Question 1

Many people buy one newspaper per day,but rarely do they buy two of the same newspapers on the same day.What is the economic justification for this behavior?

Accepted Answer

A)  The marginal benefit of purchasing the second newspaper exceeds the marginal cost of purchasing that paper.
B)  The marginal cost of purchasing the second newspaper exceeds the marginal benefit of purchasing that paper.
C)  The marginal benefit of purchasing the second newspaper equals the marginal cost of purchasing that paper.
D)  none of the above is an appropriate economic justification for this behavior.

Question 2

If variable X goes down as a result of variable Y going down,then X and Y are

Accepted Answer

A)  directly related.
B)  negatively related.
C)  inversely related.
D)  independent.

Question 3

Which of the following issues is most unlikely to be addressed by an economist practicing positive economics?

Accepted Answer

A)  the relationship between the minimum wage and the number of unemployed unskilled workers
B)  the effect of a minimum wage increase on inner-city crime rates
C)  the desirability of a minimum wage increase
D)  the consequences of implementing a minimum wage law in China

Question 4

All sellers may be tempted to raise the price of what they sell,but a negative unintended effect of raising the price could be __________ in units sold large enough to __________ the seller's total revenue earned.

Accepted Answer

A)  an increase;raise
B)  an increase;lower
C)  a decrease;raise
D)  a decrease;lower

Question 5

In every economy people vie for the economy's rationing device,a process called

Accepted Answer

A)  competition.
B)  entrepreneurship.
C)  marginal benefit.
D)  positive economics.

Question 6

The purpose of the ceteris paribus assumption is to allow economists to

Accepted Answer

A)  determine the relationship among several variables.
B)  determine the impact of several variables on another variable.
C)  isolate the impact of one variable on several variables.
D)  isolate the relationship between two variables.

Question 7

Why do societies need rationing devices?

Accepted Answer

A)  Because people have too many needs and not enough wants.
B)  Because price exists.
C)  Because scarcity exists.
D)  Because people have opportunity costs.

Question 8

If an economist says "the higher the price of oranges,the fewer oranges individuals will buy,ceteris paribus," this means that

Accepted Answer

A)  individuals don't like high-priced oranges.
B)  as the price of oranges rises,individuals' preferences change and they no longer like oranges as much as they once did.
C)  as the price of oranges rises,individuals' preferences do not change,nor does anything else,but individuals buy fewer oranges in response to the higher price of oranges.
D)  the higher the price of oranges,the fewer oranges individuals will buy,assuming that people have economic motives.

Question 9

Scarcity means

Accepted Answer

A)  wants are greater than the limited resources available to satisfy these wants.
B)  wants are less than the limited resources available to satisfy these wants.
C)  resources are infinite.
D)  wants are limited.
E)  both c and d

Question 10

In most societies,dollar price acts as the main rationing device.If dollar price weren't the main rationing device,would there still be a need for some rationing device to take its place?

Accepted Answer

A)  No,because with dollar price there would be no scarcity,although shortages would still exist.
B)  Yes,because there is a need for a rationing device as long as scarcity exists.
C)  Yes,because there is a need for a rationing device as long as the world's population is so large.
D)  No,because dollar price creates scarcity and without money price scarcity wouldn't exist.
E)  none of the above

Question 11

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.10 to 0.07 while raising the number of accidents per period from 35,000 to any more than

Accepted Answer

A)  35,000.
B)  38,500.
C)  37,450.
D)  50,000.

Question 12

In economics,scarcity implies

Accepted Answer

A)  disutility.
B)  utility.
C)  choice.
D)  inefficiency.
E)  a,c,and d

Question 13

How are changes in opportunity cost predicted to affect behavior?

Accepted Answer

A)  The lower the opportunity cost of doing X,the less likely X will be done.
B)  The higher the opportunity cost of doing X,the less likely X will be done.
C)  The lower the opportunity cost of doing X,the more likely X will be done.
D)  a and c
E)  b and c

Question 14

The effect of a decrease in interest rates upon economic growth is an example of positive economics.

Accepted Answer

A) True 
 B)False

Question 15

Price is the only rationing device that can be used in a modern economy.

Accepted Answer

A) True 
 B)False

Question 16

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.11 to 0.08 while raising the number of accidents per period from 100,000 to any more than

Accepted Answer

A)  108,000.
B)  111,111.
C)  137,500.
D)  110,000.

Question 17

The condition in an economy that makes a "rationing device" a necessity is:

Accepted Answer

A)  the economy is organized around free markets.
B)  the economy is centrally planned by the government.
C)  scarcity exists.
D)  there are fewer types of goods than there are people in the economy.

Question 18

Which of the following statements is false?

Accepted Answer

A)  To an economist,the resource land includes natural resources such as minerals,forests,water and unimproved land.
B)  To an economist,the resource capital consists of unproduced goods that can be turned into produced goods.
C)  To an economist,the resource labor consists of the physical and mental talents people contribute to the production process.
D)  To an economist,the resource entrepreneurship refers to a particular talent that some people have for organizing the resources of land,labor,and capital to produce goods,seek new business opportunities,and develop new ways of doing things.

Question 19

Explain what an economist means when he says,"You don't find any $10 bills on the sidewalk."

Accepted Answer

What an economist means by this statemen...

Question 20

The absence of value judgments is the essence of

Accepted Answer

A)  normative economics.
B)  positive economics.
C)  microeconomics.
D)  macroeconomics.

Exam 1: What Economics Is About

The purpose of the ceteris paribus assumption is to allow economists to

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The absence of value judgments is the essence of

Correct AnswerverifiedShow Answer

The condition in an economy that makes a "rationing device" a necessity is:

Correct AnswerverifiedShow Answer

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.10 to 0.07 while raising the number of accidents per period from 35,000 to any more than

Correct AnswerverifiedShow Answer

In most societies,dollar price acts as the main rationing device.If dollar price weren't the main rationing device,would there still be a need for some rationing device to take its place?

Correct AnswerverifiedShow Answer

If an economist says "the higher the price of oranges,the fewer oranges individuals will buy,ceteris paribus," this means that

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Why do societies need rationing devices?

Correct AnswerverifiedShow Answer

Price is the only rationing device that can be used in a modern economy.

Correct AnswerverifiedShow Answer

All sellers may be tempted to raise the price of what they sell,but a negative unintended effect of raising the price could be __________ in units sold large enough to __________ the seller's total revenue earned.

Correct AnswerverifiedShow Answer

In every economy people vie for the economy's rationing device,a process called

Correct AnswerverifiedShow Answer

In economics,scarcity implies

Correct AnswerverifiedShow Answer

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.11 to 0.08 while raising the number of accidents per period from 100,000 to any more than

Correct AnswerverifiedShow Answer

Explain what an economist means when he says,"You don't find any $10 bills on the sidewalk."

Correct AnswerverifiedWhat an economist means by this statemen...View AnswerShow Answer

Scarcity means

Correct AnswerverifiedShow Answer

If variable X goes down as a result of variable Y going down,then X and Y are

Correct AnswerverifiedShow Answer

The effect of a decrease in interest rates upon economic growth is an example of positive economics.

Correct AnswerverifiedShow Answer

Many people buy one newspaper per day,but rarely do they buy two of the same newspapers on the same day.What is the economic justification for this behavior?

Correct AnswerverifiedShow Answer

Which of the following issues is most unlikely to be addressed by an economist practicing positive economics?

Correct AnswerverifiedShow Answer

How are changes in opportunity cost predicted to affect behavior?

Correct AnswerverifiedShow Answer

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All sellers may be tempted to raise the price of what they sell,but a negative unintended effect of raising the price could be in units sold large enough to the seller's total revenue earned.

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What an economist means by this statemen...
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