Question 1

One topic of study for a microeconomist would be the

Accepted Answer

A)   causes of inflation.
B)   causes of a nation's unemployment level.
C)   effects of a gasoline price increase on consumer behavior.
D)   effects of an increase in government spending on overall economic activity.E) B) and C)
F) B) and D)

Question 2

The term or phrase most likely to indicate a normative statement is

Accepted Answer

A)   "ceteris paribus."
B)   "factual." or "what is" statement.
C)   "holding other things constant."
D)   "should" or "ought to."E) A) and B)
F) A) and C)

Question 3

The impact of an increase in the gasoline tax on sales of electric vehicles is

Accepted Answer

A)   a macroeconomics topic because it deals with taxes.
B)   a microeconomics topic because it deals with one industry.
C)   not an economic issue, but rather a political issue.
D)   a normative issue and so it is not an economic topic.E) All of the above
F) A) and B)

Question 4

In economics, the concept that individuals are motivated by self-interest and respond predictably to opportunities is known as

Accepted Answer

A)   rational behavior.
B)   altruism.
C)   normative bias.
D)   empiricism.E) A) and D)
F) None of the above

Question 5

Which of the following is an example of an application of the ceteris paribus assumption?

Accepted Answer

A)   an analysis of how price changes affect how much of a good people will purchase when all other factors are held constant
B)   an analysis of how people purchase more goods when prices decline and income increases
C)   After reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase.
D)   an analysis of how worker productivity increases when a firm invests in new machines and training programsE) A) and B)
F) A) and C)

Question 6

Which of the following is NOT normative economic statement?

Accepted Answer

A)   The minimum wage should be eliminated so unemployment can be reduced.
B)   Increases in the minimum wage cause increases in unemployment.
C)   The inflation rate should fall to increase individuals' well being.
D)   Taxes on cigarettes should be increased to reduce smoking.E) A) and C)
F) A) and D)

Question 7

In economics, items that are used to produce goods and services are known as

Accepted Answer

A)   wants.
B)   needs.
C)   outputs.
D)   resources.E) A) and B)
F) A) and C)

Question 8

Macroeconomics is the study of

Accepted Answer

A)   aggregate economic variables.
B)   output in particular industries.
C)   prices in particular industries.
D)   all of the above.E) A) and B)
F) B) and D)

Question 9

If a teacher tells a student that those who attend the study session typically score higher on the final exam

Accepted Answer

A)   the student has a positive incentive to attend the study session because she may get a higher grade.
B)   the student has a negative incentive to attend the study session because she will be punished if she does not go.
C)   the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam.
D)   a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.E) All of the above
F) C) and D)

Question 10

Which one of the following is an example of a normative statement?

Accepted Answer

A)   A smart phone costs more than a laptop computer.
B)   Most smart phones sold in the United States are imported from other countries.
C)   Every student in college should have a smart phone.
D)   More people will buy smart phones as their prices decline.E) A) and B)
F) None of the above

Question 11

"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement? Explain.

Accepted Answer

Disagree. A positive statement is one th...

Question 12

Positive economic analysis is said to be

Accepted Answer

A)   true.
B)   always accurate.
C)   value-laden.
D)   objective.E) C) and D)
F) B) and C)

Question 13

Ceteris paribus means

Accepted Answer

A)   "all variables are independent."
B)   "other things being constant."
C)   "some assumptions are unrealistic."
D)   "some theories are not rational."E) All of the above
F) A) and D)

Question 14

Which of the following topics is a macroeconomic subject?

Accepted Answer

A)   a proposed merger between two companies
B)   the level of sales at a particular department store
C)   increases in the overall price level of a nation
D)   the pricing decision of a firmE) A) and C)
F) A) and B)

Question 15

Suppose a survey is taken concerning car safety. According to the survey, people strongly desire safer cars and indicate they are willing to pay substantially more for safer cars. Using this information, one auto firm adds numerous safety features to its car, raising the price by several thousand dollars. Sales drop sharply, and the firm loses profits. What went wrong?

Accepted Answer

The automaker was relying on what people...

Question 16

The assumption underlying economic theory is that

Accepted Answer

A)   people respond only to negative incentives, not to positive ones.
B)   choices are affected by incentives.
C)   value judgments do not play a role in the economic decisions people make.
D)   money is the only incentive that matters.E) B) and D)
F) A) and B)

Question 17

Which is NOT true about the use of economic models?

Accepted Answer

A)   Economic models are simplified representations of the real world.
B)   Economists always use experiments in science laboratories to test their theories.
C)   Economists use what has already happened in the real world to test their theories.
D)   Economists are employed to explain economic phenomena but are never used to predict what might happen next.E) A) and C)
F) B) and C)

Question 18

The term ceteris paribus is an economic assumption that means

Accepted Answer

A)   let the buyer beware.
B)   logical common sense.
C)   the detail is in the interrelationship.
D)   other things being equal.E) A) and D)
F) B) and C)

Question 19

The basic economic problem is a situation of

Accepted Answer

A)   limited resources and unlimited wants.
B)   both limited resources and limited wants.
C)   limited incomes and unlimited choices.
D)   unlimited incomes and limited choices.E) C) and D)
F) A) and C)

Question 20

The threat of a large fine for failure to pay income taxes is an example of

Accepted Answer

A)   the excessive power of the Internal Revenue Service.
B)   the ineffectiveness of incentives to get people to pay their taxes.
C)   a negative incentive to get all people to pay taxes.
D)   people failing to consider all the benefits the government provides them.E) None of the above
F) A) and B)

Exam 1: The Nature of Economics

Which one of the following is an example of a normative statement?

Correct Answer
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In economics, the concept that individuals are motivated by self-interest and respond predictably to opportunities is known as

Correct Answer
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Macroeconomics is the study of

Correct Answer
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Which is NOT true about the use of economic models?

Correct Answer
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The term ceteris paribus is an economic assumption that means

Correct Answer
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The impact of an increase in the gasoline tax on sales of electric vehicles is

Correct Answer
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The threat of a large fine for failure to pay income taxes is an example of

Correct Answer
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Correct Answer
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The automaker was relying on what people...
View Answer

One topic of study for a microeconomist would be the

Correct Answer
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Ceteris paribus means

Correct Answer
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In economics, items that are used to produce goods and services are known as

Correct Answer
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Which of the following is an example of an application of the ceteris paribus assumption?

Correct Answer
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The assumption underlying economic theory is that

Correct Answer
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Positive economic analysis is said to be

Correct Answer
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The term or phrase most likely to indicate a normative statement is

Correct Answer
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Which of the following topics is a macroeconomic subject?

Correct Answer
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If a teacher tells a student that those who attend the study session typically score higher on the final exam

Correct Answer
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The basic economic problem is a situation of

Correct Answer
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Which of the following is NOT normative economic statement?

Correct Answer
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"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement? Explain.

Correct Answer
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Disagree. A positive statement is one th...
View Answer

Exam 1: The Nature of Economics

Which one of the following is an example of a normative statement?

Correct AnswerverifiedShow Answer

In economics, the concept that individuals are motivated by self-interest and respond predictably to opportunities is known as

Correct AnswerverifiedShow Answer

Macroeconomics is the study of

Correct AnswerverifiedShow Answer

Which is NOT true about the use of economic models?

Correct AnswerverifiedShow Answer

The term ceteris paribus is an economic assumption that means

Correct AnswerverifiedShow Answer

The impact of an increase in the gasoline tax on sales of electric vehicles is

Correct AnswerverifiedShow Answer

The threat of a large fine for failure to pay income taxes is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe automaker was relying on what people...View AnswerShow Answer

One topic of study for a microeconomist would be the

Correct AnswerverifiedShow Answer

Ceteris paribus means

Correct AnswerverifiedShow Answer

In economics, items that are used to produce goods and services are known as

Correct AnswerverifiedShow Answer

Which of the following is an example of an application of the ceteris paribus assumption?

Correct AnswerverifiedShow Answer

The assumption underlying economic theory is that

Correct AnswerverifiedShow Answer

Positive economic analysis is said to be

Correct AnswerverifiedShow Answer

The term or phrase most likely to indicate a normative statement is

Correct AnswerverifiedShow Answer

Which of the following topics is a macroeconomic subject?

Correct AnswerverifiedShow Answer

If a teacher tells a student that those who attend the study session typically score higher on the final exam

Correct AnswerverifiedShow Answer

The basic economic problem is a situation of

Correct AnswerverifiedShow Answer

Which of the following is NOT normative economic statement?

Correct AnswerverifiedShow Answer

"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement? Explain.

Correct AnswerverifiedDisagree. A positive statement is one th...View AnswerShow 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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The automaker was relying on what people...
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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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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Disagree. A positive statement is one th...
View Answer