Question 1

"If income were redistributed in favor of the poor,we would eliminate scarcity." The preceding statement is

Accepted Answer

A)  essentially correct.
B)  incorrect because scarcity has already been eliminated among the poor in wealthy countries such as the United States.
C)  incorrect;it fails to recognize that poverty will be present as long as resources are scarce.
D)  incorrect;it confuses the elimination of poverty with the elimination of the constraint imposed by scarcity.E) C) and D)
F) B) and C)

Question 2

Economics is the study of how

Accepted Answer

A)  individuals make choices because of scarcity.
B)  to succeed in business.
C)  to make money in the stock market.
D)  the morals and values of people are formed.E) None of the above
F) A) and B)

Question 3

A rational decision maker takes an action if and only if

Accepted Answer

A)  the marginal benefit of the action exceeds the marginal cost of the action.
B)  the marginal cost of the action exceeds the marginal benefit of the action.
C)  the marginal cost of the action is zero.
D)  the opportunity cost of the action is zero.E) A) and B)
F) C) and D)

Question 4

In economics,the term marginal refers to

Accepted Answer

A)  the change or difference between two alternatives.
B)  man-made resources as opposed to natural resources.
C)  the satisfaction a consumer receives from a good.
D)  holding everything else constant in the analysis.E) A) and C)
F) C) and D)

Question 5

Which of the following is part of the economic way of thinking?

Accepted Answer

A)  The accuracy of the assumptions is the best test of an economic theory.
B)  When an option becomes more expensive,people will be less likely to choose it.
C)  The value of a good can be determined objectively by measuring the amount of labor required for its production.
D)  All of the above.E) B) and D)
F) None of the above

Question 6

"The resources now going into the War on Terrorism and into improved airport security would save more lives if they were invested in medical research." This statement most clearly reflects which of the following?

Accepted Answer

A)  The best test of an economic theory is its ability to predict.
B)  There is no such thing as a free lunch--the use of scarce resources always has an opportunity cost.
C)  selfishness;if people were not selfish,we could have more of everything.
D)  The value of goods can be determined objectively.E) B) and D)
F) A) and C)

Question 7

A restaurant offers an "all you can eat" lunch buffet for $12.Jim has eaten three servings and is trying to decide whether or not to go back for a fourth.The economic way of thinking suggests that Jim should go back for the fourth serving if and only if

Accepted Answer

A)  his marginal benefit of the additional serving is greater than zero.
B)  his marginal benefit of the additional serving is at least $3.
C)  his marginal benefit of the additional serving is $12 or more.
D)  his total value from the meal exceeds $12.E) B) and C)
F) A) and C)

Question 8

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions.This person has

Accepted Answer

A)  confused association and causation.
B)  misunderstood the ceteris paribus assumption.
C)  used normative economics to answer a positive question.
D)  built an untestable model.E) None of the above
F) B) and D)

Question 9

In economics,man-made resources such as tools,equipment,and structures that are used to produce other goods and services are referred to as

Accepted Answer

A)  consumer goods.
B)  capital.
C)  marginal goods.
D)  infrastructures.E) None of the above
F) B) and D)

Question 10

According to marginal analysis,you should spend more time studying economics if the extra benefit from an additional hour of study

Accepted Answer

A)  is positive.
B)  outweighs the extra cost.
C)  exceeds the benefits of the previous hour of study.
D)  will raise your exam score.E) A) and B)
F) A) and C)

Question 11

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A)  a positive statement must be true;a normative statement is often not true
B)  a normative statement must be true;a positive statement is often not true
C)  a positive statement can be proved;a normative statement cannot
D)  a normative statement can be proved;a positive statement cannot
E)  a positive economic statement is a moral judgment;a normative economic statement is not a moral judgmentF) B) and D)
G) B) and E)

Question 12

The economic way of thinking stresses that

Accepted Answer

A)  greed is the primary motivation for human action.
B)  as the benefits of an option increase,people will be more likely to choose that option.
C)  an objective value can be attached to physical goods.
D)  as the cost of an option decreases,people will be less likely to choose that option.E) C) and D)
F) A) and B)

Question 13

Which one of the following is a positive economic statement?

Accepted Answer

A)  An increase in the minimum wage will reduce employment.
B)  The minimum wage should be increased.
C)  Social justice will be served by increasing the minimum wage.
D)  Thoughtful people oppose an increase in the minimum wage.E) B) and D)
F) All of the above

Question 14

While waiting in line to buy two tacos at 75 cents each,and a medium drink for 80 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50.For Jordan,the marginal cost of purchasing the third taco would be

Accepted Answer

A)  zero.
B)  20 cents.
C)  75 cents.
D)  80 cents.E) C) and D)
F) A) and D)

Question 15

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3.For Jordan,the marginal cost of the third taco would be

Accepted Answer

A)  zero.
B)  50 cents.
C)  80 cents.
D)  $1.E) A) and D)
F) C) and D)

Question 16

If scarcity were eliminated,

Accepted Answer

A)  all goods would be free.
B)  no one would have to make any choices.
C)  everyone could have all they want at no cost.
D)  all of the above are true.E) None of the above
F) All of the above

Question 17

Which of the following actions is consistent with the basic economic postulate (the guidepost) that incentives matter?

Accepted Answer

A)  Consumers buy fewer potatoes when the price of potatoes increases.
B)  A politician votes against a pay raise for himself because most of his constituents are strongly opposed to it and would vote against him in the next election.
C)  Farmers produce less corn because corn prices have declined.
D)  All of the above.E) A) and D)
F) None of the above

Question 18

People are willing to pay more for a diamond than for a bottle of water because

Accepted Answer

A)  the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
B)  the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
C)  producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
D)  water prices are held artificially low by governments,since water is necessary for life.E) A) and B)
F) A) and C)

Question 19

Positive economics differs from normative economics in that

Accepted Answer

A)  positive economics deals with how people react to changes in benefits,and normative economics deals with how people react to changes in costs.
B)  positive economic statements are testable,and normative statements are not.
C)  positive economic statements tell us what we should be doing,and normative economics tells us what we should have done.
D)  positive economic statements focus on the application of the theory,and normative economic statements are theoretical.E) A) and B)
F) B) and D)

Question 20

Which of the following is a positive economic statement?

Accepted Answer

A)  The federal minimum wage should be raised to $6.50 per hour.
B)  The United States spends too much on anti-terrorism efforts.
C)  An increase in investment will lead to a higher rate of economic growth.
D)  Economics is twice as interesting to study as philosophy.E) All of the above
F) C) and D)

Exam 1: The Economic Approach

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3.For Jordan,the marginal cost of the third taco would be

Correct AnswerverifiedShow Answer

In economics,the term marginal refers to

Correct AnswerverifiedShow Answer

A restaurant offers an "all you can eat" lunch buffet for $12.Jim has eaten three servings and is trying to decide whether or not to go back for a fourth.The economic way of thinking suggests that Jim should go back for the fourth serving if and only if

Correct AnswerverifiedShow Answer

Which of the following is part of the economic way of thinking?

Correct AnswerverifiedShow Answer

According to marginal analysis,you should spend more time studying economics if the extra benefit from an additional hour of study

Correct AnswerverifiedShow Answer

Positive economics differs from normative economics in that

Correct AnswerverifiedShow Answer

A rational decision maker takes an action if and only if

Correct AnswerverifiedShow Answer

In economics,man-made resources such as tools,equipment,and structures that are used to produce other goods and services are referred to as

Correct AnswerverifiedShow Answer

"The resources now going into the War on Terrorism and into improved airport security would save more lives if they were invested in medical research." This statement most clearly reflects which of the following?

Correct AnswerverifiedShow Answer

While waiting in line to buy two tacos at 75 cents each,and a medium drink for 80 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50.For Jordan,the marginal cost of purchasing the third taco would be

Correct AnswerverifiedShow Answer

People are willing to pay more for a diamond than for a bottle of water because

Correct AnswerverifiedShow Answer

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions.This person has

Correct AnswerverifiedShow Answer

Economics is the study of how

Correct AnswerverifiedShow Answer

"If income were redistributed in favor of the poor,we would eliminate scarcity." The preceding statement is

Correct AnswerverifiedShow Answer

Which one of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

The economic way of thinking stresses that

Correct AnswerverifiedShow Answer

The difference between a positive economic statement and a normative statement is that

Correct AnswerverifiedShow Answer

Which of the following actions is consistent with the basic economic postulate (the guidepost) that incentives matter?

Correct AnswerverifiedShow Answer

Which of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

If scarcity were eliminated,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified