Question 1

The distribution of income primarily determines which of the fundamental economic questions?

Accepted Answer

A)   What goods and services are to be produced?
B)   How are the goods and services to be produced?
C)   Who will receive the goods and services produced?
D)   How will the economy be planned?

Question 2

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

Accepted Answer

A) True 
 B)False

Question 3

Macroeconomics is the study of________.

Accepted Answer

A)   how households make choices
B)   how firms make choices
C)   how households and firms make choices
D)   the economy as a whole

Question 4

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

Accepted Answer

A) True 
 B)False

Question 5

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.Should DeShawn continue to offer the engine detailing service?

Accepted Answer

A)   Yes, he still makes a profit by selling the engine detailing service with the basic detailing package.
B)   Yes, but only if he raises the price of the basic detailing package.
C)   No, his marginal benefit is less than his marginal cost.
D)   More information is needed for DeShawn to make this decision.

Question 6

Damian shares a small food truck with his sister.His share of the expenses is $500 per month.He has decided to get his own,newer food truck which he will not have to share with anyone.His expenses for the newer truck are $1 400 per month.Damian is as rational as any other person.As an economics major,you rightly conclude that________.

Accepted Answer

A)   Damian cannot afford the newer truck and will have to go back to sharing a truck with his sister
B)   Damian figures that the additional benefit of having his own truck (as opposed to sharing)  is at least $900
C)   Damian figures that the benefit of having his own truck (as opposed to sharing)  is at least $1 400
D)   the cost of having one's own truck outweighs the benefits

Question 7

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Positive economic analysis is concerned ...

Question 8

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 9

Scarcity is a problem that will eventually disappear as technology advances.

Accepted Answer

A) True 
 B)False

Question 10

What is a mixed economy?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A mixed economy is an economy in which m...

Question 11

Soo Jin shares a one-bedroom apartment with her classmate.Her share of the rent is $700 per month.She is considering moving to a studio apartment which she will not have to share with anyone.The studio apartment rents for $950 per month.Recently,you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment.Soo Jin is as rational as any other person.As an economics major,you rightly conclude that________.

Accepted Answer

A)   Soo Jin did not have a choice; her roommate was a slob
B)   Soo Jin figures that the additional benefit of having her own place (as opposed to sharing)  is at least $250
C)   Soo Jin figures that the benefit of having her own place (as opposed to sharing)  is at least $950
D)   the cost of having one's own space outweighs the benefits

Question 12

What occurs when production reflects consumer preferences?

Accepted Answer

A)   Allocative efficiency
B)   Productive efficiency
C)   Equity
D)   Efficient central planning

Question 13

The highest valued alternative that must be given up to engage in an activity is the definition of __________.

Accepted Answer

A)   economic equity
B)   marginal benefit
C)   opportunity cost
D)   marginal cost

Question 14

When voluntary exchange takes place,both parties gain from the exchange.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Accepted Answer

A)   They are both automatically achieved in a free market economy.
B)   They always call for opposite outcomes.
C)   There is no conflict between the two goals.
D)   There is often a trade-off between the two.

Question 16

In which of the following situations does society not face a trade-off?

Accepted Answer

A)   When deciding who will receive the goods and services produced
B)   When deciding what goods and services will be produced
C)   When deciding how goods and services will be produced
D)   When some previously unemployed workers find jobs

Question 17

Allocative efficiency occurs when every good or service is produced up to the point where the last unit provides________.

Accepted Answer

A)   a marginal benefit to society equal to the marginal cost of producing it
B)   a marginal benefit to society greater than the marginal cost of producing it
C)   a marginal benefit to society less than the marginal cost of producing it
D)   a marginal benefit to society equal to zero

Question 18

Economic models do all of the following except _________.

Accepted Answer

A)   answering economic questions
B)   portraying reality in all its minute details
C)   making economic ideas explicit and concrete for use by decision makers
D)   simplifying some aspect of economic life

Question 19

An example of a microeconomics question is:

Accepted Answer

A)   How much will be saved and how much will be produced in the entire economy?
B)   What will the level of economic growth be in the entire economy?
C)   What factors determine the price of carrots?
D)   What determines the average price level and inflation?

Question 20

Economists assume that rational behaviour is useful in explaining choices people make________.

Accepted Answer

A)   because irrational people do not make economic choices
B)   even though people may not behave rationally all the time
C)   because individuals act rationally all the time in all circumstances
D)   even though people rarely, if ever, behave in a rational manner

Exam 1: Economics: Foundations and Models

Correct Answer
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Positive economic analysis is concerned ...
View Answer

What occurs when production reflects consumer preferences?

Correct Answer
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What is a mixed economy? __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
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A mixed economy is an economy in which m...
View Answer

Correct Answer
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Economic models do all of the following except _________.

Correct Answer
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Allocative efficiency occurs when every good or service is produced up to the point where the last unit provides________.

Correct Answer
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In which of the following situations does society not face a trade-off?

Correct Answer
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Correct Answer
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The highest valued alternative that must be given up to engage in an activity is the definition of __________.

Correct Answer
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In a centrally planned economy,the households and firms decide how economic resources will be allocated.

Correct Answer
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Macroeconomics is the study of________.

Correct Answer
verified

Correct Answer
verified

An example of a microeconomics question is:

Correct Answer
verified

The distribution of income primarily determines which of the fundamental economic questions?

Correct Answer
verified

Scarcity is a problem that will eventually disappear as technology advances.

Correct Answer
verified

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Correct Answer
verified

Economists assume that rational behaviour is useful in explaining choices people make________.

Correct Answer
verified

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Correct Answer
verified

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

Correct Answer
verified

When voluntary exchange takes place,both parties gain from the exchange.

Correct Answer
verified

Exam 1: Economics: Foundations and Models

Correct AnswerverifiedPositive economic analysis is concerned ...View AnswerShow Answer

What occurs when production reflects consumer preferences?

Correct AnswerverifiedShow Answer

What is a mixed economy? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedA mixed economy is an economy in which m...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Economic models do all of the following except _________.

Correct AnswerverifiedShow Answer

Allocative efficiency occurs when every good or service is produced up to the point where the last unit provides________.

Correct AnswerverifiedShow Answer

In which of the following situations does society not face a trade-off?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The highest valued alternative that must be given up to engage in an activity is the definition of __________.

Correct AnswerverifiedShow Answer

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

Correct AnswerverifiedShow Answer

Macroeconomics is the study of________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of a microeconomics question is:

Correct AnswerverifiedShow Answer

The distribution of income primarily determines which of the fundamental economic questions?

Correct AnswerverifiedShow Answer

Scarcity is a problem that will eventually disappear as technology advances.

Correct AnswerverifiedShow Answer

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Correct AnswerverifiedShow Answer

Economists assume that rational behaviour is useful in explaining choices people make________.

Correct AnswerverifiedShow Answer

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

Correct AnswerverifiedShow Answer

When voluntary exchange takes place,both parties gain from the exchange.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Positive economic analysis is concerned ...
View Answer

Correct Answer
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Correct Answer
verified
A mixed economy is an economy in which m...
View 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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