Question 1

If variable X goes up as result of variable Y going down,then X and Y are

Accepted Answer

A)  directly related.
B)  inversely related.
C)  independent.
D)  positively related.

Question 2

Which of the following is a positive macroeconomics statement?

Accepted Answer

A)  The central bank should increase the nation's money supply.
B)  The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.
C)  Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
D)  The local government ought to spend more on recreational facilities.

Question 3

What does it mean if a person makes a "decision at the margin"?

Accepted Answer

A)  The person compares additional benefits and additional costs when deciding what to do.
B)  The person weighs the good against the bad and then decides what to do.
C)  The person is more likely to say yes than to say no.
D)  The person compares marginal benefits and total costs and then decides what to do.
E)  The person makes a decision based on a condition.

Question 4

Which of the following is a microeconomics topic?

Accepted Answer

A)  the study of how prices are determined in the computer industry
B)  the study of unemployment in the economy
C)  the study of how changes in the nation's money supply affect the nation's output
D)  a and c
E)  b and c

Question 5

Economists use the ceteris paribus assumption primarily in order to

Accepted Answer

A)  make their analyses easier for them to conduct.
B)  designate what they believe is the correct relationship between two variables.
C)  explain why people sometimes consume more of a good when its price rises.
D)  explain why those things that come first do not necessarily cause those things that come later.
E)  designate the difference between normative and positive economics.

Question 6

Economists sometimes refer to the resource category land as natural resources.

Accepted Answer

A) True 
 B)False

Question 7

In general,there is a ______________ relationship between the number of hours spent studying for a test and the grade earned on the test.

Accepted Answer

A)  independent
B)  direct
C)  inverse
D)  smooth

Question 8

Exhibit 1-1 
-Refer to Exhibit 1-1.If the student whose study habits are illustrated here is currently studying for the 2nd hour she should

Accepted Answer

A)  cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so.
B)  cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is greater than the marginal cost of doing so.
C)  increase the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so.
D)  increase the number of hours she is studying because the marginal benefit of studying for the 2ndhour is greater than the marginal cost of doing so.

Question 9

A rationing device is a method used to resolve who gets what of available goods and resources.

Accepted Answer

A) True 
 B)False

Question 10

Explain how scarcity can exist in a relatively rich country such as the United States.Give examples to help support your answer.

Accepted Answer

Even in a wealthy country,the people liv...

Question 11

The higher the opportunity cost of doing something,the more likely it will be done.

Accepted Answer

A) True 
 B)False

Question 12

Normative economics is concerned with

Accepted Answer

A)  value judgments.
B)  opinions.
C)  cause-effect relationships.
D)  observations that can be proved.
E)  both a and b

Question 13

Which of the following statements uses the term ceteris paribus correctly?

Accepted Answer

A)  In economics,there are numerous theories,ceteris paribus.
B)  New York City is a major American city,ceteris paribus.
C)  The price of pineapples is low in Hawaii,ceteris paribus.
D)  The more ice cream you eat,the more weight you will gain,ceteris paribus.
E)  none of the above

Question 14

Scarcity occurs in both wealthy societies and poor societies.

Accepted Answer

A) True 
 B)False

Question 15

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Accepted Answer

A)  Yes,because it is better to spend $25 billion on ending poverty than on building another interstate highway system.
B)  No,because building a new interstate highway system promotes economic growth,which helps everyone.
C)  No,because the benefits of building a new interstate highway system may be greater than $25 billion.
D)  Yes,because the benefits of building a new interstate highway system may be greater than $25 billion.

Question 16

Define the term scarcity and discuss two of its consequences.

Accepted Answer

Scarcity is the condition in which our w...

Question 17

If people want more cars than there are cars available,then it is necessarily true that

Accepted Answer

A)  cars are scarce.
B)  there is a surplus of cars.
C)  there is a decreased supply of cars.
D)  none of the above

Question 18

Microeconomics is the branch of economics that deals with

Accepted Answer

A)  highly aggregated markets or the entire economy.
B)  the production side of the economy,exclusively.
C)  the buying side of the economy,exclusively.
D)  human behavior and choices as they relate to relatively small units --- an individual,a firm,an industry.

Question 19

Amy's opportunity cost of going to the movies is

Accepted Answer

A)  the price of the ticket.
B)  zero,if she has a free pass to the movie.
C)  the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies.
D)  both b and c

Question 20

Describe the difference between positive and normative economics.Cite an example of each.

Accepted Answer

Positive economics deals with "what is."...

Exam 1: What Economics Is About

Which of the following is a microeconomics topic?

Correct AnswerverifiedShow Answer

Exhibit 1-1 -Refer to Exhibit 1-1.If the student whose study habits are illustrated here is currently studying for the 2nd hour she should

Correct AnswerverifiedShow Answer

Economists use the ceteris paribus assumption primarily in order to

Correct AnswerverifiedShow Answer

A rationing device is a method used to resolve who gets what of available goods and resources.

Correct AnswerverifiedShow Answer

Scarcity occurs in both wealthy societies and poor societies.

Correct AnswerverifiedShow Answer

Define the term scarcity and discuss two of its consequences.

Correct AnswerverifiedScarcity is the condition in which our w...View AnswerShow Answer

Amy's opportunity cost of going to the movies is

Correct AnswerverifiedShow Answer

Economists sometimes refer to the resource category land as natural resources.

Correct AnswerverifiedShow Answer

If people want more cars than there are cars available,then it is necessarily true that

Correct AnswerverifiedShow Answer

Explain how scarcity can exist in a relatively rich country such as the United States.Give examples to help support your answer.

Correct AnswerverifiedEven in a wealthy country,the people liv...View AnswerShow Answer

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Correct AnswerverifiedShow Answer

Describe the difference between positive and normative economics.Cite an example of each.

Correct AnswerverifiedPositive economics deals with "what is."...View AnswerShow Answer

The higher the opportunity cost of doing something,the more likely it will be done.

Correct AnswerverifiedShow Answer

In general,there is a ______________ relationship between the number of hours spent studying for a test and the grade earned on the test.

Correct AnswerverifiedShow Answer

What does it mean if a person makes a "decision at the margin"?

Correct AnswerverifiedShow Answer

Which of the following is a positive macroeconomics statement?

Correct AnswerverifiedShow Answer

Which of the following statements uses the term ceteris paribus correctly?

Correct AnswerverifiedShow Answer

Microeconomics is the branch of economics that deals with

Correct AnswerverifiedShow Answer

If variable X goes up as result of variable Y going down,then X and Y are

Correct AnswerverifiedShow Answer

Normative economics is concerned with

Correct AnswerverifiedShow Answer

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Scarcity is the condition in which our w...
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Even in a wealthy country,the people liv...
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Positive economics deals with "what is."...
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