Exam 1: The Role and Method of Economics

A) by determining whether it corresponds to our own ideas on ethics, religion, and political philosophy
B) by ensuring there is no fallacy of composition
C) by examining the professional credentials of the person who made the statement
D) by analyzing the relevant data

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A) It is likely greater than the expected marginal benefit from going on the date.
B) It is impossible to compare to the expected enjoyment from going on a date.
C) It is likely equal to the expected marginal benefit from going on the date.
D) It is likely less than the expected marginal benefit from going on the date.

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A) Gather data, evaluate results, tentatively accept the theory, and support or refute the hypothesis.
B) Select a theory, create a hypothesis, and evaluate the evidence.
C) Formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis, and tentatively accept theory.
D) Predict behaviour, evaluate the results, and formulate a hypothesis.

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A) an abstraction from reality useful for explaining but not predicting behaviour (since theories are too simplistic)
B) an opinion that can be tested against economic data
C) an abstraction for the sake of argument
D) a statement or relationship that is used to explain and predict human behaviour

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A) when the additional cost incurred as a result of the activity exceeds the additional benefit received
B) when the opportunity cost of your time is very low
C) when the total benefit from that activity exceeds the total cost of the activity
D) when the additional benefit received as a result of the activity exceeds the additional cost incurred

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Microeconomic topics...

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A) There is no relationship.
B) There is an unequal relationship.
C) There is a negative slope.
D) There is a positive slope.

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A) If the price of bread rose, consumers would buy less; if consumers bought less, the price of bread would rise.
B) If Mr. Lewis produces more, he can consume more; if Mr. Lewis consumes more, he can produce more.
C) If prices of houses went down, more people could afford houses; and if more people bought houses, the prices of houses would increase.
D) If Mr. Lewis had more money, he would be wealthier; if a nation's money supply were larger, the people of the nation would be wealthier.

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A) a cheeseburger
B) a chainsaw
C) a $100 bill
D) a stock certificate

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A) You estimate the expected cost of searching for one hour to be greater than $20.
B) In your estimation, the expected value of searching for the lost $20 for an hour is less than your hourly wage.
C) You must earn more than $20 per hour.
D) In your estimation, the expected value of searching for the lost $20 for an hour exceeds your hourly wage.

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A) An increase in tax rates will reduce unemployment.
B) We should increase pension payments to the elderly.
C) Teenage unemployment should be reduced.
D) New tax laws are needed to help the poor.

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A) that consumers are stocking up on corn because of the predictions of a cold winter
B) that consumers are buying more corn than before
C) that corn is relatively less abundant than before
D) that corn is relatively more abundant than before

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A) Grades are independent variables.
B) A negative relationship exists between studying and grades.
C) A positive relationship exists between studying and grades.
D) Grades are not dependent variables.

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A) Scarcity means that shortages occur at the existing market price.
B) It is impossible to satisfy unlimited human wants with limited resources.
C) When there is scarcity, individuals do not face trade-offs.
D) As a result of scarcity, individuals do not have the ability to make choices.

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A) If you are acting rationally, you will borrow $2000 and purchase a new sport utility vehicle.
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally.
C) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $30 000.
D) If you do not purchase the new sport utility vehicle, your net loss will be $2000.

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A) the highest valued opportunity that must be sacrificed in order to take the action
B) the value of all of the alternative actions that could have been taken
C) the total time spent by all parties in carrying out the action
D) the monetary payment the action required

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A) If you purchase iced tea you will suffer a net loss of 25 cents per bottle.
B) You will not purchase iced tea if you are acting rationally.
C) If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents.
D) If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

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