empirically.

Accepted Answer

A) True 
 B)False

Question 6

Scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value.

Accepted Answer

A) True 
 B)False

Question 7

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

Accepted Answer

A) True 
 B)False

Question 8

A positive statement is prescriptive-it prescribes what should be done.

Accepted Answer

A) True 
 B)False

Question 9

To an economist, rational self-interest means that individuals try to weigh the expected marginal (additional) benefits and marginal (additional) costs of their decisions.

Accepted Answer

A) True 
 B)False

Question 10

Economics is most importantly concerned with:

Accepted Answer

A) ​how to profit from trading in the stock market. 
B) ​government taxation and spending. 
C) ​studying how we allocate scarce resources to satisfy unlimited wants. 
D) ​how to successfully launch a business. 
A) ​how to profit from trading in the stock market. 
B) ​government taxation and spending. 
C) ​studying how we allocate scarce resources to satisfy unlimited wants. 
D) ​how to successfully launch a business.

Question 11

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Accepted Answer

A) True 
 B)False

Question 12

Economists believe that most individuals act as if they are motivated by self-interest and:

Accepted Answer

A) ​respond selfishly. 
B) ​respond in predictable ways to changing circumstances. 
C) ​it leads to inconsistent and unpredictable behavior. 
D) ​all of the above. 
A) ​respond selfishly. 
B) ​respond in predictable ways to changing circumstances. 
C) ​it leads to inconsistent and unpredictable behavior. 
D) ​all of the above.

Question 13

Scarcity is:

Accepted Answer

A) ​only a problem in modern industrialized economies. 
B) ​only a problem in impoverished economies. 
C) ​only a problem in centrally planned economies. 
D) ​a problem that necessitates making choices and tradeoffs. 
A) ​only a problem in modern industrialized economies. 
B) ​only a problem in impoverished economies. 
C) ​only a problem in centrally planned economies. 
D) ​a problem that necessitates making choices and tradeoffs.

Question 14

Economics is the study of how people cope with:

Accepted Answer

A) ​fluctuations in stock prices. 
B) ​greed. 
C) ​limited human wants. 
D) ​limited resources. 
A) ​fluctuations in stock prices. 
B) ​greed. 
C) ​limited human wants. 
D) ​limited resources.

Question 15

Which of the following contains only normative statements?

Accepted Answer

A) ​The birth rate is reduced as economies urbanize, but that also leads to a decreased average age of developing countries' populations. 
B) ​An increase in the price of corn will decrease the amount of corn purchased.However, it will increase the amount of wheat purchased. 
C) ​A decrease in the price of butter will increase the amount of butter purchased, but that would be bad because it would increase Americans' cholesterol levels. 
D) ​None of the above contain only normative statements. 
A) ​The birth rate is reduced as economies urbanize, but that also leads to a decreased average age of developing countries' populations. 
B) ​An increase in the price of corn will decrease the amount of corn purchased.However, it will increase the amount of wheat purchased. 
C) ​A decrease in the price of butter will increase the amount of butter purchased, but that would be bad because it would increase Americans' cholesterol levels. 
D) ​None of the above contain only normative statements.

Question 16

Darla is surprised to find that the quality of in-flight service remains much the same despite a steep hike in air-fares recently. What could be wrong in her assumption that a higher price naturally translates into better quality?

Accepted Answer

The fact that two variables might be rel

Question 17

Which of the following is a statement of positive economics?

Accepted Answer

A) ​The income tax reduces after-tax incomes of the rich. 
B) ​A reduction in tax rates makes the after-tax distribution of income fairer. 
C) ​Tax rates ought to be reduced so that people will work more. 
D) ​All of the above are statements of positive economics. 
A) ​The income tax reduces after-tax incomes of the rich. 
B) ​A reduction in tax rates makes the after-tax distribution of income fairer. 
C) ​Tax rates ought to be reduced so that people will work more. 
D) ​All of the above are statements of positive economics.

Question 18

Which of the following is true?

Accepted Answer

A) ​Virtually all theories in economics are expressed using a ceteris paribus ("let everything else be equal" or "holding everything else constant") assumption. 
B) ​The fallacy of composition is that, even if something is true for an individual, it is not necessarily true for many individuals as a group. 
C) ​One must always be careful not to confuse correlation with causation. 
D) ​All of the above are true. 
A) ​Virtually all theories in economics are expressed using a ceteris paribus ("let everything else be equal" or "holding everything else constant") assumption. 
B) ​The fallacy of composition is that, even if something is true for an individual, it is not necessarily true for many individuals as a group. 
C) ​One must always be careful not to confuse correlation with causation. 
D) ​All of the above are true.

Question 19

Why is prediction in social sciences like economics more difficult than in physical sciences?

Accepted Answer

The major reason for the difference is t

Question 20

Which of the following statements is most accurate?

Accepted Answer

A) ​If something is rare it is also has to be scarce. 
B) ​Scarcity can and will be eliminated in the short run. 
C) ​Scarcity can and will be eliminated in the long run. 
D) ​Scarcity cannot be eliminated in any time frame. 
A) ​If something is rare it is also has to be scarce. 
B) ​Scarcity can and will be eliminated in the short run. 
C) ​Scarcity can and will be eliminated in the long run. 
D) ​Scarcity cannot be eliminated in any time frame.

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Which of the following is an example of a normative statement?

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Economic models are of limited use since they cannot be tested empirically.

Scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value.

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

A positive statement is prescriptive-it prescribes what should be done.

To an economist, rational self-interest means that individuals try to weigh the expected marginal (additional) benefits and marginal (additional) costs of their decisions.

Economics is most importantly concerned with:

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Economists believe that most individuals act as if they are motivated by self-interest and:

Scarcity is:

Economics is the study of how people cope with:

Which of the following contains only normative statements?

Darla is surprised to find that the quality of in-flight service remains much the same despite a steep hike in air-fares recently. What could be wrong in her assumption that a higher price naturally translates into better quality?

Which of the following is a statement of positive economics?

Which of the following is true?

Why is prediction in social sciences like economics more difficult than in physical sciences?

Which of the following statements is most accurate?

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

Filters

Exam 1: The Role and Method of Economics

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Which of the following is an example of a normative statement?

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Economic models are of limited use since they cannot be tested empirically.

Scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value.

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

A positive statement is prescriptive-it prescribes what should be done.

To an economist, rational self-interest means that individuals try to weigh the expected marginal (additional) benefits and marginal (additional) costs of their decisions.

Economics is most importantly concerned with:

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Economists believe that most individuals act as if they are motivated by self-interest and:

Scarcity is:

Economics is the study of how people cope with:

Which of the following contains only normative statements?

Darla is surprised to find that the quality of in-flight service remains much the same despite a steep hike in air-fares recently. What could be wrong in her assumption that a higher price naturally translates into better quality?

Which of the following is a statement of positive economics?

Which of the following is true?

Why is prediction in social sciences like economics more difficult than in physical sciences?

Which of the following statements is most accurate?

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

Filters