Question 1

Society has to establish priorities among its goals because of

Accepted Answer

A)  lazy politicians
B)  manipulative politicians
C)  uneducated voters
D)  a scarcity of resources
E)  too many bosses and not enough workers

Question 2

Microeconomic topics include the overall unemployment rate in the United States and the rate of inflation.

Accepted Answer

A) True 
 B)False

Question 3

The money we pay for a good or service

Accepted Answer

A)  generally exceeds its opportunity cost.
B)  generally equals its opportunity cost.
C)  has no part in determining its opportunity cost.
D)  generally equals two-thirds of its opportunity cost.
E)  generally is only part of its opportunity cost.

Question 4

Macroeconomics studies the determination of

Accepted Answer

A)  total output,total employment,the general price level,and the general level of interest rates
B)  total output and the general level of interest rates only
C)  total employment and the general level of prices only
D)  the interaction of individual economic actors in specific markets and industries
E)  the levels of employment and prices in specific markets and industries

Question 5

Opportunity costs arise because of resource scarcity.

Accepted Answer

A) True 
 B)False

Question 6

The opportunity cost of a particular economic activity

Accepted Answer

A)  is the same for each individual considering the activity
B)  can differ among different individuals considering the activity
C)  excludes the monetary cost of the activity
D)  equals the money cost of the activity minus its time cost
E)  has the same time cost for each individual considering the activity

Question 7

An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of

Accepted Answer

A)  positive economics
B)  normative economics
C)  negative economics
D)  a simplifying assumption
E)  microeconomic analysis

Question 8

The price that a firm's only competitor charges would be a

Accepted Answer

A)  topic in microeconomics
B)  topic in finance
C)  macroeconomic topic
D)  topic in public finance
E)  normative issue

Question 9

Which of the following would be strictly a microeconomic topic?

Accepted Answer

A)  a general rise in interest rates
B)  a drop in inflation
C)  an increase in total production in the United States
D)  a drop in the nation's unemployment rate
E)  an increase in the price of the Ford Taurus

Question 10

If the president of Chile commented that "the crime rate in Chile is currently too high," this would be an example of a normative statement.

Accepted Answer

A) True 
 B)False

Question 11

The statement "The unemployment rate in the U.S.is 5 percent" is

Accepted Answer

A)  a statement of opinion
B)  a positive statement that can be falsified
C)  lacking proper microeconomic foundations
D)  a statistical anomaly
E)  a philosophical difference of opinions regarding the nature and significance of statistical inference

Question 12

Which of the following is a normative statement?

Accepted Answer

A)  Fifteen percent of Americans go without health insurance in a year.
B)  The Consumer Price Index rose three-tenths of one percent in May.
C)  An increase in the minimum wage will increase teenage unemployment.
D)  Americans would be better served by single-payer health care system.
E)  The French trade deficit reached an all-time high last year.

Question 13

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

Accepted Answer

A)  normative issues
B)  positive issues
C)  the mathematical calculations in an economic model
D)  whether microeconomics or macroeconomics is more important
E)  whether economic theory is useful in explaining the behavior of actors in the economy

Question 14

Opportunity costs exist because

Accepted Answer

A)  there is a price attached to virtually every good or service
B)  technology is not fixed in the economy
C)  people have different tastes and preferences
D)  limited resources cannot satisfy all of the wants in society
E)  the production possibilities frontier is bowed in with respect to the origin

Question 15

The knowledge that students gain while in college is referred to by economists as human capital.

Accepted Answer

A) True 
 B)False

Question 16

The opportunity cost of a particular activity is the sum of the benefits that could have been received from all foregone activities.

Accepted Answer

A) True 
 B)False

Question 17

A professional basketball players' union negotiates a contract that dramatically increases all players' salaries.How would this influence the opportunity cost for a player who was considering giving up basketball to pursue a career in broadcasting?

Accepted Answer

A)  It would not affect the opportunity cost of playing basketball or of broadcasting.
B)  It would increase the opportunity cost of continuing to play professional basketball.
C)  It would cause the production possibilities frontier to become convex.
D)  It would increase the opportunity cost of becoming a broadcaster.
E)  It should have no bearing on the player's decision from an economic standpoint.

Question 18

Kate takes a part-time job and the sacrifice of study time causes her grade point average to fall from 3.5 to 2.9.Assume that the grade point average would have stayed at 3.5 if study time had not been reduced.The opportunity cost of having taken the job is the

Accepted Answer

A)  cost of tuition
B)  3.5 grade point average
C)  0.6 decrease in the grade point average
D)  2.9 grade point average
E)  money earned from the part-time job

Question 19

The ultimate purpose of an economic model is to

Accepted Answer

A)  explain reality as completely as possible
B)  establish assumptions that closely resemble reality
C)  help us understand economic behavior
D)  determine what each decision maker wants to maximize
E)  guide government policy decisions

Question 20

A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam

Accepted Answer

A)  is zero if he does not like any other compact disk
B)  is how much he would have enjoyed his second-favorite compact disk
C)  depends on the compact disks not sold by the store
D)  is negative
E)  is how much he would have enjoyed a compact disk by Vanilla Ice

Exam 1: What Is Economics

The opportunity cost of a particular activity is the sum of the benefits that could have been received from all foregone activities.

Correct AnswerverifiedShow Answer

Kate takes a part-time job and the sacrifice of study time causes her grade point average to fall from 3.5 to 2.9.Assume that the grade point average would have stayed at 3.5 if study time had not been reduced.The opportunity cost of having taken the job is the

Correct AnswerverifiedShow Answer

Society has to establish priorities among its goals because of

Correct AnswerverifiedShow Answer

A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam

Correct AnswerverifiedShow Answer

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

Correct AnswerverifiedShow Answer

The money we pay for a good or service

Correct AnswerverifiedShow Answer

If the president of Chile commented that "the crime rate in Chile is currently too high," this would be an example of a normative statement.

Correct AnswerverifiedShow Answer

Macroeconomics studies the determination of

Correct AnswerverifiedShow Answer

The ultimate purpose of an economic model is to

Correct AnswerverifiedShow Answer

Opportunity costs arise because of resource scarcity.

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Which of the following would be strictly a microeconomic topic?

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A professional basketball players' union negotiates a contract that dramatically increases all players' salaries.How would this influence the opportunity cost for a player who was considering giving up basketball to pursue a career in broadcasting?

Correct AnswerverifiedShow Answer

An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of

Correct AnswerverifiedShow Answer

Microeconomic topics include the overall unemployment rate in the United States and the rate of inflation.

Correct AnswerverifiedShow Answer

The knowledge that students gain while in college is referred to by economists as human capital.

Correct AnswerverifiedShow Answer

The opportunity cost of a particular economic activity

Correct AnswerverifiedShow Answer

Opportunity costs exist because

Correct AnswerverifiedShow Answer

The price that a firm's only competitor charges would be a

Correct AnswerverifiedShow Answer

The statement "The unemployment rate in the U.S.is 5 percent" is

Correct AnswerverifiedShow Answer

Which of the following is a normative statement?

Correct AnswerverifiedShow Answer

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