Exam 1: The Art and Science of Economic Analysis

A) rationally
B) self-interestedly
C) greedily
D) marginally
E) expectantly

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A) studies human behavior when scarcity exists and choices must be made
B) provides the only reasonable explanation of how people make decisions
C) can accurately explain all human behavior since it is based on the assumption of rationality
D) is better at showing the way things ought to be than the other social sciences are
E) is the only social science that can explain the existence and behavior of public institutions

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A) price received for the good
B) price of the product minus the cost of the resources used to produce the product
C) return paid to the firm's bank on its outstanding loans
D) price of the product minus the wages paid for the labor used to produce it
E) wages paid for the labor used to produce the product minus the price

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A) marginal or inferior products
B) the economic behavior of individual decision makers
C) the behavior of the economy as a whole
D) how to use the fewest natural resources to produce goods and services
E) government's role as a producer in the economy

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A) rely mostly on their own value judgments and ignore the far more complex world of facts
B) always try to duplicate reality by including all available information
C) use assumptions that are true for the individual but never true for the whole economy
D) must rely on simplifying assumptions that abstract from the complexity of the real world
E) are primarily concerned with making realistic assumptions

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A) economists would be unable to command high salaries if their models were so simple that anyone could understand them
B) human behavior is very erratic and unpredictable
C) reality is too complex to understand in its entirety, so we must reduce it to a level that we can understand
D) they always try to duplicate all possible information and cover all possible variables that might influence decision making
E) we must rely on value judgments and ignore reality

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A) unlimited resources
B) a shortage -- when buyers cannot obtain the goods they want
C) a surplus -- when sellers cannot sell the goods they produce
D) insufficient resources to satisfy unlimited wants
E) the private ownership of society's resources

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A) 100 shares of Microsoft stock
B) a $50 bill
C) a credit card
D) a lawyer's personal computer
E) a bauxite mine in Jamaica

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A) is a hypothesis used to test economic theory
B) is a statement of fact
C) is a statement of what ought to be, not what is
D) indicates what will occur if certain assumptions are true
E) enables economists to test hypotheses

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A) formulate a hypothesis
B) reflect an opinion
C) specify assumptions
D) identify the question and define relevant variables
E) test the hypothesis

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A) they always want more of at least one good
B) each person has an unlimited desire for every good
C) labor unions demand wage increases
D) selfish people are not concerned about others
E) people buy goods without regard to what they can afford

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A) a reduction if the number of rental units that are available to rent
B) an increase in the number of rental units that people would like to rent
C) a shortage of rental units in the market
D) the deterioration in the quality of rental units
E) an increase in the difficulty of finding a rental unit at the rent control price

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A) If the money supply falls, interest rates will rise.
B) Teenage unemployment would be lower if there were no minimum wage.
C) The quantity of shirts sold increases as the price of shirts decreases.
D) The federal government's total spending should be reduced.
E) If interest rates go up, then construction activity will fall.

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A) government market
B) classified market
C) communication market
D) resource market
E) product market

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A) microeconomics
B) macroeconomics
C) positive economics
D) normative economics
E) disequilibrium economics

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