Question 1

Jamie and Danny both attend the same college and incur the same expenses for tuition, books, and school supplies. Jamie gave up a lucrative modeling job in Paris to attend school full time and Danny gave up a part-time job as a sales clerk in a department store. Which of the following statements about opportunity cost is the most accurate?

Accepted Answer

A)   The opportunity cost of attending college is likely greater for Danny than for Jamie.
B)   The opportunity cost is miniscule for both since college graduates are paid much higher than high school graduates on average.
C)   The opportunity cost of attending college is the same for both since they are enrolled at the same academic institution.
D)   The opportunity cost of attending college is likely greater for Jamie than for Danny.

Question 2

Economic theories are of limited use since they cannot be tested empirically.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements about microeconomics is the most accurate?

Accepted Answer

A)   It is a "positive" science, whereas macroeconomics is a "normative" science.
B)   It provides an overall view of the economy and how it functions.
C)   It explores the behaviour of individual consumers and firms when confronted with scarcity.
D)   It examines the aggregate behaviour of consumers and firms when confronted with scarcity.

Question 4

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Accepted Answer

A) True 
 B)False

Question 5

In a four quadrant graph, economics is primarily concerned with which area?

Accepted Answer

A)   upper left
B)   lower right
C)   lower left
D)   upper right

Question 6

The armed forces rely exclusively on volunteers to fill their ranks. According to economic theory, what type of people are the military personnel most likely to consist of?

Accepted Answer

A)   People who are motivated primarily by patriotism.
B)   People who would serve for no pay.
C)   People who are motivated exclusively by money.
D)   People who have lower valued opportunities available.

Question 7

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Based on the theory of specialization, why doesn't Sergei make his own clothes?

Accepted Answer

A)   Sergei has a comparative advantage in tailoring clothes.
B)   The opportunity cost to him of making his own clothes is very low because it takes away from his lucrative hockey career.
C)   The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career.
D)   Sergei does not face an opportunity cost in this situation since he is good at both activities.

Question 8

Which of the following statements about the opportunity cost of an action is the most accurate?

Accepted Answer

A)   It is the same for everyone who undertakes the action.
B)   It is the difference between the benefits that result and the expenses incurred as a result of the action.
C)   It is the value of the best forgone alternative.
D)   It is the same as the expected benefit of the action.

Question 9

What topic does microeconomics NOT usually include?

Accepted Answer

A)   how firms choose output to maximize profits
B)   how consumers maximize utility subject to a budget constraint
C)   how wages are determined in the labour market
D)   how national income is calculated

Question 10

Which of the following statements about negative incentives is the most accurate?

Accepted Answer

A)   They increase benefits or reduce costs.
B)   They increase benefits and increase costs
C)   They decrease benefits or increase costs.
D)   They include both cash subsidies and taxes.

Question 11

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements best describes the effects of price controls?

Accepted Answer

A)   They always lower the price.
B)   They efficiently allocate resources.
C)   They always benefit those that the price is trying to help.
D)   They distort market prices.

Question 13

A beer at the hockey arena costs $5 each. According to the rule of rational choice, when will Cynthia stop drinking beer?

Accepted Answer

A)   when the marginal benefit received from consuming peanuts with beer just equals $5
B)   when the marginal cost of an additional beer is less than $5
C)   when the marginal benefit of an additional beer equals zero
D)   when the marginal benefit of an additional beer falls below $5

Question 14

Which of the following does the term "opportunity cost" refer to?

Accepted Answer

A)   the price paid for the opportunity to buy stock in an initial public offering
B)   the finder's fee paid to a job placement agency for locating employment for workers
C)   the dollar price paid for a good
D)   the value of the best forgone alternative

Question 15

What is the fallacy of composition?

Accepted Answer

A)   the idea that correlation need not imply causation
B)   the erroneous view that an economic activity can sometimes exceed the sum of its components
C)   the view that the aggregation of economic activity will necessarily lead to an outcome that is different from the outcome generated by each individual in the group
D)   the erroneous view that what is True for the individual will also be True for the group

Question 16

Which of the following is NOT a factor of production?

Accepted Answer

A)   cash
B)   labour
C)   land
D)   entrepreneurship

Question 17

TABLE 1-1
 
-Refer to Table 1-1. A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. What is the opportunity cost of scoring a 94 on the economics exam rather than a 77?

Accepted Answer

A)   8 points on the history exam
B)   14 points on the history exam
C)   15 points on the history exam
D)   17 points on the history exam

Question 18

Which of the following is most likely a topic of discussion in macroeconomics?

Accepted Answer

A)   an increase in the price of food
B)   a decrease in the production of DVD players by a consumer electronics company
C)   a decrease in the unemployment rate
D)   an increase in the wage rate paid to automobile workers

Question 19

How do we measure the slope of a linear curve?

Accepted Answer

A straight-line curve is called a linear...

Question 20

The fallacy of composition states that even if something is True for an individual, it is not necessarily True for many individuals as a group.

Accepted Answer

A) True 
 B)False

Exam 1: The Role and Method of Economics

What is the fallacy of composition?

Correct Answer
verified

A beer at the hockey arena costs $5 each. According to the rule of rational choice, when will Cynthia stop drinking beer?

Correct Answer
verified

Correct Answer
verified

Which of the following does the term "opportunity cost" refer to?

Correct Answer
verified

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Based on the theory of specialization, why doesn't Sergei make his own clothes?

Correct Answer
verified

The fallacy of composition states that even if something is True for an individual, it is not necessarily True for many individuals as a group.

Correct Answer
verified

Correct Answer
verified

Which of the following is NOT a factor of production?

Correct Answer
verified

Which of the following statements about negative incentives is the most accurate?

Correct Answer
verified

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Correct Answer
verified

What topic does microeconomics NOT usually include?

Correct Answer
verified

Which of the following statements best describes the effects of price controls?

Correct Answer
verified

Which of the following is most likely a topic of discussion in macroeconomics?

Correct Answer
verified

In a four quadrant graph, economics is primarily concerned with which area?

Correct Answer
verified

How do we measure the slope of a linear curve?

Correct Answer
verified
A straight-line curve is called a linear...
View Answer

Economic theories are of limited use since they cannot be tested empirically.

Correct Answer
verified

Which of the following statements about microeconomics is the most accurate?

Correct Answer
verified

The armed forces rely exclusively on volunteers to fill their ranks. According to economic theory, what type of people are the military personnel most likely to consist of?

Correct Answer
verified

Which of the following statements about the opportunity cost of an action is the most accurate?

Correct Answer
verified

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Correct Answer
verified

Exam 1: The Role and Method of Economics

What is the fallacy of composition?

Correct AnswerverifiedShow Answer

A beer at the hockey arena costs $5 each. According to the rule of rational choice, when will Cynthia stop drinking beer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following does the term "opportunity cost" refer to?

Correct AnswerverifiedShow Answer

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Based on the theory of specialization, why doesn't Sergei make his own clothes?

Correct AnswerverifiedShow Answer

The fallacy of composition states that even if something is True for an individual, it is not necessarily True for many individuals as a group.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is NOT a factor of production?

Correct AnswerverifiedShow Answer

Which of the following statements about negative incentives is the most accurate?

Correct AnswerverifiedShow Answer

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Correct AnswerverifiedShow Answer

What topic does microeconomics NOT usually include?

Correct AnswerverifiedShow Answer

Which of the following statements best describes the effects of price controls?

Correct AnswerverifiedShow Answer

Which of the following is most likely a topic of discussion in macroeconomics?

Correct AnswerverifiedShow Answer

In a four quadrant graph, economics is primarily concerned with which area?

Correct AnswerverifiedShow Answer

How do we measure the slope of a linear curve?

Correct AnswerverifiedA straight-line curve is called a linear...View AnswerShow Answer

Economic theories are of limited use since they cannot be tested empirically.

Correct AnswerverifiedShow Answer

Which of the following statements about microeconomics is the most accurate?

Correct AnswerverifiedShow Answer

The armed forces rely exclusively on volunteers to fill their ranks. According to economic theory, what type of people are the military personnel most likely to consist of?

Correct AnswerverifiedShow Answer

Which of the following statements about the opportunity cost of an action is the most accurate?

Correct AnswerverifiedShow Answer

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A straight-line curve is called a linear...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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