Exam 1: The Role and Method of Economics

A) There is no opportunity cost of writing a test because it only applies to people that are working.
B) There is no opportunity cost of writing a test because they are so important.
C) The opportunity cost of writing a test is the wages given up from not working plus the loss of time studying for another test.
D) The opportunity cost of writing a test is the time given up for doing an important assignment for another class.

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A) Everything is variable.
B) What is True for the individual is not necessarily True for the whole.
C) All variables except those specified are constant.
D) No one knows which variables will change and which will remain constant.

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A) It allows one to separate normative economic issues from positive economic ones.
B) It allows one to analyze the relationship between two variables apart from the influence of other variables.
C) It allows one to hold all variables constant so the economy can be carefully observed in a suspended state.
D) It allows one to generalize from the whole to the individual.

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A) entrepreneurship
B) capital
C) legal institutions
D) labour

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A) They can only be made by comparing opportunity cost with the marginal cost.
B) They are made based on expectations of the additional benefits and additional costs involved.
C) They are based on a comparison of total benefits and total costs.
D) They measure benefits based on the past.

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A) Microeconomics is concerned with consumer behaviour, while macroeconomics is concerned with firm behaviour.
B) Microeconomics utilizes positive economic analysis, while macroeconomics utilizes normative economic analysis.
C) Microeconomics studies aggregate decision making, while macroeconomics examines individual decision making.
D) Microeconomics studies individual decision making, while macroeconomics examines aggregate decision making.

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A) ceteris paribus
B) specialization
C) opportunity cost
D) exchange

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A) entrepreneurship
B) private property rights
C) land
D) capital

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A) government decision making
B) positive economics
C) wants that exceed the resources necessary to provide them
D) inappropriate normative judgments

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A) scarcity
B) normative economics
C) the fallacy of composition
D) ceteris paribus

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A) how to reduce inflation
B) how to profit from trading in the stock market
C) studying how we allocate scarce resources to satisfy unlimited wants
D) government taxation and spending

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A) comparing the total benefit and total cost of two desserts when deciding whether or not to enjoy a second dessert
B) the rule of rational choice
C) calculating the ratio of the total benefit of an activity to the total cost of that activity
D) people wanting to make themselves better off

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A time-series graph shows chan...

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A) the error of omitting relevant variables from an economic model
B) the error of confusing normative economics with positive economics
C) the error of generalizing from the individual to the whole
D) the error of confusing correlation with causation

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A) through increases in the general population of an area
B) through improved education and on-the-job training
C) through monthly deposits into a savings account
D) through the purchase of tools and equipment by workers

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An employer might provide on-site traini...

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A) how to regulate the supply of money
B) how to reduce the wants of individuals, businesses, and government
C) how to find more resources to satisfy everyone's wants
D) how to make the best use of scarce resources to satisfy our unlimited wants

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