Question 1

An economic model

Accepted Answer

A)   omits critical elements
B)   must be presented in mathematical terms
C)   simplifies reality in order to focus on its essential elements
D)   can never be proven wrong if its assumptions are realistic
E)   produces poor predictions if it includes an unrealistic assumption

Question 2

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)   to make money
C)   the government should deal with unemployment and inflation
D)   to eliminate the problem of scarce resources
E)   to run a business

Question 3

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 A

Question 4

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

Accepted Answer

A)   both c and e are 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

Question 5

The expression "There's no such thing as a free lunch" means that

Accepted Answer

A)   services may be free,but goods are never free
B)   even if it has a price of zero,a good or service has a cost
C)   charitable organizations should not serve free lunches to the poor
D)   poor people are really the ones who pay for their allegedly free lunches
E)   someone has to pay the market price for a good or service B

Question 6

Which of the following is the fundamental resource that is the basis of labor?

Accepted Answer

A)   capital
B)   natural resources
C)   time
D)   money
E)   entrepreneurial ability

Question 7

A resource is something that

Accepted Answer

A)   is used to produce goods and services
B)   is provided by nature,not made by society
C)   exists in unlimited quantities
D)   must be produced by a firm
E)   consumes goods and services

Question 8

A market

Accepted Answer

A)   is often a physical place
B)   facilitates exchanges between buyers and sellers
C)   typically involves monetary transactions
D)   might not have well-defined geographical limits
E)   all of the above

Question 9

The assumption of rational self-interest means that economic decision makers

Accepted Answer

A)   have no concern for the welfare of others
B)   consider the welfare of others to be more important than their own happiness
C)   know with certainty which choice will have the best result
D)   make reasonable decisions based on their expectations of results
E)   do not make incorrect decisions or bad choices

Question 10

Economists believe that individuals respond in a predictable way to changes in costs and benefits.The term that best describes this belief is

Accepted Answer

A)   opportunity cost
B)   demand
C)   supply
D)   scarcity
E)   rational behavior

Question 11

"There should be less discrimination against the elderly." This is an example of a

Accepted Answer

A)   normative statement
B)   positive statement
C)   forecast
D)   hypothesis
E)   prediction

Question 12

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 13

The expression "There's no such thing as a free lunch" means

Accepted Answer

A)   that even if the lunch is free,we pay for it in extra calories
B)   that resources used up in producing the lunch are not available to satisfy other wants
C)   the same thing as "The best things in life are free"
D)   you can eat only if you work first
E)   neither sea water nor air is free

Question 14

One might commit the fallacy of composition by concluding that

Accepted Answer

A)   statements that are true during prosperity are necessarily true during depression
B)   what is good for the individual is necessarily good for the group
C)   an event that precedes another is necessarily the cause of the latter
D)   intentions need not coincide with actions
E)   the composition of a complex product is not revealed by its exterior appearance B

Question 15

The statement 'If I'm going to Miami for the Spring Break,all of my classmates are also going to Miami for the Spring Break' is an example of:

Accepted Answer

A)   The fallacy that association is causation
B)   The fallacy of composition
C)   The mistake of ignoring secondary effects
D)   A normative statement
E)   A false statement

Question 16

Which of the following is a positive statement?

Accepted Answer

A)   An unemployment rate of 7 percent or higher is a national disgrace.
B)   Unemployment is a less important problem than inflation.
C)   When the national unemployment rate is 7 percent,the unemployment rate for inner-city youth is often close to 40 percent.
D)   Unemployment and inflation are equally important problems.
E)   An inflation rate of 7 percent is too high.

Question 17

"Natural resources" refers

Accepted Answer

A)   bodies of water
B)   trees
C)   oil reserves
D)   minerals
E)   All of the answers are correct.

Question 18

Behavioral assumptions

Accepted Answer

A)   make economic models more complex than if these assumptions were removed
B)   pertain only to consumers
C)   hold all other things constant
D)   are ways to test a hypothesis
E)   describe how individuals are expected to behave

Question 19

Which of the following is true about entrepreneurs?

Accepted Answer

A)   They have the talent required to dream up a new product or find a better way to produce an existing one.
B)   They are rewarded by profits.
C)   They sometimes suffer losses.
D)   They benefit from what's left over after paying other resource suppliers.
E)   All of the answers are correct.

Question 20

In a circular-flow model,households supply all of the following except

Accepted Answer

A)   labor
B)   goods and services
C)   capital
D)   entrepreneurial ability
E)   natural resources

Exam 1: The Art and Science of Economic Analysis

An economic model

Correct AnswerverifiedShow Answer

Economics is best defined as the study of how

Correct AnswerverifiedShow Answer

Economics is best described as the

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

The expression "There's no such thing as a free lunch" means that

Correct AnswerverifiedB

Which of the following is the fundamental resource that is the basis of labor?

Correct AnswerverifiedShow Answer

A resource is something that

Correct AnswerverifiedShow Answer

A market

Correct AnswerverifiedShow Answer

The assumption of rational self-interest means that economic decision makers

Correct AnswerverifiedShow Answer

Economists believe that individuals respond in a predictable way to changes in costs and benefits.The term that best describes this belief is

Correct AnswerverifiedShow Answer

"There should be less discrimination against the elderly." This is an example of a

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

The expression "There's no such thing as a free lunch" means

Correct AnswerverifiedShow Answer

One might commit the fallacy of composition by concluding that

Correct AnswerverifiedB

The statement 'If I'm going to Miami for the Spring Break,all of my classmates are also going to Miami for the Spring Break' is an example of:

Correct AnswerverifiedShow Answer

Which of the following is a positive statement?

Correct AnswerverifiedShow Answer

"Natural resources" refers

Correct AnswerverifiedShow Answer

Behavioral assumptions

Correct AnswerverifiedShow Answer

Which of the following is true about entrepreneurs?

Correct AnswerverifiedShow Answer

In a circular-flow model,households supply all of the following except

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified