Question 1

When a person is making a decision at the margin he or she is comparing the total benefits from that activity to the total costs of the proposed action.

Accepted Answer

A) True 
 B)False

Question 2

The headline in the newspaper reads "County Supervisors Debate Building New Schools." The headline relates closest to which economic concept?

Accepted Answer

A)  goods and bads
B)  utility
C)  choice
D)  efficiencyE) B) and C)
F) A) and D)

Question 3

Economists use the terms resource and input as synonyms.

Accepted Answer

A) True 
 B)False

Question 4

Attempts to determine "what is" are part of __________ economics.

Accepted Answer

A)  positive
B)  normative
C)  positive and normative
D)  neither positive nor normativeE) All of the above
F) B) and C)

Question 5

Every time you make a __________, you incur a(n)  __________.

Accepted Answer

A)  decision; efficient effect
B)  choice; opportunity cost
C)  competitive move; price
D)  decision; mistake
E)  none of the aboveF) C) and D)
G) A) and B)

Question 6

Something that motivates or encourages people to take an action is referred to as a(n)

Accepted Answer

A)  utility.
B)  abstract.
C)  market.
D)  incentive.E) C) and D)
F) A) and C)

Question 7

Decision making "at the margin" means making a choice based on __________ of a decision.

Accepted Answer

A)  the total benefits
B)  the total costs
C)  comparing the total benefits and costs
D)  comparing the additional benefits and costsE) C) and D)
F) All of the above

Question 8

If it is discovered that using drugs enhances a person's chance of contracting a fatal disease, the cost of using drugs

Accepted Answer

A)  increases.
B)  decreases.
C)  is not affected.
D)  is irrelevant, since they are illegal anyway.E) A) and D)
F) A) and B)

Question 9

The latest Taylor Swift album is available to be downloaded for $12.99. Is this price a rationing device?

Accepted Answer

A)  No, the album will be sold to anyone having the required number of dollars.
B)  Yes, because the album will only be purchased by people who are willing and able to pay $12.99.
C)  No, for price to be a rationing device, it must be so high that only one unit of the item is sold.
D)  Yes, since that is a reasonable price.E) C) and D)
F) A) and B)

Question 10

Economists use the word utility to describe the satisfaction one receives from a good.

Accepted Answer

A) True 
 B)False

Question 11

Explain why the ceteris paribus assumption is essential when assessing an economic theory. Give an example to help support your answer.

Accepted Answer

Economists use the ceteris paribus assum...

Question 12

In all cases, macroeconomics deals with

Accepted Answer

A)  what is.
B)  what should be.
C)  relatively small units in the economy.
D)  the entire economy.E) A) and C)
F) A) and D)

Question 13

Which of the following is a positive economic statement?

Accepted Answer

A)  The temperature is too high today.
B)  The temperature is 105 degrees today.
C)  It is too hot to jog today.
D)  I enjoy summer evenings when it cools off.E) A) and B)
F) None of the above

Question 14

It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a small convenience store (such as 7-Eleven)  than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store?

Accepted Answer

A)  a person with a high opportunity cost of time
B)  a person with a low opportunity cost of time
C)  a person who is out of work
D)  a person who works at a full-service grocery storeE) B) and C)
F) None of the above

Question 15

In a two-variable diagram, there is a straight line which is parallel to the horizontal axis. The slope of this line is

Accepted Answer

A)  infinite.
B)  indicative of an inverse relationship between two variables.
C)  indicative of a direct relationship between two variables.
D)  zero.
E)  b and dF) B) and D)
G) C) and D)

Question 16

How is scarcity related to competition?

Accepted Answer

A)  Competition is an effect of scarcity.
B)  Scarcity is an effect of competition.
C)  Both scarcity and competition are effects of a rationing device.
D)  Both scarcity and competition are effects of opportunity cost.
E)  Scarcity produces disutility and competition produces utility.F) A) and B)
G) A) and E)

Question 17

According to economists, one of the four broad categories of resources is money.

Accepted Answer

A) True 
 B)False

Question 18

Minerals, water, and forests are all considered to be part of the broad resource category known as

Accepted Answer

A)  capital.
B)  entrepreneurship.
C)  labor.
D)  land.
E)  none of the aboveF) A) and E)
G) C) and E)

Question 19

A theory is

Accepted Answer

A)  built on the major factors or variables that the theorist believes explain some event.
B)  a simplified abstract representation of the real world.
C)  used to understand the real world.
D)  a and b
E)  a, b, and cF) A) and B)
G) None of the above

Question 20

The synonym economists commonly use for additional is

Accepted Answer

A)  capital.
B)  rational.
C)  marginal.
D)  economic.E) A) and D)
F) A) and C)

Exam 1: What Economics Is About

Every time you make a __________, you incur a(n) __________.

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The latest Taylor Swift album is available to be downloaded for $12.99. Is this price a rationing device?

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In all cases, macroeconomics deals with

Correct AnswerverifiedShow Answer

A theory is

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Decision making "at the margin" means making a choice based on __________ of a decision.

Correct AnswerverifiedShow Answer

In a two-variable diagram, there is a straight line which is parallel to the horizontal axis. The slope of this line is

Correct AnswerverifiedShow Answer

If it is discovered that using drugs enhances a person's chance of contracting a fatal disease, the cost of using drugs

Correct AnswerverifiedShow Answer

Attempts to determine "what is" are part of __________ economics.

Correct AnswerverifiedShow Answer

Minerals, water, and forests are all considered to be part of the broad resource category known as

Correct AnswerverifiedShow Answer

The synonym economists commonly use for additional is

Correct AnswerverifiedShow Answer

It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a small convenience store (such as 7-Eleven) than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store?

Correct AnswerverifiedShow Answer

Economists use the terms resource and input as synonyms.

Correct AnswerverifiedShow Answer

Something that motivates or encourages people to take an action is referred to as a(n)

Correct AnswerverifiedShow Answer

The headline in the newspaper reads "County Supervisors Debate Building New Schools." The headline relates closest to which economic concept?

Correct AnswerverifiedShow Answer

When a person is making a decision at the margin he or she is comparing the total benefits from that activity to the total costs of the proposed action.

Correct AnswerverifiedShow Answer

Explain why the ceteris paribus assumption is essential when assessing an economic theory. Give an example to help support your answer.

Correct AnswerverifiedEconomists use the ceteris paribus assum...View AnswerShow Answer

According to economists, one of the four broad categories of resources is money.

Correct AnswerverifiedShow Answer

Which of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

Economists use the word utility to describe the satisfaction one receives from a good.

Correct AnswerverifiedShow Answer

How is scarcity related to competition?

Correct AnswerverifiedShow Answer

Every time you make a , you incur a(n) .

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Economists use the ceteris paribus assum...
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