Question 1

"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)  theory.
E)  prediction.

Question 2

Which of the following is a normative economic statement?​

Accepted Answer

A)  The U.S. rate of unemployment was lower in 2004 than it was in 1994.
B)  Savings accounts earn interest, whereas checking accounts do not.
C)  Congress must recognize that the growing national debt is the most serious problem that the country faces.
D)  The unemployment rate increases when the percentage of the labor force without jobs increases.
E)  The unemployment rate among teenagers is higher than the rate among adults.

Question 3

Because people's wants are unlimited but resources are scarce, _____:​

Accepted Answer

A)  only the rich get everything they want.
B)  choices must be made.
C)  there will be more services produced than goods.
D)  people search for spiritual fulfillment rather than material fulfillment.
E)  poor people never get anything they want.

Question 4

To tell a compelling story, an economist relies on:​

Accepted Answer

A)  case studies and parables.
B)  anecdotes and personal experiences.
C)  irrelevant data.
D)  anecdotes and irrelevant data.
E)  case studies, anecdotes, parables, personal experience, and supporting data. E

Question 5

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 price.

Question 6

Microeconomics is the study of:​

Accepted Answer

A)  marginal or inferior products.
B)  how to use the fewest natural resources to produce goods and services.
C)  the behavior of the economy as a whole.
D)  the economic behavior of individual decision makers.
E)  the government's role as a producer in the economy.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would be a topic considered in the field of macroeconomics?​

Accepted Answer

A)  The study of the amazing recent growth of the Chinese economy
B)  The study of the relocation of U.S. manufacturing firms to China
C)  The study of the differences in wages between men and women in the United States
D)  The study of the effect of rent control on the housing market in New York City
E)  The study of the impact of environmental regulations on the well-being of human populations A

Question 9

Economics is as much an art as it is a science.

Accepted Answer

A) True 
 B)False

Question 10

Consumers need information to make good choices. In the context of this information, which of the following is correct?​

Accepted Answer

A)  Advertising is always harmful to consumers.
B)  Information is scarce and therefore valuable.
C)  Brand names offer no informational content.
D)  Acquiring more information is always rational.
E)  Marginal analysis does not apply to the acquisition of information.

Question 11

The ceteris paribus assumption is a behavioral assumption.

Accepted Answer

A) True 
 B)False  False

Question 12

​The scientific method is useful:​

Accepted Answer

A)  only in fields of science such as chemistry and physics.
B)  for testing the validity of theoretical predictions.
C)  for testing the validity of a model's assumptions.
D)  when no economic variables can be assumed to be constant.
E)  only if a theory has been proven to be true.

Question 13

Someone who commits the fallacy of composition is likely to assume that:​

Accepted Answer

A)  the simplest model is the best predictor.
B)  event B, which followed event A, was caused by event A.
C)  event B, which followed event A, was not necessarily caused by event A.
D)  what is true for the individual is also true for the group.
E)  what is true for the individual is not necessarily true for the group.

Question 14

Alicia makes the statement that every time she eats chocolate, she gets acne. By ignoring the possibility that there may be another factor that causes Alicia to eat chocolate and which also causes her acne, Alicia is committing the:​

Accepted Answer

A)  fallacy of composition.
B)  fallacy that association is causation.
C)  fallacy of segmentation.
D)  mistake of ignoring secondary effects.
E)  mistake of looking beyond the obvious.

Question 15

​Economics:

Accepted Answer

A)  studies human behavior when scarcity exists and choices must be made.
B)  provides the only reasonable explanation of how people make decisions.
C)  can accurately explain all human behavior since it is based on the assumption of rationality.
D)  is better at showing the way things ought to be than the other social sciences.
E)  is the only social science that can explain the existence and behavior of public institutions.

Question 16

Unlike a service, a good:​

Accepted Answer

A)  is desirable.
B)  uses resources to satisfy wants.
C)  is physical and tangible.
D)  is abundant and free.
E)  is a resource.

Question 17

A marginal adjustment only refers to a minor change.

Accepted Answer

A) True 
 B)False

Question 18

Rational self-interest is equivalent to pure selfishness.

Accepted Answer

A) True 
 B)False

Question 19

Elijah, a basketball fan, reasons that because his favorite team has three superstars on it, the team must be a great team and will win the championship. Elijah is committing the:​

Accepted Answer

A)  fallacy of composition.
B)  fallacy that association is causation.
C)  fallacy of segmentation.
D)  mistake of ignoring the secondary effects.
E)  mistake of ignoring the obvious.

Question 20

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)  guarantees an incorrect decision.

Exam 1: The Art and Science of Economic Analysis

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

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?​

Correct AnswerverifiedShow Answer

Because people's wants are unlimited but resources are scarce, _____:​

Correct AnswerverifiedShow Answer

To tell a compelling story, an economist relies on:​

Correct AnswerverifiedE

A good or service is considered scarce if:​

Correct AnswerverifiedShow Answer

Microeconomics is the study of:​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would be a topic considered in the field of macroeconomics?​

Correct AnswerverifiedA

Economics is as much an art as it is a science.

Correct AnswerverifiedShow Answer

Consumers need information to make good choices. In the context of this information, which of the following is correct?​

Correct AnswerverifiedShow Answer

The ceteris paribus assumption is a behavioral assumption.

Correct AnswerverifiedFalse

​The scientific method is useful:​

Correct AnswerverifiedShow Answer

Someone who commits the fallacy of composition is likely to assume that:​

Correct AnswerverifiedShow Answer

Alicia makes the statement that every time she eats chocolate, she gets acne. By ignoring the possibility that there may be another factor that causes Alicia to eat chocolate and which also causes her acne, Alicia is committing the:​

Correct AnswerverifiedShow Answer

​Economics:

Correct AnswerverifiedShow Answer

Unlike a service, a good:​

Correct AnswerverifiedShow Answer

A marginal adjustment only refers to a minor change.

Correct AnswerverifiedShow Answer

Rational self-interest is equivalent to pure selfishness.

Correct AnswerverifiedShow Answer

Elijah, a basketball fan, reasons that because his favorite team has three superstars on it, the team must be a great team and will win the championship. Elijah is committing the:​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answer
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Which of the following is a normative economic statement?

Correct Answer
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Because people's wants are unlimited but resources are scarce, _____:

Correct Answer
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To tell a compelling story, an economist relies on:

Correct Answer
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E

A good or service is considered scarce if:

Correct Answer
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Microeconomics is the study of:

Correct Answer
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Which of the following would be a topic considered in the field of macroeconomics?

Correct Answer
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A

Correct Answer
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Consumers need information to make good choices. In the context of this information, which of the following is correct?

Correct Answer
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False

The scientific method is useful:

Correct Answer
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Someone who commits the fallacy of composition is likely to assume that:

Correct Answer
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Alicia makes the statement that every time she eats chocolate, she gets acne. By ignoring the possibility that there may be another factor that causes Alicia to eat chocolate and which also causes her acne, Alicia is committing the:

Correct Answer
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Economics:

Correct Answer
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Unlike a service, a good:

Correct Answer
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Correct Answer
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Correct Answer
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Elijah, a basketball fan, reasons that because his favorite team has three superstars on it, the team must be a great team and will win the championship. Elijah is committing the:

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

Correct Answer
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