Question 1

Trade-offs are:

Accepted Answer

A)   associated with every decision.
B)   do not exist if we receive something for free.
C)   always result in market-failure.
D)   can be avoided through economic planning.E) All of the above
F) C) and D)

Question 2

When making a decision,it is easier to identify and evaluate which of the following?

Accepted Answer

A)   Costs associated with the decision.
B)   Benefits associated with the decision.
C)   Costs and benefits are equally easy to identify and evaluate.
D)   Neither of these is often easy to identify and evaluate.E) A) and B)
F) A) and C)

Question 3

In the early 1990s,before pay at the pump was an option,a gas station decides to force people to pre-pay due to drive-offs.The opportunity cost of this decision may include:

Accepted Answer

A)   the value of the gas that is no longer stolen by people who drove off.
B)   not having to look outside for people waving at you to turn on the pump.
C)   lost revenue when people under estimate what they think their gas tanks will hold in order to avoid going back into the store to get change from overpayment.
D)   a loss of snack sales because people decide to come into the store to pay for gas before pumping versus after pumping their gas.E) B) and D)
F) None of the above

Question 4

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

Accepted Answer

A)   NCAA Football should have adopted a playoff system 10 years ago.
B)   An increase in minimum wage results in higher teenage unemployment.
C)   No oneshould be allowed to carry guns into the classroom.
D)   Cats are better pets than dogs.E) A) and D)
F) A) and B)

Question 5

Thomas Malthus was an early nineteenth-century economist that created a model describing the relationship between:

Accepted Answer

A)   population growth and war.
B)   population growth and birth control.
C)   population growth and crime.
D)   population growth and food production.E) A) and C)
F) B) and C)

Question 6

Which is not a characteristic of a good economic model?

Accepted Answer

A)   Focuses on important details
B)   Predicts cause and effect
C)   Utilizes vague assumptions
D)   Describes the world accuratelyE) B) and C)
F) None of the above

Question 7

Households are vital to the circular flow model in what two ways?

Accepted Answer

A)   They supply factors of production and purchase goods and services.
B)   They export goods and services and import goods and services.
C)   They vote for political officers and pay taxes.
D)   They facilitate exchange between consumers and firms.E) All of the above
F) B) and D)

Question 8

In the past,there was a strong correlation between ice cream consumption by children and polio cases for children.There was not a causal relationship due to:

Accepted Answer

A)   a common underlying omitted variable.
B)   reverse causality.
C)   accounting fraud practiced by Baskin Robbins.
D)   an infection present in cherries.E) B) and D)
F) A) and D)

Question 9

Which of the following is a positive incentive?

Accepted Answer

A)   Discover credit cards offer 0 percent balance transfer rates for someone to open a new account.
B)   McDonalds decides to offer a white chocolate mocha.
C)   A school teacher decides to retire and focus on gardening.
D)   A business decides to leave the industry.E) A) and B)
F) B) and C)

Question 10

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

Accepted Answer

A)   The American Recovery and Reinvestment Act should not have been passed during the Great Recession.
B)   Unemployment soared to 25 percent during the Great Depression.
C)   An increase in alcohol taxes will reduce the number of drunk driving accidents.
D)   Great Britain has fewer hospital beds per capita today than they did in 1948.E) None of the above
F) All of the above

Question 11

You decided to take a college accounting course to brush up on your knowledge of the language of business.The tuition expense was $500.After the date has expired to receive a refund for the course,you are offered a job that would conflict with your class time.In making the decision to accept or decline the offer,the $500 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) None of the above
F) A) and D)

Question 12

A college student decides to spend the afternoon watching three movies rented from Red Box.The cost of each movie is $1.The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie.What was the marginal benefit received by the student when renting the 2nd movie?

Accepted Answer

A)   $1
B)   $8
C)   $4
D)   $2E) A) and B)
F) A) and C)

Question 13

A positive statement:

Accepted Answer

A)   can actually be false.
B)   must always be true.
C)   provides an opinion with a positive outlook.
D)   is the same as a normative statement.E) B) and D)
F) None of the above

Question 14

If Johnny weren't in economics class this morning,he'd be sleeping.The value Johnny places on sleeping represents his:

Accepted Answer

A)   marginal benefit.
B)   incentives.
C)   sunk cost.
D)   opportunity cost.E) B) and D)
F) B) and C)

Question 15

You have paid all expenses to travel to your favorite beach for a vacation.You made these payments early in order to receive a discount and all payments are nonrefundable.Unfortunately,a hurricane is likely to crash into the coast during your vacation dates.What should not be considered as you make a decision to take your trip or not?

Accepted Answer

A)   The money that has already been spent on the trip
B)   The satisfaction you are likely to receive at the beach during a hurricane
C)   The best alternative use of your time if you do not take the trip
D)   The additional costs you didn't anticipate while on the trip.E) B) and C)
F) A) and D)

Question 16

A normative statement is generally based upon:

Accepted Answer

A)   data that can be tested.
B)   a factual claim.
C)   subjective beliefs.
D)   scientific fact.E) C) and D)
F) B) and D)

Question 17

When toilet paper sales increase,quarterly economic growth tends 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 B)
F) A) and C)

Question 18

In order to understand when a model may not be accurate,which is not an important action to take?

Accepted Answer

A)   Identify what important details were omitted when developing a model.
B)   Make sure assumptions made in the model are clear and accurate.
C)   Test the model for accuracy.
D)   Make sure the model all includes all possible details.E) B) and D)
F) All of the above

Question 19

The problem created by "scarcity":

Accepted Answer

A)   could be solved if more people worked overtime.
B)   is not a concern for the top income earners.
C)   is an individual concern but not a concern on the macro level.
D)   applies to everyone because in general resources are limited.E) All of the above
F) A) and B)

Question 20

Thomas Malthus's model made the mistake of failing to consider:

Accepted Answer

A)   technological progress.
B)   inflation.
C)   comparative advantage.
D)   scarcity.E) All of the above
F) A) and B)

Exam 1: Economics and Life

Correct Answer
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Correct Answer
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A positive statement:

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

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Thomas Malthus was an early nineteenth-century economist that created a model describing the relationship between:

Correct Answer
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Correct Answer
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Trade-offs are:

Correct Answer
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Which is not a characteristic of a good economic model?

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

Correct Answer
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If Johnny weren't in economics class this morning,he'd be sleeping.The value Johnny places on sleeping represents his:

Correct Answer
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The problem created by "scarcity":

Correct Answer
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In order to understand when a model may not be accurate,which is not an important action to take?

Correct Answer
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When toilet paper sales increase,quarterly economic growth tends to rise.This is an example of:

Correct Answer
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When making a decision,it is easier to identify and evaluate which of the following?

Correct Answer
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A normative statement is generally based upon:

Correct Answer
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Thomas Malthus's model made the mistake of failing to consider:

Correct Answer
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Which of the following is a positive incentive?

Correct Answer
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Households are vital to the circular flow model in what two ways?

Correct Answer
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In the past,there was a strong correlation between ice cream consumption by children and polio cases for children.There was not a causal relationship due to:

Correct Answer
verified

In the early 1990s,before pay at the pump was an option,a gas station decides to force people to pre-pay due to drive-offs.The opportunity cost of this decision may include:

Correct Answer
verified

Exam 1: Economics and Life

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A positive statement:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Thomas Malthus was an early nineteenth-century economist that created a model describing the relationship between:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Trade-offs are:

Correct AnswerverifiedShow Answer

Which is not a characteristic of a good economic model?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If Johnny weren't in economics class this morning,he'd be sleeping.The value Johnny places on sleeping represents his:

Correct AnswerverifiedShow Answer

The problem created by "scarcity":

Correct AnswerverifiedShow Answer

In order to understand when a model may not be accurate,which is not an important action to take?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When making a decision,it is easier to identify and evaluate which of the following?

Correct AnswerverifiedShow Answer

A normative statement is generally based upon:

Correct AnswerverifiedShow Answer

Thomas Malthus's model made the mistake of failing to consider:

Correct AnswerverifiedShow Answer

Which of the following is a positive incentive?

Correct AnswerverifiedShow Answer

Households are vital to the circular flow model in what two ways?

Correct AnswerverifiedShow Answer

In the past,there was a strong correlation between ice cream consumption by children and polio cases for children.There was not a causal relationship due to:

Correct AnswerverifiedShow Answer

In the early 1990s,before pay at the pump was an option,a gas station decides to force people to pre-pay due to drive-offs.The opportunity cost of this decision may include:

Correct AnswerverifiedShow Answer

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