Question 1

_______ is a simplified representation of an economic environment.

Accepted Answer

A)   Scarcity
B)   Normative Analysis.
C)   An economic model
D)   MicroeconomicsE) A) and D)
F) None of the above

Question 2

Economics is the study of:

Accepted Answer

A)   the role of money in markets.
B)   how government officials decide which goods and services are produced.
C)   how to invest in the stock market.
D)   how society uses limited resources.E) B) and D)
F) All of the above

Question 3

Which of the following is a country whose economy shrank between the 1960s and 2001?

Accepted Answer

A)   Canada
B)   Sierra Leone
C)   Mexico
D)   the United StatesE) None of the above
F) C) and D) B

Question 4

Microeconomics is the study of aggregate behavior in the economy.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an example of a question answered by positive analysis?

Accepted Answer

A)   Should the government increase the minimum wage?
B)   What fraction of an income- tax cut will be spent on consumer goods?
C)   How will an increase in interest rates affect investment in factories?
D)   How will an increase in the price of gasoline affect taxi drivers?E) C) and D)
F) None of the above

Question 6

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied:

Accepted Answer

A)   all other variables are held fixed.
B)   both are treated as unpredictable.
C)   we recognize that some factors are unknown.
D)   neither of those two variables is allowed to change.E) B) and C)
F) None of the above

Question 7

Which of the following is an example of scarcity?

Accepted Answer

A)   If I decide to buy a new car I may not have enough money to go away on vacation this year.
B)   If a city uses an acre of land to build a park there will be less land for houses.
C)   If you choose to play video games you will not have as much time for exercise.
D)   All of the above are examples of scarcity.E) A) and B)
F) A) and C)

Question 8

_______ is a situation in which resources are limited in quantity and can be used in different ways.

Accepted Answer

A)   Scarcity
B)   Choice
C)   Economics
D)   Supply and demandE) A) and B)
F) A) and D)

Question 9

In the final two decades of the 20th century, sub- Saharan African economies grew rapidly.

Accepted Answer

A) True 
 B)False

Question 10

One efficient solution to congestion is to:

Accepted Answer

A)   give subsidies to drivers who use the road during the rush hour.
B)   lower gasoline taxes.
C)   prevent cars from using the roads during the rush hour.
D)   impose a congestion tax on drivers who use the road during the rush hour.E) A) and B)
F) None of the above

Question 11

What assumption was used by the authors of the book when analyzing the traffic congestion problem in London?

Accepted Answer

A)   They assumed that traffic congestion is the same during daytime and during nighttime.
B)   They assumed that every car has the same effect on the travel time of other cars.
C)   They assumed that all cars are of the same make and model.
D)   They assumed that travel via public transportation is less costly that travel by car.E) A) and B)
F) A) and C)

Question 12

Imagine that an upward sloping line is depicted in a graph with income per week on the y- axis and hours worked per week on the x- axis. From the graph, we can conclude that:

Accepted Answer

A)   hours worked are not related.
B)   income and hours worked are negatively related.
C)   income and hours worked per week are positively related.
D)   income and hours worked are equal.E) B) and D)
F) B) and C)

Question 13

A variable is:

Accepted Answer

A)   something that cannot be measured.
B)   something that always has the same value.
C)   something that varies over time.
D)   something that can take on different values.E) A) and C)
F) A) and B)

Question 14

When we study the effect of how a beer tax may decrease the number of highway deaths, we use microeconomics to:

Accepted Answer

A)   better understand how markets work.
B)   make personal or managerial decisions.
C)   evaluate the merits of public officials.
D)   A and C are correct.E) A) and D)
F) B) and C) D

Question 15

The four elements of the economic way of thinking includes all of the following except:

Accepted Answer

A)   economic analysis uses the key assumption that people act irrationally and that they are not motivated by self- interest.
B)   economists use assumptions to make things simpler and focus attention on what really matters.
C)   economic analysis often involves variables and how they affect one another.
D)   economists often consider how a small change in one variable affects another variable.E) B) and D)
F) A) and C)

Question 16

Microeconomics is best described as the study of:

Accepted Answer

A)   inflation, unemployment, gross national product, and the nation's economy as a whole.
B)   how markets interact in the aggregate economy.
C)   the choices made by individual households, firms, and governments.
D)   marginal changes in the economy.E) None of the above
F) All of the above C

Question 17

Positive economics question, "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"

Accepted Answer

A) True 
 B)False

Question 18

We do not use microeconomic analysis:

Accepted Answer

A)   to understand markets and predict changes.
B)   to explain why the US is in a recession.
C)   to make personal and managerial decisions.
D)   to evaluate the merits of public policies.E) A) and B)
F) C) and D)

Question 19

Which of the following is not a factor of production?

Accepted Answer

A)   money
B)   labor
C)   human capital
D)   physical capitalE) None of the above
F) A) and B)

Question 20

Allocating more hours toward studying for your economics exam gives you a higher grade. Based on this observation, hours and your economics grade exhibit:

Accepted Answer

A)   a positive relationship.
B)   a negative relationship.
C)   an unpredictable relationship.
D)   no relationship.E) A) and B)
F) All of the above

Exam 1: Introduction: What Is Economics

_______ is a simplified representation of an economic environment.

Correct AnswerverifiedShow Answer

Economics is the study of:

Correct AnswerverifiedShow Answer

Which of the following is a country whose economy shrank between the 1960s and 2001?

Correct AnswerverifiedB

Microeconomics is the study of aggregate behavior in the economy.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a question answered by positive analysis?

Correct AnswerverifiedShow Answer

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied:

Correct AnswerverifiedShow Answer

Which of the following is an example of scarcity?

Correct AnswerverifiedShow Answer

_______ is a situation in which resources are limited in quantity and can be used in different ways.

Correct AnswerverifiedShow Answer

In the final two decades of the 20th century, sub- Saharan African economies grew rapidly.

Correct AnswerverifiedShow Answer

One efficient solution to congestion is to:

Correct AnswerverifiedShow Answer

What assumption was used by the authors of the book when analyzing the traffic congestion problem in London?

Correct AnswerverifiedShow Answer

Imagine that an upward sloping line is depicted in a graph with income per week on the y- axis and hours worked per week on the x- axis. From the graph, we can conclude that:

Correct AnswerverifiedShow Answer

A variable is:

Correct AnswerverifiedShow Answer

When we study the effect of how a beer tax may decrease the number of highway deaths, we use microeconomics to:

Correct AnswerverifiedD

The four elements of the economic way of thinking includes all of the following except:

Correct AnswerverifiedShow Answer

Microeconomics is best described as the study of:

Correct AnswerverifiedC

Positive economics question, "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"

Correct AnswerverifiedShow Answer

We do not use microeconomic analysis:

Correct AnswerverifiedShow Answer

Which of the following is not a factor of production?

Correct AnswerverifiedShow Answer

Allocating more hours toward studying for your economics exam gives you a higher grade. Based on this observation, hours and your economics grade exhibit:

Correct AnswerverifiedShow Answer

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B

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D

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C

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