Question 1

Which of the following is an example of human capital?

Accepted Answer

A)  100 hectares of farmland in Central Ontario 
B)  a pitch fork 
C)  a commercial sewing machine 
D)  the expertise of a computer programmer

Question 2

Since resources are abundant, we do not have to make choices about their use.

Accepted Answer

A) True 
 B)False

Question 3

Explain why each of the following is considered an economic issue:
a.whether to spend Saturday evening at a hockey game
b.obtaining tickets to a U2 concert
c.your university considers your application for one of 25 available scholarships

Accepted Answer

The answer of Explain why each of the following is...

Question 4

If Jared declines to purchase a new bicycle priced at $200, according to the rule of rational choice, what will be the expected marginal benefit of the bicycle for Jared?

Accepted Answer

A)  less than $250 
B)  less than $100 
C)  less than $200 
D)  more than $200

Question 5

Which of the following is the erroneous view that is associated with the fallacy of composition?

Accepted Answer

A)  An increase in the supply of money will cause a general increase in the level of prices. 
B)  When two events are correlated, the one observed first must have caused the second. 
C)  If something is True for an individual, then it must also be True for a group. 
D)  A small change in an economic variable will have an unrecognizable but significant effect on the economy.

Question 6

Which of the following descriptions of normative statements is the most accurate?

Accepted Answer

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

Question 7

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." What is this statement an illustration of?

Accepted Answer

A)  the fallacy of composition 
B)  a normative economic statement 
C)  the basic principle of economics 
D)  a positive economic statement

Question 8

Ten-year-old Tommy observes that people who play hockey are larger than average and tells his mom that he's going to play hockey because it will make him big and strong. What is the problem with Tommy's logic?

Accepted Answer

A)  He is committing the fallacy of composition. 
B)  He is committing the fallacy of decomposition. 
C)  He is violating the ceteris paribus assumption. 
D)  He is mistaking correlation for causation.

Question 9

Which of the following statements about the rule of rational choice is the most accurate?

Accepted Answer

A)  It requires the availability of complete information before decisions can be made. 
B)  It includes marginal benefits but not marginal costs. 
C)  It involves marginal thinking. 
D)  It can only be applied in business decisions.

Question 10

Which of following statements about economics is the most accurate?

Accepted Answer

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

Question 11

An entrepreneur organizes the other factors of production and bears the business risk.

Accepted Answer

A) True 
 B)False

Question 12

The marginal cost of a vacation in the south of France is $4500. If the marginal benefit to Druscilla of a vacation in the south of France is $4800, what will she do?

Accepted Answer

A)  Druscilla will enjoy a net gain of $4800 if she vacations in the south of France. 
B)  Druscilla will experience a net gain of $300 if she vacations in the south of France. 
C)  Druscilla will lose $300 if she vacations in the south of France. 
D)  Druscilla will be worse off if she vacations in the south of France.

Question 13

Economists believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, what would an economist expect to happen?

Accepted Answer

A)  Families would have the same number of children, but spaced further apart. 
B)  Families would have the same number of children, but wait longer to begin having them. 
C)  Fewer children would be born. 
D)  More children would be born, but spaced further apart.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

How is an economic hypothesis tested?

Accepted Answer

A)  by comparing the hypothesis's prediction to real-world data 
B)  by using a controlled experiment 
C)  by assessing the realism of its assumptions 
D)  by assessing the level of descriptive detail

Question 16

"To do well and be at the top 10 percent of the class, one should study more. If everyone studies more then they all can do well and finish at the top of the class." What is the problem with the logic in this statement?

Accepted Answer

A)  There is causation but no correlation. 
B)  There is correlation but no causation. 
C)  It is a normative statement and should be a positive statement. 
D)  There is a fallacy of composition.

Question 17

Which of the following statements about human capital is the most accurate?

Accepted Answer

A)  It is the same as labour. 
B)  It is a term describing the tools and equipment owned by households. 
C)  It is a worker's physical effort when working with machines. 
D)  It is the expertise or knowledge possessed by workers.

Question 18

To be a positive economic statement, an assertion must be factual.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements best describes scarcity?

Accepted Answer

A)  Scarcity and poverty are basically the same thing. 
B)  Goods are scarce because of greed. 
C)  Even in the wealthiest of countries, the desire for material goods is greater than productive capabilities. 
D)  The absence of scarcity means that a minimal level of income is provided to all individuals.

Question 20

What is the definition of a theory?

Accepted Answer

A)  It is an untestable assertion or statement of untestable fact. 
B)  It is a normative statement that can be tested empirically through analysis of real-world data. 
C)  It is a testable statement that can be definitively proven to be True or False using empirical analysis. 
D)  It is a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

Exam 1: The Role and Method of Economics

Which of the following is an example of human capital?

Since resources are abundant, we do not have to make choices about their use.

Explain why each of the following is considered an economic issue: a.whether to spend Saturday evening at a hockey game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

If Jared declines to purchase a new bicycle priced at $200, according to the rule of rational choice, what will be the expected marginal benefit of the bicycle for Jared?

Which of the following is the erroneous view that is associated with the fallacy of composition?

Which of the following descriptions of normative statements is the most accurate?

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." What is this statement an illustration of?

Ten-year-old Tommy observes that people who play hockey are larger than average and tells his mom that he's going to play hockey because it will make him big and strong. What is the problem with Tommy's logic?

Which of the following statements about the rule of rational choice is the most accurate?

Which of following statements about economics is the most accurate?

An entrepreneur organizes the other factors of production and bears the business risk.

The marginal cost of a vacation in the south of France is $4500. If the marginal benefit to Druscilla of a vacation in the south of France is $4800, what will she do?

Economists believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, what would an economist expect to happen?

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

How is an economic hypothesis tested?

"To do well and be at the top 10 percent of the class, one should study more. If everyone studies more then they all can do well and finish at the top of the class." What is the problem with the logic in this statement?

Which of the following statements about human capital is the most accurate?

To be a positive economic statement, an assertion must be factual.

Which of the following statements best describes scarcity?

What is the definition of a theory?