Question 1

An answer to the question "How are goods produced?" determines:

Accepted Answer

A)   who receives the goods that are produced.
B)   how tastes and preferences are determined.
C)   how resources are combined in the production of goods.
D)   the types and quantities of goods and services produced.

Question 2

Most economists' disagreements are a result of:

Accepted Answer

A)   factual considerations.
B)   positive economics.
C)   the scientific method.
D)   normative considerations.

Question 3

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:

Accepted Answer

A)   How will each good be produced?
B)   For whom shall the goods be produced?
C)   Why will the resources be used to produce goods?
D)   What goods and services should a society produce?

Question 4

A systematic set of procedures through which knowledge is created is:

Accepted Answer

A)   the economy.
B)   the scientific method.
C)   a market.
D)   a model.

Question 5

Economics is a:

Accepted Answer

A)   social science that deals with making choices among alternatives.
B)   natural science that concerns itself with allocating relatively scarce resources among alternative ends.
C)   science that has no theories or models based on the scientific method.
D)   humanities course that mainly concerns itself with limited wants versus unlimited resources.

Question 6

Ceteris paribus means allowing all things to change.

Accepted Answer

A) True 
 B)False

Question 7

The BEST example of making a choice at the margin is:

Accepted Answer

A)   buying a new car.
B)   quitting your job.
C)   a coffee drinker drinking another cup of coffee.
D)   attending college.

Question 8

The observed correlation between baldness and heart disease demonstrates that:

Accepted Answer

A)   being bald causes a man to have heart disease.
B)   being bald actually makes heart disease less likely.
C)   bald men are generally unreliable.
D)   there is probably some other factor that causes both baldness and heart disease.

Question 9

Scarcity exists when:

Accepted Answer

A)   a choice must be made among two or more alternatives.
B)   we face the notion of "all other things unchanged."
C)   countries and people find themselves facing poverty.
D)   the notions of normative economics come into play.

Question 10

The primary emphasis in macroeconomics is on:

Accepted Answer

A)   how firms set prices.
B)   aggregates in the economy.
C)   marginal analysis and normative economics.
D)   international trade and environmental economics.

Question 11

The "all other things unchanged" assumption is used to:

Accepted Answer

A)   express the fundamental questions in economics.
B)   approximate real-world conditions.
C)   simplify the very complex real world.
D)   do all of the above.

Question 12

An example of a positive statement is:

Accepted Answer

A)   The rate of unemployment should be 4 percent.
B)   A high rate of economic growth is good for the country.
C)   an increase in investment spending tends to reduce unemployment.
D)   Everyone in the country needs to be covered by national health insurance.

Question 13

Macroeconomics deals with:

Accepted Answer

A)   bits and pieces of the economy.
B)   the question of how a business unit should operate profitably.
C)   the analysis of the aggregate values in the economy.
D)   ceteris paribus.

Question 14

A normative statement deals with:

Accepted Answer

A)   the facts.
B)   what was, is, or will be.
C)   what ought to be.
D)   the scientific method.

Question 15

Unemployment and inflation are:

Accepted Answer

A)   not relevant in the U.S. economy today.
B)   major topics in macroeconomics.
C)   unique only to capitalistic economies.
D)   very important in the study of microeconomics.

Question 16

A key theme fundamental to all of economics is:

Accepted Answer

A)   there are limited wants.
B)   we are a rich country but are simply not aware of it.
C)   people have unlimited wants facing limited means to satisfy them.
D)   there are unlimited resources.

Question 17

The problem of determining for whom to produce exists because:

Accepted Answer

A)   government regulations prevent firms from producing the kinds of goods that consumers want.
B)   a decision that one person or group will receive a good or service usually means that another person or group will not.
C)   taxes on firms make it more costly for them to produce all the goods that people want.
D)   taxes on consumers make it more difficult for them to buy all the goods they want.

Question 18

Microeconomics deals with:

Accepted Answer

A)   the working of the entire economy or large sectors of it.
B)   employment, growth, and inflation.
C)   individual units in the economy.
D)   normative economics for the most part.

Question 19

The current rate of unemployment of 5 percent is too high. This is a _______ statement.

Accepted Answer

A)   normative
B)   ceteris paribus
C)   positive
D)   fallacy of false cause

Question 20

The Case in Point on the Simpsons indicated that time is:

Accepted Answer

A)   a scarce resource.
B)   a resource without alternative uses.
C)   a ubiquitous resource.
D)   not a resource.

Exam 1: Economics: the Study of Choice

Microeconomics deals with:

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Unemployment and inflation are:

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The "all other things unchanged" assumption is used to:

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Ceteris paribus means allowing all things to change.

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A normative statement deals with:

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Economics is a:

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The current rate of unemployment of 5 percent is too high. This is a _______ statement.

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Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:

Correct AnswerverifiedShow Answer

Macroeconomics deals with:

Correct AnswerverifiedShow Answer

Scarcity exists when:

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A key theme fundamental to all of economics is:

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The primary emphasis in macroeconomics is on:

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The BEST example of making a choice at the margin is:

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An answer to the question "How are goods produced?" determines:

Correct AnswerverifiedShow Answer

The problem of determining for whom to produce exists because:

Correct AnswerverifiedShow Answer

A systematic set of procedures through which knowledge is created is:

Correct AnswerverifiedShow Answer

The Case in Point on the Simpsons indicated that time is:

Correct AnswerverifiedShow Answer

An example of a positive statement is:

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The observed correlation between baldness and heart disease demonstrates that:

Correct AnswerverifiedShow Answer

Most economists' disagreements are a result of:

Correct AnswerverifiedShow Answer

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