Question 1

Which of the following is not an example of a capital input?

Accepted Answer

A)   A person's skills and abilities, which can be employed to produce valuable goods and services.
B)   Factories and offices where goods and services are produced.
C)   Tools and equipment.
D)   Computers used by a company to record inventory, sales, and payroll.

Question 2

The statement, "Violent crime has decreased in the last five years," is:

Accepted Answer

A)   obviously wrong and, therefore, cannot be a positive statement.
B)   normative since it can be answered by simply looking at the facts.
C)   positive because it is testable.
D)   not very interesting because all normative issues are of little importance.

Question 3

Relate the term scarcity to the action(s)  it causes.

Accepted Answer

A)   Scarcity causes developed nations to have more material goods than developing nations.
B)   Scarcity causes fewer technological advances.
C)   Scarcity forces people to want more material goods.
D)   Scarcity forces everyone to make choices.

Question 4

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Accepted Answer

A)   Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
B)   The reccurrence of such a relationship is definitely caused by the variation of another variable.
C)   The reccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.
D)   The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.

Question 5

The perpetual problem in economics is:

Accepted Answer

A)   our inability to work together effectively.
B)   our inability to satisfy everyone's wants with the available resources.
C)   likely to be solved in resource-rich countries.
D)   our inability to utilize resources efficiently.

Question 6

Which of the following is an example of scarcity?

Accepted Answer

A)   Adam has more than enough food to eat each day.
B)   Benito is wealthy so he has everything he could ever want.
C)   Camden would like to have more designer clothes than he can afford.
D)   Dennis takes as many vacations as he would like since he won the lottery.

Question 7

Which of the following is not an example of a factor of production?

Accepted Answer

A)   A forest.
B)   A computer program.
C)   A n assembly-line worker .
D)   Dollars.

Question 8

The finite nature of the economy's resource base:

Accepted Answer

A)   will be solved if only we would learn to conserve.
B)   is only a problem in developing countries.
C)   will be solved as technology advances.
D)   will always be with us.

Question 9

Natural resources are:

Accepted Answer

A)   not considered scarce because no one pays for them.
B)   rarely used in production.
C)   included in the category of resources called land.
D)   available in unlimited quantities.

Question 10

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

Accepted Answer

A)   analyze data on the price of pens and the price of pencils without holding other factors constant.
B)   investigate whether people purchase more pens when their income rises.
C)   analyze data on pen purchases linked to the price of pens, holding other factors constant.
D)   ask his or her friends if they would buy fewer pens when the price rises.

Question 11

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus)  is relaxed. We would expect that the line representing this relationship would:

Accepted Answer

A)   change from inverse to direct.
B)   change from direct to inverse.
C)   have a greater number of data points.
D)   change its location.

Question 12

Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

Accepted Answer

A)   has confused association and causation.
B)   cannot test his theory because his observations violate the ceteris paribus assumption.
C)   used normative economics to answer a positive question.
D)   built a model with too many variables .

Question 13

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Accepted Answer

A)   cost per unit of output will rise.
B)   workers will gain their rightful share of total income.
C)   the rate of inflation will increase.
D)   profits will fall.

Question 14

Exhibit 1A-2 Straight line 
In Exhibit 1A-2, explain the slope of straight line CD.

Accepted Answer

A)   As the X value increases by 20, the Y value increases by 5, so the slope is 4.
B)   As the Y value increases by 5, the X value increases by 20, so the slope is 1/4.
C)   As the X value increases by 10, the Y value increases by 5, so the slope is 2.
D)   As the Y value increases by 5, the X value increases by 10, so the slope is 1/2.

Question 15

Microeconomics deals with the analysis of all the following questions except how:

Accepted Answer

A)   the wages of carpenters are determined.
B)   high did unemployment rise during the Great Depression.
C)   does Ford decide how to price its cars.
D)   does a college student decide how to spend her income.

Question 16

A shift in a curve represents a change in:

Accepted Answer

A)   the variable on the horizontal axis.
B)   the variable on the vertical axis.
C)   a third variable that is not on either axis.
D)   any variable that is relevant to the relationship being graphed.

Question 17

An entrepreneur is:

Accepted Answer

A)   an employee in a factory.
B)   the manager of a factory.
C)   the person who conceives and starts a business.
D)   the person who does not assume any risk in business.

Question 18

The price of milk would be of particular interest to

Accepted Answer

A)   a microeconomist.
B)   a macroeconomist.
C)   neither a microeconomist nor a macroeconomist.
D)   both a microeconomist and a macroeconomist.

Question 19

If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then  the economist is assuming

Accepted Answer

A)   the price of cars must be decreasing.
B)   all other things remain constant.
C)   the price of gas must be decreasing.
D)   the interest rate on car loans must be decreasing.

Exam 1: Introducing the Economic Way of Thinking

The perpetual problem in economics is:

Correct Answer
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An entrepreneur is:

Correct Answer
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If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then the economist is assuming

Correct Answer
verified

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:

Correct Answer
verified

Exhibit 1A-2 Straight line In Exhibit 1A-2, explain the slope of straight line CD.

Correct Answer
verified

The statement, "Violent crime has decreased in the last five years," is:

Correct Answer
verified

Which of the following is an example of scarcity?

Correct Answer
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The price of milk would be of particular interest to

Correct Answer
verified

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Correct Answer
verified

Relate the term scarcity to the action(s) it causes.

Correct Answer
verified

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

Correct Answer
verified

Natural resources are:

Correct Answer
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A shift in a curve represents a change in:

Correct Answer
verified

Which of the following is not an example of a capital input?

Correct Answer
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Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

Correct Answer
verified

The finite nature of the economy's resource base:

Correct Answer
verified

Microeconomics deals with the analysis of all the following questions except how:

Correct Answer
verified

Which of the following is not an example of a factor of production?

Correct Answer
verified

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Correct Answer
verified

Exam 1: Introducing the Economic Way of Thinking

The perpetual problem in economics is:

Correct AnswerverifiedShow Answer

An entrepreneur is:

Correct AnswerverifiedShow Answer

If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then the economist is assuming

Correct AnswerverifiedShow Answer

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:

Correct AnswerverifiedShow Answer

Exhibit 1A-2 Straight line In Exhibit 1A-2, explain the slope of straight line CD.

Correct AnswerverifiedShow Answer

The statement, "Violent crime has decreased in the last five years," is:

Correct AnswerverifiedShow Answer

Which of the following is an example of scarcity?

Correct AnswerverifiedShow Answer

The price of milk would be of particular interest to

Correct AnswerverifiedShow Answer

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Correct AnswerverifiedShow Answer

Relate the term scarcity to the action(s) it causes.

Correct AnswerverifiedShow Answer

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

Correct AnswerverifiedShow Answer

Natural resources are:

Correct AnswerverifiedShow Answer

A shift in a curve represents a change in:

Correct AnswerverifiedShow Answer

Which of the following is not an example of a capital input?

Correct AnswerverifiedShow Answer

Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

Correct AnswerverifiedShow Answer

The finite nature of the economy's resource base:

Correct AnswerverifiedShow Answer

Microeconomics deals with the analysis of all the following questions except how:

Correct AnswerverifiedShow Answer

Which of the following is not an example of a factor of production?

Correct AnswerverifiedShow Answer

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Correct AnswerverifiedShow Answer

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