Question 1

In economics,money is an example of capital.

Accepted Answer

A) True 
 B)False

Question 2

Economists generally believe that

Accepted Answer

A)   buyers and sellers have all the information they can use
B)   additional information is costly to acquire
C)   decision makers have complete knowledge of all the alternatives available
D)   economic decisions result from random behavior
E)   decision makers never make mistakesF) All of the above
G) B) and C)

Question 3

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

Accepted Answer

A) True 
 B)False

Question 4

One problem with rent controls is that policy makers often ignore its secondary effects.

Accepted Answer

A) True 
 B)False

Question 5

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 servicesF) A) and B)
G) A) and C)

Question 6

Which of the following is not an example of the fallacy of composition?

Accepted Answer

A)   If I can get to work fastest by taking the interstate,so can everyone else.
B)   If you can only get away from it all by going to Fairbanks,everyone who needs to get away should go to Fairbanks.
C)   If the quickest way to get off a sinking ship is to run to the nearest lifeboat,all the passengers should do this.
D)   If the best TV reception can be gotten with a Couch Potato antenna,then everyone should have a Couch Potato antenna.
E)   If I can get a better view by standing up at the baseball game,everyone gets a better view by standing up.F) A) and B)
G) B) and C)

Question 7

A good or service is considered scarce if

Accepted Answer

A)   any quantity of it can be consumed at a zero price
B)   the amount people desire exceeds the amount available at a zero price
C)   the amount people desire exceeds the amount available at any price
D)   the amount people desire is less than the amount available at any price
E)   the amount people desire is less than the amount available at a zero priceF) A) and E)
G) A) and C)

Question 8

The difference between a good and a service is that

Accepted Answer

A)   a good helps satisfy unlimited wants; a service does not
B)   a service helps satisfy unlimited wants; a good does not
C)   a services is available in unlimited quantities; a good is not
D)   a good is available in unlimited quantities; a service is not
E)   a good is tangible; a service is notF) B) and D)
G) A) and C)

Question 9

In economics,the term "marginal" usually refers to

Accepted Answer

A)   a small change in an economic variable
B)   a low-quality product or resource
C)   an unimportant and irrelevant economic variable
D)   an all-or-nothing economic decision
E)   a footnote or minor pointF) B) and C)
G) A) and E)

Question 10

Which of the following is an example of capital?

Accepted Answer

A)   pizza ovens
B)   bulldozers
C)   a college education
D)   carpentry skills
E)   all of the aboveF) A) and B)
G) None of the above

Question 11

When economic choice involves an adjustment to an existing situation,marginal analysis

Accepted Answer

A)   has no practical applications or real-world uses
B)   eliminates incorrect decisions and bad choices
C)   involves comparing the additional costs and additional benefits of an activity before deciding
D)   involves examining only the total costs and total benefits of an activity before deciding
E)   none of the aboveF) None of the above
G) B) and C)

Question 12

As a scientist,an economist's main professional objective is to

Accepted Answer

A)   become wealthy
B)   control the government's decision-making processes
C)   understand how the economy works
D)   discover which stock prices will decrease
E)   understand the psychology of participants in marketsF) A) and D)
G) B) and C)

Question 13

Which of the following is an example of a positive statement?

Accepted Answer

A)   Workers with families should be paid at least the minimum wage.
B)   If crime rates were reduced,the world would be a better place in which to live.
C)   Marginal tax rates should be reduced for individuals in the highest tax brackets.
D)   An increase in the price of gasoline will cause a reduction in the amount purchased.
E)   Corrupt politicians ought to be voted out of office.F) B) and D)
G) A) and B)

Question 14

"Natural resources" refers

Accepted Answer

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

Question 15

An economic model is useful if it

Accepted Answer

A)   includes every detail of reality
B)   involves no unproven assumptions
C)   is expressed in equations
D)   makes accurate predictions
E)   is simple enough to be understood by a childF) A) and D)
G) B) and D)

Question 16

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

Accepted Answer

A)   opportunity cost
B)   scarcity
C)   innovation
D)   marginal analysis
E)   other things equal (or ceteris paribus) F) B) and E)
G) None of the above

Question 17

Resources are used only in the production of goods,not services.

Accepted Answer

A) True 
 B)False

Question 18

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 choicesF) B) and D)
G) A) and B)

Question 19

Rent is the payment received by resource owners for the use of their natural resources.

Accepted Answer

A) True 
 B)False

Question 20

Economic information

Accepted Answer

A)   is usually scarce and costly to acquire
B)   is usually available free to any decision maker
C)   is usually not required for rational decision making
D)   must be complete before any decision is made
E)   is usually useful only to governmentsF) B) and C)
G) A) and B)

Exam 1: The Art and Science of Economic Analysis

Rent is the payment received by resource owners for the use of their natural resources.

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Resources are used only in the production of goods,not services.

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A good or service is considered scarce if

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

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As a scientist,an economist's main professional objective is to

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When economic choice involves an adjustment to an existing situation,marginal analysis

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Economic information

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In economics,money is an example of capital.

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One problem with rent controls is that policy makers often ignore its secondary effects.

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"Natural resources" refers

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The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

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Which of the following is not an example of the fallacy of composition?

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The difference between a good and a service is that

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In economics,the term "marginal" usually refers to

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Which of the following is an example of a positive statement?

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An economic model is useful if it

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A resource is something that

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Economists generally believe that

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

Correct AnswerverifiedShow Answer

Which of the following is an example of capital?

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