Question 1

Carl is considering attending a concert with a ticket price of $35.He estimates that the cost of driving to the concert and parking there will total an additional $20.In order to attend the concert,Carl will have to take time off from his part-time job or forgo studying for an exam scheduled for the next morning.He estimates that he will lose 5 hours at work,at a wage of $6 per hour,or 5 hours of study time.If Carl considers studying the best alternative use of his time,his opportunity cost of attending the concert equals

Accepted Answer

A)   $55
B)   $55 plus the value of the higher exam grade he could earn by studying for 5 hours
C)   $85 plus the value of the higher exam grade he could earn by studying for 5 hours
D)   $85 minus the value of the higher exam grade he could earn by studying for 5 hours
E)   $55 minus the value of the higher exam grade he could earn by studying for 5 hours

Question 2

A good economic model

Accepted Answer

A)   is as simple as possible,including only necessary details
B)   is as complex as possible,including many details
C)   represents reality as concretely as possible
D)   tries to be as detailed as the reality it is describing
E)   is very detailed regardless of its purpose

Question 3

-Grant has four hours of time to divide between studying for a physics exam and a geology exam.Figure 1-1 shows his estimates of the grades (on a scale of 0 to 100) that he could earn from studying a particular number of hours on each subject.If he plans on spending two hours studying each subject,what would be his opportunity cost of an additional hour studying physics?

Accepted Answer

A)   10 points on his geology exam
B)   20 points on his geology exam
C)   80 points on his geology exam
D)   25 points on his physics exam
E)   85 points on his physics exam

Question 4

For an individual,opportunity costs

Accepted Answer

A)   decrease as consumption increases.
B)   include only the monetary costs of goods and services.
C)   reflect resource scarcity.
D)   reflect the fact that wants are unlimited.
E)   reflect the fundamental assumption that "more is better."

Question 5

Economics is the study of

Accepted Answer

A)   scarcity under conditions of democracy
B)   choice within a system of free speech
C)   financial markets
D)   the role of government in a market system
E)   choice under conditions of scarcity

Question 6

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

Accepted Answer

A)   critical assumptions
B)   macroeconomic assumptions
C)   normative assumptions
D)   positive assumptions
E)   simplifying assumptions

Question 7

Suppose that the following headlines appeared in a newspaper.Which would most clearly represent a macroeconomic issue?

Accepted Answer

A)   "Central Bank Raises Interest Rates"
B)   "Auto Dealership to Cut Prices"
C)   "Fanny's Freeze Dried Prunes to Lay Off 50 Workers"
D)   "United Workers Union to Strike April 15"
E)   "Brazilian Coffee Bean Crop Falls by 10 Percent"

Question 8

For society as a whole,producing more of one good or service has an opportunity cost because

Accepted Answer

A)   human wants are limited and resources are unlimited
B)   both human wants and resources are unlimited
C)   resources are limited;human wants are irrelevant
D)   human wants are unlimited and resources are limited
E)   both human wants and resources are limited

Question 9

An assumption that makes an economic model simpler without affecting its conclusions in important ways is

Accepted Answer

A)   an indication of a positive assumption
B)   an efficient assumption
C)   useful in disguising the valid conclusions
D)   a simplifying assumption
E)   a critical assumption

Question 10

Opportunity costs arise because of resource scarcity.

Accepted Answer

A) True 
 B)False

Question 11

Macroeconomics studies the determination of

Accepted Answer

A)   total output,total employment,the general price level,and the general level of interest rates
B)   total output and the general level of interest rates only
C)   total employment and the general level of prices only
D)   the interaction of individual economic actors in specific markets and industries
E)   the levels of employment and prices in specific markets and industries

Question 12

Individuals must make choices because

Accepted Answer

A)   resources are scarce and wants are limited
B)   resources and wants are unlimited
C)   assets and wealth are distributed unevenly
D)   resources are scarce and wants are unlimited
E)   inflation usually outpaces income growth

Question 13

Which of the following is a normative statement?

Accepted Answer

A)   Fifteen percent of Americans go without health insurance in a year.
B)   The Consumer Price Index rose three-tenths of one percent in May.
C)   An increase in the minimum wage will increase teenage unemployment.
D)   Americans would be better served by single-payer health care system.
E)   The French trade deficit reached an all-time high last year.

Question 14

The study of economics would be superfluous if __________ did not exist.

Accepted Answer

A)   demand
B)   capital
C)   corporations
D)   profit
E)   scarcity

Question 15

Physical capital differs from raw materials in the sense that raw materials

Accepted Answer

A)   have a longer useful life in production
B)   are considered human capital
C)   cannot be used to produce goods and services
D)   are used up in production
E)   are not a resource used in production

Question 16

In the United States,individuals are forced to make choices

Accepted Answer

A)   because time is scarce,though spending power is not
B)   because spending power is scarce,though time is not
C)   though neither time nor spending power are scarce
D)   because both time and spending power are scarce
E)   because living standards are low

Question 17

Which of the following would be studied in macroeconomics?

Accepted Answer

A)   a drop in the price of personal computers
B)   an individual household's decision on how to allocate its spending power
C)   a rise in employment in movie theaters across the nation
D)   total output in the nation
E)   a local bank's increase in the interest rate offered on savings deposits

Question 18

A simplifying assumption

Accepted Answer

A)   affects the important conclusions of an economic model
B)   increases the level of detail in an economic model
C)   makes an economic model a more concrete representation of reality
D)   eliminates unnecessary details from an economic model
E)   limits the validity of an economic model's conclusions

Question 19

The knowledge that students gain while in college is referred to by economists as human capital.

Accepted Answer

A) True 
 B)False

Question 20

Microeconomics is the study of

Accepted Answer

A)   government decisions
B)   the federal government's budget
C)   the economic behavior of entire nations
D)   the economic behavior of individual decision makers
E)   the overall economy

Exam 1: What Is Economics

Which of the following would be studied in macroeconomics?

Correct Answer
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For an individual,opportunity costs

Correct Answer
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A simplifying assumption

Correct Answer
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Individuals must make choices because

Correct Answer
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For society as a whole,producing more of one good or service has an opportunity cost because

Correct Answer
verified

Macroeconomics studies the determination of

Correct Answer
verified

An assumption that makes an economic model simpler without affecting its conclusions in important ways is

Correct Answer
verified

Opportunity costs arise because of resource scarcity.

Correct Answer
verified

The study of economics would be superfluous if __________ did not exist.

Correct Answer
verified

Physical capital differs from raw materials in the sense that raw materials

Correct Answer
verified

Microeconomics is the study of

Correct Answer
verified

Economics is the study of

Correct Answer
verified

Suppose that the following headlines appeared in a newspaper.Which would most clearly represent a macroeconomic issue?

Correct Answer
verified

In the United States,individuals are forced to make choices

Correct Answer
verified

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

Correct Answer
verified

Correct Answer
verified

Which of the following is a normative statement?

Correct Answer
verified

A good economic model

Correct Answer
verified

The knowledge that students gain while in college is referred to by economists as human capital.

Correct Answer
verified

Correct Answer
verified

Exam 1: What Is Economics

Which of the following would be studied in macroeconomics?

Correct AnswerverifiedShow Answer

For an individual,opportunity costs

Correct AnswerverifiedShow Answer

A simplifying assumption

Correct AnswerverifiedShow Answer

Individuals must make choices because

Correct AnswerverifiedShow Answer

For society as a whole,producing more of one good or service has an opportunity cost because

Correct AnswerverifiedShow Answer

Macroeconomics studies the determination of

Correct AnswerverifiedShow Answer

An assumption that makes an economic model simpler without affecting its conclusions in important ways is

Correct AnswerverifiedShow Answer

Opportunity costs arise because of resource scarcity.

Correct AnswerverifiedShow Answer

The study of economics would be superfluous if __________ did not exist.

Correct AnswerverifiedShow Answer

Physical capital differs from raw materials in the sense that raw materials

Correct AnswerverifiedShow Answer

Microeconomics is the study of

Correct AnswerverifiedShow Answer

Economics is the study of

Correct AnswerverifiedShow Answer

Suppose that the following headlines appeared in a newspaper.Which would most clearly represent a macroeconomic issue?

Correct AnswerverifiedShow Answer

In the United States,individuals are forced to make choices

Correct AnswerverifiedShow Answer

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a normative statement?

Correct AnswerverifiedShow Answer

A good economic model

Correct AnswerverifiedShow Answer

The knowledge that students gain while in college is referred to by economists as human capital.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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