Question 1

The association is causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Accepted Answer

A) True 
 B)False

Question 2

Scarcity:

Accepted Answer

A)  applies to a brain surgeon but not to a cab driver.
B)  is not a problem for a politician.
C)  exists only in rich countries.
D)  exists only in poor countries.
E)  occurs when a resource is not freely available.F) All of the above
G) A) and C)

Question 3

It is always rational to acquire more information before making a decision.

Accepted Answer

A) True 
 B)False

Question 4

The difference between a good and a service is that:

Accepted Answer

A)  a good helps satisfy unlimited wants,but a service does not.
B)  a service helps satisfy unlimited wants,but a good does not.
C)  a service is available in unlimited quantities,but a good is not.
D)  a good is available in unlimited quantities,but a service is not.
E)  a good is tangible,but a service is not.F) All of the above
G) A) and B)

Question 5

A rational decision maker will take only those actions for which the expected marginal benefit:

Accepted Answer

A)  is positive.
B)  is at its maximum level.
C)  is greater than or equal to the expected marginal cost.
D)  is less than the expected marginal cost.
E)  exactly equals the expected marginal cost.F) B) and E)
G) A) and E)

Question 6

Macroeconomics is the study of:

Accepted Answer

A)  the behavior of large firms in the marketplace.
B)  the economic behavior of individual decision makers.
C)  the behavior of the economy as a whole.
D)  how to use the fewest natural resources to produce goods and services.
E)  the government's role as a stabilizing influence on the economy.F) All of the above
G) A) and B)

Question 7

In an economic model of consumer behavior,rational self-interest would likely be:

Accepted Answer

A)   a key variable.
B)  the hypothesis of the model.
C)  a behavioral assumption.
D)  a prediction of the model.
E)  a method of testing the model.F) B) and E)
G) All of the above

Question 8

When economists refer to capital,they might mean:

Accepted Answer

A)  money.
B)  human skills used in production.
C)  stocks.
D)  bonds.
E)  bank loans.F) All of the above
G) A) and E)

Question 9

Environmentalists have continually argued for the use of alternatives to fossil fuels to generate energy.Harnessing wind power by setting up wind farms had been one alternative proposed and implemented.As it is now known that these wind farms lead to the slicing and dicing of migratory birds and the decimation of the local bat population,we could say that environmentalists have committed the:

Accepted Answer

A)  fallacy of composition.
B)  fallacy that association is causation.
C)  fallacy of segmentation.
D)  mistake of ignoring secondary effects.
E)  mistake of ignoring the obvious.F) A) and B)
G) A) and C)

Question 10

A resource is something that:

Accepted Answer

A)  is used to produce goods and services.
B)  is provided by nature,not produced by society.
C)  exists in unlimited quantities.
D)  must be produced by a firm.
E)  is always available free of cost.F) B) and C)
G) A) and E)

Question 11

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Accepted Answer

A) True 
 B)False

Question 12

The difference between a positive economic statement and a normative economic statement is that:

Accepted Answer

A)  a positive statement must be true,while a normative statement is often not true.
B)  a normative statement must be true,while a positive statement is often not true.
C)  a positive statement can be verified,while a normative statement cannot.
D)  a normative statement can be verified,while a positive statement cannot.
E)  a positive economic statement is a moral judgment,while a normative economic statement is not a moral judgment.F) A) and E)
G) B) and E)

Question 13

One problem with rent controls is that policy makers often ignore its secondary effects.

Accepted Answer

A) True 
 B)False

Question 14

The difference between positive economic statements and normative economic statements is that:

Accepted Answer

A)  positive statements are based on opinion while normative statements are always true.
B)  positive statements are based on opinion while normative statements are based on fact.
C)  positive statements are true and normative statements are often false.
D)  positive statements are often false and normative statements are true.
E)  positive statements are based on fact while normative statements are based on opinion.F) B) and D)
G) C) and D)

Question 15

Consumers need information to make good choices.In the context of this information,which of the following is correct?

Accepted Answer

A)  Advertising is always harmful to consumers.
B)  Information is scarce and therefore valuable.
C)  Brand names offer no informational content.
D)  Acquiring more information is always rational.
E)  Marginal analysis does not apply to the acquisition of information.F) B) and D)
G) None of the above

Question 16

Economics is best described as the:

Accepted Answer

A)  study of choice when scarcity exists.
B)  study of the production of goods and services.
C)  theory of consumer behavior.
D)  science of money.
E)  art of spending money wisely.F) A) and D)
G) B) and C)

Question 17

Macroeconomists analyze:

Accepted Answer

A)  the labor market.
B)  the arrangements through which specific products are exchanged.
C)  influences on the decision making of particular households.
D)  the impact of unemployment on the economy.
E)  the factors that affect the decisions of individual firms.F) B) and C)
G) B) and E)

Question 18

Economics is best defined as the study of how:

Accepted Answer

A)  individuals decide to use scarce resources in an attempt to satisfy their unlimited wants.
B)  individuals can make money.
C)  the government should deal with unemployment and inflation.
D)  to eliminate the problem of scarce resources.
E)  to run a business.F) A) and E)
G) C) and D)

Question 19

A hypothesis is:

Accepted Answer

A)  an assumption about behavior.
B)  a prediction of what will occur given certain assumptions.
C)  a prediction of what will occur regardless of assumptions.
D)  a forecast of future events.
E)  useful only if the assumptions are realistic.F) B) and C)
G) B) and D)

Question 20

An entrepreneur:

Accepted Answer

A)  always makes a profit.
B)  generally avoids risky situations.
C)  claims the profit after other resource suppliers are compensated.
D)  is a parasite that benefits by not paying other resources for their services.
E)  is the manager who runs an enterprise and keeps the customers happy.F) A) and B)
G) All of the above

Exam 1: The Art and Science of Economic Analysis

Economics is best defined as the study of how:

Correct Answer
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The difference between a positive economic statement and a normative economic statement is that:

Correct Answer
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Consumers need information to make good choices.In the context of this information,which of the following is correct?

Correct Answer
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When economists refer to capital,they might mean:

Correct Answer
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It is always rational to acquire more information before making a decision.

Correct Answer
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An entrepreneur:

Correct Answer
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The difference between positive economic statements and normative economic statements is that:

Correct Answer
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Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Correct Answer
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Scarcity:

Correct Answer
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The difference between a good and a service is that:

Correct Answer
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A resource is something that:

Correct Answer
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Correct Answer
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The association is causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Correct Answer
verified

In an economic model of consumer behavior,rational self-interest would likely be:

Correct Answer
verified

Economics is best described as the:

Correct Answer
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Macroeconomists analyze:

Correct Answer
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Macroeconomics is the study of:

Correct Answer
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A hypothesis is:

Correct Answer
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One problem with rent controls is that policy makers often ignore its secondary effects.

Correct Answer
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A rational decision maker will take only those actions for which the expected marginal benefit:

Correct Answer
verified

Exam 1: The Art and Science of Economic Analysis

Economics is best defined as the study of how:

Correct AnswerverifiedShow Answer

The difference between a positive economic statement and a normative economic statement is that:

Correct AnswerverifiedShow Answer

Consumers need information to make good choices.In the context of this information,which of the following is correct?

Correct AnswerverifiedShow Answer

When economists refer to capital,they might mean:

Correct AnswerverifiedShow Answer

It is always rational to acquire more information before making a decision.

Correct AnswerverifiedShow Answer

An entrepreneur:

Correct AnswerverifiedShow Answer

The difference between positive economic statements and normative economic statements is that:

Correct AnswerverifiedShow Answer

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Correct AnswerverifiedShow Answer

Scarcity:

Correct AnswerverifiedShow Answer

The difference between a good and a service is that:

Correct AnswerverifiedShow Answer

A resource is something that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The association is causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Correct AnswerverifiedShow Answer

In an economic model of consumer behavior,rational self-interest would likely be:

Correct AnswerverifiedShow Answer

Economics is best described as the:

Correct AnswerverifiedShow Answer

Macroeconomists analyze:

Correct AnswerverifiedShow Answer

Macroeconomics is the study of:

Correct AnswerverifiedShow Answer

A hypothesis is:

Correct AnswerverifiedShow Answer

One problem with rent controls is that policy makers often ignore its secondary effects.

Correct AnswerverifiedShow Answer

A rational decision maker will take only those actions for which the expected marginal benefit:

Correct AnswerverifiedShow Answer

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