Question 1

When toilet paper sales increase, quarterly economic growth rates tend to rise. This is an example of:

Accepted Answer

A)   two variables that are negatively correlated.
B)   the presence of ceteris paribus.
C)   correlation without causation.
D)   causation with no correlation.E) A) and C)
F) C) and D)

Question 2

Economists assume that people choose to do something when they believe:

Accepted Answer

A)   the benefits outweigh the costs of the decision.
B)   it will make society better off.
C)   their decision cannot be questioned by anyone else.
D)   it won't harm anyone and will better themselves.E) A) and B)
F) B) and D)

Question 3

The broad field of _____ would most likely study how all consumers respond to a hike in cigarette taxes.

Accepted Answer

A)   microeconomics
B)   development economics
C)   macroeconomics
D)   labor economicsE) C) and D)
F) A) and C)

Question 4

A macroeconomist would study how:

Accepted Answer

A)   the economy works on a regional, national, or international scale.
B)   rent ceilings impact the construction rates of new apartments.
C)   the increase in the female labor force participation rate impacts childhood obesity.
D)   grocery cart rental fees impact parking lot accident rates.E) B) and D)
F) B) and C)

Question 5

Which of the following statements about scarcity is true?

Accepted Answer

A)   Scarcity is an undeniable part of everyone's reality due to the world's limited resources.
B)   Scarcity is not a problem for billionaires like Bill Gates.
C)   Scarcity in the world can be eliminated by rational decision making.
D)   Scarcity is a problem studied in microeconomics and is not a macroeconomic concern.E) A) and C)
F) B) and C)

Question 6

Which of the following is considered a macroeconomic issue?

Accepted Answer

A)   T-Mobile and Sprint announce plans for a merger.
B)   Sears goes bankrupt and the entire retail fashion industry experiences losses.
C)   The unemployment rate in the U.S. falls during the month of June.
D)   Microsoft decides to offer all users a free upgrade to Windows 10.E) A) and B)
F) A) and C)

Question 7

Something is valuable if:

Accepted Answer

A)   it does not involve a trade-off.
B)   it is a good or a service.
C)   someone wants it.
D)   it was made using resources.E) A) and B)
F) All of the above

Question 8

Opportunity cost:

Accepted Answer

A)   only includes explicit, out-of-pocket expenses.
B)   is the value of your next best alternative.
C)   is never provided in dollar values.
D)   would not include wages lost when you take a vacation.E) A) and B)
F) All of the above

Question 9

An incentive is:

Accepted Answer

A)   the marginal cost of engaging in a course of action.
B)   the marginal benefit of engaging in a course of action.
C)   something that changes the trade-offs people face.
D)   rational behavior that involves thinking on the margin.E) C) and D)
F) A) and B)

Question 10

Suppose the government would like to reduce smoking rates among teenagers. Which of the following policies is designed to achieve this goal by changing incentives?

Accepted Answer

A)   The government requires all high school students to take a health class, and the harmful effects of cigarette smoke will be a required component of the curriculum.
B)   The government asks all high schools to post "Thank you for not smoking" signs around the school grounds.
C)   The government raises the legal age for purchasing cigarettes to 20.
D)   The government raises the tax on cigarettes.E) None of the above
F) A) and B)

Question 11

The idea of efficiency is used to address which of the following questions?

Accepted Answer

A)   What are the wants and constraints of those involved?
B)   What are the trade-offs?
C)   How will others respond?
D)   Are resources being allocated in the best way possible?E) A) and D)
F) B) and C)

Question 12

A factual claim about how the world actually works is a ______ statement.

Accepted Answer

A)   positive
B)   marginal
C)   irrational
D)   normativeE) A) and B)
F) A) and C)

Question 13

Suppose that out of the two cities that send football teams to the Super Bowl, the city with the lowest unemployment rate wins 70 percent of the time. What does this imply?

Accepted Answer

A)   A positive correlation between Super Bowl wins and low unemployment rates
B)   Evidence that richer cities always have better football teams
C)   The condition of ceteris paribus present in the winning cities
D)   A negative correlation between Super Bowl wins and low unemployment ratesE) A) and D)
F) All of the above

Question 14

An Italian restaurant decreases the price of pizza relative to the price of spaghetti, so customers buy more pizza. This is an example of responding to:

Accepted Answer

A)   marginal science.
B)   incentives.
C)   disincentives.
D)   sunk benefit.E) All of the above
F) A) and B)

Question 15

Emir decides to sign up for a college accounting course. He pays the $500 tuition, but before the course starts he is offered a job that would conflict with the class time. The tuition is no longer refundable. In deciding whether to accept or decline the job offer, the $500 spent on the class is:

Accepted Answer

A)   the opportunity cost of the job.
B)   the expected gain in pay from taking the accounting course.
C)   a sunk cost.
D)   a sunk benefit.E) B) and C)
F) A) and C)

Question 16

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

Accepted Answer

A)   Tom is a college student.
B)   Immigration into the United States should be encouraged.
C)   The cost of basic health insurance rose from the previous year.
D)   The federal minimum wage is $7.25.E) All of the above
F) A) and B)

Question 17

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

Accepted Answer

A)   Discover offers 0 percent balance transfer rates to anyone who opens a new credit card.
B)   McDonald's decides to add a white chocolate mocha to its menu.
C)   A teacher who has taught for 30 years decides to retire and focus on gardening.
D)   A business decides to leave the industry after facing stiff competition.E) None of the above
F) A) and C)

Question 18

Many theaters sell empty seats at a deep discount just before show time. What economic concept is displayed by this behavior?

Accepted Answer

A)   Consumer demand
B)   Sunk costs
C)   Price optimization
D)   Thinking at the marginE) All of the above
F) B) and C)

Question 19

The problem of having unlimited wants under the constraint of limited resources describes:

Accepted Answer

A)   opportunity cost.
B)   sunk costs.
C)   scarcity.
D)   the marginal principle.E) A) and B)
F) A) and C)

Question 20

When two variables have been observed to have a tendency to occur at the same time, we can say there is ______ but not necessarily ______.

Accepted Answer

A)   causation; correlation
B)   correlation; causation
C)   positivity; causation
D)   normality; correlationE) C) and D)
F) B) and D)

Exam 1: Economicsand Life

The problem of having unlimited wants under the constraint of limited resources describes:

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Suppose that out of the two cities that send football teams to the Super Bowl, the city with the lowest unemployment rate wins 70 percent of the time. What does this imply?

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Suppose the government would like to reduce smoking rates among teenagers. Which of the following policies is designed to achieve this goal by changing incentives?

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Something is valuable if:

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

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An incentive is:

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A factual claim about how the world actually works is a ______ statement.

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Which of the following is considered a macroeconomic issue?

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

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The broad field of _____ would most likely study how all consumers respond to a hike in cigarette taxes.

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A macroeconomist would study how:

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Opportunity cost:

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The idea of efficiency is used to address which of the following questions?

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When toilet paper sales increase, quarterly economic growth rates tend to rise. This is an example of:

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When two variables have been observed to have a tendency to occur at the same time, we can say there is ______ but not necessarily ______.

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Many theaters sell empty seats at a deep discount just before show time. What economic concept is displayed by this behavior?

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Which of the following statements about scarcity is true?

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An Italian restaurant decreases the price of pizza relative to the price of spaghetti, so customers buy more pizza. This is an example of responding to:

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Economists assume that people choose to do something when they believe:

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Emir decides to sign up for a college accounting course. He pays the $500 tuition, but before the course starts he is offered a job that would conflict with the class time. The tuition is no longer refundable. In deciding whether to accept or decline the job offer, the $500 spent on the class is:

Correct AnswerverifiedShow Answer

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When two variables have been observed to have a tendency to occur at the same time, we can say there is but not necessarily .

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