Question 1

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

Accepted Answer

A)   macroeconomics
B)   microeconomics
C)   political economics
D)   aggregate economicsE) B) and D)
F) C) and D)

Question 2

________ are the things that are used to produce items that satisfy people's wants.

Accepted Answer

A)   Concepts
B)   Production possibilities curves
C)   Resources
D)   CostsE) C) and D)
F) B) and D)

Question 3

Because resources are scarce relative to wants, the study of economics concerns

Accepted Answer

A)   how money is important to people.
B)   how individuals, businesses, and governments make choices.
C)   how money is used to buy what people want.
D)   None of the above are correct.E) All of the above
F) B) and C)

Question 4

A fundamental aspect of economics is to

Accepted Answer

A)   ensure that every firm makes a profit.
B)   analyze how choices are made.
C)   satisfy all our wants.
D)   make sure that we always have sufficient resources.E) C) and D)
F) A) and B)

Question 5

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

Accepted Answer

A)   It is too hot to go jogging.
B)   Ceteris paribus, a teacher should award a higher grade if you study more hours for an economics test.
C)   When the price of an item increases, people respond by reducing their consumption of the item.
D)   The government should balance the budget.E) None of the above
F) A) and B)

Question 6

Which of the following statements is a normative as opposed to a positive economic statement?

Accepted Answer

A)   Consumer spending helps to create jobs.
B)   If the price of gasoline goes up, people buy less gasoline.
C)   Labor unions should be allowed to organize in every industry.
D)   Government intervention in markets is common in many countries.E) A) and D)
F) None of the above

Question 7

If a straight line crosses the Y-axis at 2 and crosses the X-axis at 4, we can conclude that the slope of the line is

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   infinity.E) All of the above
F) A) and C)

Question 8

Jose is rational if he

Accepted Answer

A)   does not intentionally make decisions that would leave him worse off.
B)   never makes a mistake in his life.
C)   only responds to rewards that involve money.
D)   always uses a model or mathematical formula to help him make a decision.E) A) and C)
F) B) and D)

Question 9

Economics is the study of

Accepted Answer

A)   the allocation of scarce resources to satisfy unlimited wants.
B)   why some people want certain goods and services.
C)   earning the most income.
D)   ways to use fewer resources.E) B) and C)
F) A) and B)

Question 10

Both the social sciences and the natural sciences employ ________ to help them understand the world around them.

Accepted Answer

A)   models
B)   experiments
C)   traditional thinking
D)   implicationsE) None of the above
F) A) and B)

Question 11

Normative economic analysis involves

Accepted Answer

A)   positive analysis.
B)   value judgments.
C)   if-then statements.
D)   objective descriptions of the way things are.E) A) and B)
F) None of the above

Question 12

Aggregate measures are

Accepted Answer

A)   anything to do with economics.
B)   a total measure of a variable in the economy.
C)   used only by policymakers but not by firms.
D)   determined by the government.E) B) and C)
F) A) and B)

Question 13

During the Middle Ages, heretics were often burned at the stake. Were the heretics violating the assumption of rational self-interest? Explain.

Accepted Answer

For someone today, or even many people l...

Question 14

In an economic model, assumptions

Accepted Answer

A)   must be applicable to all real-world situations.
B)   must be eliminated before being used to make sure the model is realistic.
C)   are not important in determining the usefulness of the model.
D)   define the set of circumstances in which the model is most likely to be applicable in the real world.E) All of the above
F) C) and D)

Question 15

Wants are

Accepted Answer

A)   another term for needs.
B)   the things people would consume if they had unlimited incomes.
C)   the things people consume with their income.
D)   all the things people really need in order to live comfortably.E) B) and C)
F) All of the above

Question 16

Macroeconomics would be concerned with

Accepted Answer

A)   implications of changes in unemployment and inflation.
B)   the effects on individual consumers of changes in the price of gasoline for a business.
C)   the effects of a tax on beer.
D)   the effects of wage increases on steel manufacturers.E) B) and C)
F) A) and D)

Question 17

A common approach that economists use to understand, explain and predict economic phenomena is to

Accepted Answer

A)   form a theory or model.
B)   conduct experiments in a science lab.
C)   ask what people think.
D)   examine people's thought processes.E) A) and B)
F) A) and C)

Question 18

"Economists assume people are selfish." Do you agree with this statement or not? Explain.

Accepted Answer

Economists do not assume people are self...

Question 19

What would lead an economist to conclude that Theory A is superior to Theory B?

Accepted Answer

A)   Theory A predicts real-world events better than does Theory B.
B)   The assumptions underlying Theory A are more realistic than are the assumptions underlying Theory B.
C)   Theory A explains how people think, whereas Theory B only explains what they do.
D)   Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interest and acts accordingly.E) B) and D)
F) B) and C)

Question 20

Why do economists test their hypotheses?

Accepted Answer

A)   to see whether people are motivated by self-interest
B)   to see whether their models predict the choices people will make
C)   to determine whether government policies have effectively achieved their goals
D)   to learn what people are thinking when they make the choices they doE) A) and B)
F) A) and C)

Exam 1: The Nature of Economics

A common approach that economists use to understand, explain and predict economic phenomena is to

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Because resources are scarce relative to wants, the study of economics concerns

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What would lead an economist to conclude that Theory A is superior to Theory B?

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"Economists assume people are selfish." Do you agree with this statement or not? Explain.

Correct AnswerverifiedEconomists do not assume people are self...View AnswerShow Answer

Which of the following statements is a normative as opposed to a positive economic statement?

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Aggregate measures are

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Why do economists test their hypotheses?

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In an economic model, assumptions

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________ are the things that are used to produce items that satisfy people's wants.

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Economics is the study of

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During the Middle Ages, heretics were often burned at the stake. Were the heretics violating the assumption of rational self-interest? Explain.

Correct AnswerverifiedFor someone today, or even many people l...View AnswerShow Answer

Normative economic analysis involves

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A fundamental aspect of economics is to

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The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

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Jose is rational if he

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Wants are

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

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If a straight line crosses the Y-axis at 2 and crosses the X-axis at 4, we can conclude that the slope of the line is

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Both the social sciences and the natural sciences employ ________ to help them understand the world around them.

Correct AnswerverifiedShow Answer

Macroeconomics would be concerned with

Correct AnswerverifiedShow Answer

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Economists do not assume people are self...
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For someone today, or even many people l...
View Answer

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