Question 1

What is the role of value judgments in economic analysis?

Accepted Answer

The answer of What is the role of value judgments...

Question 2

What are the tools available to governments to mitigate cycles of boom and bust? Why do these tools fail?

Accepted Answer

The answer of What are the tools available to governments...

Question 3

"Assume that all individuals have perfect information about prices now and in the future,that they have identical tastes,that all markets are competitive,and that there is no government." This statement is indicative of how economists

Accepted Answer

A)  apply the law of supply and demand. 
B)  employ marginal analysis. 
C)  are prevented from getting correct answers. 
D)  abstract for analytic purposes. 
E)  use realistic assumptions to develop theory.

Question 4

How useful is economic analysis in solving complex social problems?

Accepted Answer

A)  It is reliable in analyzing problems, and can usefully serve as the "final word" on solutions. 
B)  It is unreliable for understanding much of anything about social problems, and cannot offer much advice. 
C)  It is useful in clarifying options, but the final decision often rests on ethical decisions about which people differ. 
D)  It is useful in understanding economic problems but is only useful within that very narrow boundary. 
E)  It is not useful because economists agree on so little when they use their analysis.

Question 5

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Accepted Answer

A) True 
 B)False

Question 6

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

Accepted Answer

A)  production indifference map 
B)  two-variable diagram 
C)  scalar diagram 
D)  time-series graph

Question 7

In 1971,a bank worker could process 265 checks in 1 hour.Currently,computers with built-in reader-sorter processing capacity have pushed that number above 100,000 checks per hour.Economists describe this type of activity as

Accepted Answer

A)  exploitation of labor. 
B)  an increase in labor productivity. 
C)  speed-up. 
D)  comparative advantage. 
E)  mutual gains from voluntary trade.

Question 8

Why do economists tend to create models in diagrammatic form?

Accepted Answer

A)  Diagrams hide reality, and theory is an attempt to avoid reality. 
B)  It is easier than building models out of physical objects. 
C)  Economic reality cannot possibly be represented except in diagrams. 
D)  Most economists are frustrated artists, and like to draw when possible. 
E)  All of the above are correct.

Question 9

It has been found that people die at a much higher rate in hospitals than in most other environments,leading some to conclude that hospitals cause death.What is the problem with this reasoning?

Accepted Answer

The answer of It has been found that people die...

Question 10

To an economist,the cost of a college education

Accepted Answer

A)  includes the income that the student could have earned during the time spent in college. 
B)  can be measured solely by the dollar cost of tuition, books, and other fees. 
C)  includes only the cost of schooling, not the cost of housing and food. 
D)  excludes financial aid in computation of the cost of schooling. 
E)  All of the above are correct.

Question 11

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 12

Economists often say that trade is a win-win situation.How do you justify this?

Accepted Answer

The answer of Economists often say that trade is a...

Question 13

Which of the following is one source of disagreement between economists?

Accepted Answer

A)  Some facts about the economy are unknown. 
B)  Economists differ in their political persuasions. 
C)  Economic theory may not always give an unambiguous answer to a question. 
D)  Solving one problem may make another problem worse. 
E)  All of the above are correct.

Question 14

All economic transactions involve only buyers and sellers; no third parties are involved.

Accepted Answer

A) True 
 B)False

Question 15

When economists are critical of government regulations that prohibit free individuals from making certain kinds of contracts,for example,to purchase a good or service,they will usually invoke the concept of

Accepted Answer

A)  marginal analysis. 
B)  mutual gains from voluntary trade. 
C)  inflation-unemployment trade-off. 
D)  the need for abstraction. 
E)  externalities.

Question 16

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100,then it will be profitable for the airline to

Accepted Answer

A)  charge a stand-by passenger no less than the full fare of $500. 
B)  charge a stand-by passenger less than $100. 
C)  charge a stand-by passenger more than $500. 
D)  charge a stand-by passenger more than $100. 
E)  fill the seats at the last minute for any price.

Question 17

A theory is an untested assertion of alleged fact.

Accepted Answer

A) True 
 B)False

Question 18

How is a production indifference map helpful?

Accepted Answer

The answer of How is a production indifference map helpful?...

Question 19

Lower inflation rates are usually correlated with lower unemployment rates.

Accepted Answer

A) True 
 B)False

Question 20

Only economists and other "social" scientists have areas of dispute within their disciplines.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics?

What is the role of value judgments in economic analysis?

What are the tools available to governments to mitigate cycles of boom and bust? Why do these tools fail?

"Assume that all individuals have perfect information about prices now and in the future,that they have identical tastes,that all markets are competitive,and that there is no government." This statement is indicative of how economists

How useful is economic analysis in solving complex social problems?

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

In 1971,a bank worker could process 265 checks in 1 hour.Currently,computers with built-in reader-sorter processing capacity have pushed that number above 100,000 checks per hour.Economists describe this type of activity as

Why do economists tend to create models in diagrammatic form?

It has been found that people die at a much higher rate in hospitals than in most other environments,leading some to conclude that hospitals cause death.What is the problem with this reasoning?

To an economist,the cost of a college education

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.

Economists often say that trade is a win-win situation.How do you justify this?

Which of the following is one source of disagreement between economists?

All economic transactions involve only buyers and sellers; no third parties are involved.

When economists are critical of government regulations that prohibit free individuals from making certain kinds of contracts,for example,to purchase a good or service,they will usually invoke the concept of

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100,then it will be profitable for the airline to

A theory is an untested assertion of alleged fact.

How is a production indifference map helpful?

Lower inflation rates are usually correlated with lower unemployment rates.

Only economists and other "social" scientists have areas of dispute within their disciplines.