Test Bank for Principles of Macroeconomics, 12th Edition
Don't just study—practice smarter with Test Bank for Principles of Macroeconomics, 12th Edition, the perfect test prep tool.
Zoey Brown
Contributor
4.3
154
about 2 months ago
Preview (31 of 1444)
Sign in to access the full document!
1
Principles of Macroeconomics, 12e (Case)
Chapter 1 The Scope and Method of Economics
1.1 Why Study Economics?
1) Which of the following is not listed in the book as a reason to study economics?
A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
2) Among the fundamental concepts in economics are
A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Which of the following is the best definition of economics?
A) the study of how individuals and societies choose to use the scarce resources that nature and previous
generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Principles of Macroeconomics, 12e (Case)
Chapter 1 The Scope and Method of Economics
1.1 Why Study Economics?
1) Which of the following is not listed in the book as a reason to study economics?
A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
2) Among the fundamental concepts in economics are
A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Which of the following is the best definition of economics?
A) the study of how individuals and societies choose to use the scarce resources that nature and previous
generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
1
Principles of Macroeconomics, 12e (Case)
Chapter 1 The Scope and Method of Economics
1.1 Why Study Economics?
1) Which of the following is not listed in the book as a reason to study economics?
A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
2) Among the fundamental concepts in economics are
A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Which of the following is the best definition of economics?
A) the study of how individuals and societies choose to use the scarce resources that nature and previous
generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Principles of Macroeconomics, 12e (Case)
Chapter 1 The Scope and Method of Economics
1.1 Why Study Economics?
1) Which of the following is not listed in the book as a reason to study economics?
A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
2) Among the fundamental concepts in economics are
A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Which of the following is the best definition of economics?
A) the study of how individuals and societies choose to use the scarce resources that nature and previous
generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
2
4) The rise of the modern factory system in England during the late eighteenth and early nineteenth
centuries is known as the
A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
5) Which of the following statements is not correct?
A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) The study of economics
A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
7) Which of the following is not one of the three fundamental concepts of economics?
A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
Learning Outcome: Micro-1
4) The rise of the modern factory system in England during the late eighteenth and early nineteenth
centuries is known as the
A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
5) Which of the following statements is not correct?
A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) The study of economics
A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
7) Which of the following is not one of the three fundamental concepts of economics?
A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
Learning Outcome: Micro-1
2
4) The rise of the modern factory system in England during the late eighteenth and early nineteenth
centuries is known as the
A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
5) Which of the following statements is not correct?
A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) The study of economics
A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
7) Which of the following is not one of the three fundamental concepts of economics?
A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
Learning Outcome: Micro-1
4) The rise of the modern factory system in England during the late eighteenth and early nineteenth
centuries is known as the
A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
5) Which of the following statements is not correct?
A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) The study of economics
A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
7) Which of the following is not one of the three fundamental concepts of economics?
A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
Learning Outcome: Micro-1
3
8) Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you
arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the
additional $15 you pay for parking is an example of
A) an economic loss.
B) opportunity cost.
C) marginal cost.
D) an inefficient cost.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
9) You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost
$40 to assemble your costume. After spending $40 on the costume, you realize that the additional pieces
you need will cost you $25 more. The marginal cost of completing the costume is
A) $15.
B) $25.
C) $40.
D) $65.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
10) The concept of opportunity cost
A) is relevant only to economics.
B) can be applied to the analysis of any decision-making process.
C) applies to consumers but not to firms.
D) refers only to actual payments and incomes.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
11) Opportunity cost is
A) that which we forgo, or give up, when we make a choice or a decision.
B) a cost that cannot be avoided, regardless of what is done in the future.
C) the additional cost of producing an additional unit of output.
D) the additional cost of buying an additional unit of a product.
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
8) Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you
arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the
additional $15 you pay for parking is an example of
A) an economic loss.
B) opportunity cost.
C) marginal cost.
D) an inefficient cost.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
9) You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost
$40 to assemble your costume. After spending $40 on the costume, you realize that the additional pieces
you need will cost you $25 more. The marginal cost of completing the costume is
A) $15.
B) $25.
C) $40.
D) $65.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
10) The concept of opportunity cost
A) is relevant only to economics.
B) can be applied to the analysis of any decision-making process.
C) applies to consumers but not to firms.
D) refers only to actual payments and incomes.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
11) Opportunity cost is
A) that which we forgo, or give up, when we make a choice or a decision.
B) a cost that cannot be avoided, regardless of what is done in the future.
C) the additional cost of producing an additional unit of output.
D) the additional cost of buying an additional unit of a product.
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Loading page 4...
4
12) The reason that opportunity costs arise is that
A) an economy relies on money to facilitate exchange of goods and services.
B) resources are scarce.
C) there are no alternative decisions that could be made.
D) people have limited wants.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
13) Which of the following is not an opportunity cost of attending college?
A) the tuition you pay
B) the income you could have earned if you didn't attend college
C) the alternative uses of the time you spend studying
D) the cost of the food that you consume while you are attending college
Answer: D
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
14) If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours
per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and
board is $3,000 this semester (same as if not attending college), then your opportunity cost of attending
college this semester is
A) $5,600.
B) $5,900.
C) $10,100.
D) $11,600.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
12) The reason that opportunity costs arise is that
A) an economy relies on money to facilitate exchange of goods and services.
B) resources are scarce.
C) there are no alternative decisions that could be made.
D) people have limited wants.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
13) Which of the following is not an opportunity cost of attending college?
A) the tuition you pay
B) the income you could have earned if you didn't attend college
C) the alternative uses of the time you spend studying
D) the cost of the food that you consume while you are attending college
Answer: D
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
14) If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours
per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and
board is $3,000 this semester (same as if not attending college), then your opportunity cost of attending
college this semester is
A) $5,600.
B) $5,900.
C) $10,100.
D) $11,600.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
Loading page 5...
5
15) If your tuition is $25,000 this semester, your books cost $1,500, you can only work 20 rather than 40
hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room
and board is $7,500 this semester (same as if not attending college), then your opportunity cost of
attending college this semester is
A) $26,500.
B) $26,800.
C) $31,000.
D) $38,500.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
16) If you own a building and you decide to use that building to open a book store,
A) there is no opportunity cost of using this building for a book store because you own it.
B) there is an opportunity cost of using this building for a book store because it could have been used in
other ways.
C) the opportunity costs equal the cost of inventory.
D) the only cost relevant to this decision is the price you paid for the building.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
17) You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second
time
A) is zero.
B) is one-half the cost of the game, as this is the second time you have played it.
C) is the value of the alternative use of the time you spend playing the game.
D) cannot be calculated.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
15) If your tuition is $25,000 this semester, your books cost $1,500, you can only work 20 rather than 40
hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room
and board is $7,500 this semester (same as if not attending college), then your opportunity cost of
attending college this semester is
A) $26,500.
B) $26,800.
C) $31,000.
D) $38,500.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
16) If you own a building and you decide to use that building to open a book store,
A) there is no opportunity cost of using this building for a book store because you own it.
B) there is an opportunity cost of using this building for a book store because it could have been used in
other ways.
C) the opportunity costs equal the cost of inventory.
D) the only cost relevant to this decision is the price you paid for the building.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
17) You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second
time
A) is zero.
B) is one-half the cost of the game, as this is the second time you have played it.
C) is the value of the alternative use of the time you spend playing the game.
D) cannot be calculated.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 6...
6
18) That which we forgo, or give up, when we make a choice or decision is called
A) out-of-pocket cost.
B) marginal cost.
C) real cost.
D) opportunity cost.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
19) Economists often refer to risk-free ventures as
A) efficient market outcomes.
B) profit opportunities.
C) those with no opportunity costs.
D) break-even propositions.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
20) If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal cost of the
tenth DVD is
A) $4.
B) $13.
C) $14.
D) $130.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
Learning Outcome: Micro-1
21) If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then the marginal
cost of your 10th piece of sushi is
A) zero.
B) $2.
C) $200.
D) $2,000.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
18) That which we forgo, or give up, when we make a choice or decision is called
A) out-of-pocket cost.
B) marginal cost.
C) real cost.
D) opportunity cost.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
19) Economists often refer to risk-free ventures as
A) efficient market outcomes.
B) profit opportunities.
C) those with no opportunity costs.
D) break-even propositions.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
20) If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal cost of the
tenth DVD is
A) $4.
B) $13.
C) $14.
D) $130.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
Learning Outcome: Micro-1
21) If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then the marginal
cost of your 10th piece of sushi is
A) zero.
B) $2.
C) $200.
D) $2,000.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
Loading page 7...
7
22) A market in which profit opportunities are eliminated almost instantaneously is
A) a laissez-faire market.
B) a capitalist market.
C) a socialist market.
D) an efficient market.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
23) If information is less costly and more easily available, then usually this
A) makes markets more efficient.
B) makes markets less efficient.
C) increases profit opportunities.
D) increases the opportunity cost of acquiring more information.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
24) An efficient market is a market in which
A) everyone always gets what they want.
B) profit opportunities are eliminated almost instantaneously.
C) profits are always very high and persistent.
D) opportunity costs are zero.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
25) Related to the Economics in Practice on page 5: According to the Economics in Practice, a majority of the
$10 retail value of the Barbie doll
A) is needed to pay for the cost of the Taiwanese plastic used to make the dolls.
B) pays for the Chinese labor used to assemble the doll.
C) is captured in the United States.
D) goes to the Japanese manufacturer of the hair which is used for the dolls.
Answer: C
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Fact
Learning Outcome: Micro-1
22) A market in which profit opportunities are eliminated almost instantaneously is
A) a laissez-faire market.
B) a capitalist market.
C) a socialist market.
D) an efficient market.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
23) If information is less costly and more easily available, then usually this
A) makes markets more efficient.
B) makes markets less efficient.
C) increases profit opportunities.
D) increases the opportunity cost of acquiring more information.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
24) An efficient market is a market in which
A) everyone always gets what they want.
B) profit opportunities are eliminated almost instantaneously.
C) profits are always very high and persistent.
D) opportunity costs are zero.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
25) Related to the Economics in Practice on page 5: According to the Economics in Practice, a majority of the
$10 retail value of the Barbie doll
A) is needed to pay for the cost of the Taiwanese plastic used to make the dolls.
B) pays for the Chinese labor used to assemble the doll.
C) is captured in the United States.
D) goes to the Japanese manufacturer of the hair which is used for the dolls.
Answer: C
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Fact
Learning Outcome: Micro-1
Loading page 8...
8
26) Related to the Economics in Practice on page 5: The opportunity cost to Mattel of having its Barbie doll
assembled in China is
A) the low wages paid to Chinese workers.
B) the $2 export value the doll carries when it leaves Hong Kong.
C) the $8 of its $10 retail value which is captured in the United States.
D) having the Barbie doll assembled in the next best available location.
Answer: D
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
27) The reasons to study economics include which of the following?
A) to be an informed citizen
B) to understand society
C) to learn a way of thinking
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
28) Marginalism is
A) the best alternative that we forgo when making a decision.
B) the study of how societies choose to use scarce resources.
C) a market situation in which profit opportunities are eliminated almost instantaneously.
D) the process of analyzing the additional costs or benefits arising from a decision.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
29) Economics is best defined as the study of
A) financial decision making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
26) Related to the Economics in Practice on page 5: The opportunity cost to Mattel of having its Barbie doll
assembled in China is
A) the low wages paid to Chinese workers.
B) the $2 export value the doll carries when it leaves Hong Kong.
C) the $8 of its $10 retail value which is captured in the United States.
D) having the Barbie doll assembled in the next best available location.
Answer: D
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
27) The reasons to study economics include which of the following?
A) to be an informed citizen
B) to understand society
C) to learn a way of thinking
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
28) Marginalism is
A) the best alternative that we forgo when making a decision.
B) the study of how societies choose to use scarce resources.
C) a market situation in which profit opportunities are eliminated almost instantaneously.
D) the process of analyzing the additional costs or benefits arising from a decision.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
29) Economics is best defined as the study of
A) financial decision making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Loading page 9...
9
30) The Industrial Revolution refers to the rise of the modern factory system in ________ during the late
eighteenth and early nineteenth centuries.
A) the United States
B) England
C) France
D) Germany
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
31) Which of the following statements is correct?
A) Economics is a natural science.
B) In large measure, economics is the study of how people make choices.
C) If poverty was eliminated there would be no reason to study economics.
D) Economic analysis can be used to explain how societies, but not individuals, make decisions.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
32) Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
33) You decide to go to LEGOLAND after you visit Disneyworld in Orlando. The cost of going to
LEGOLAND after you visit Disneyworld is the ________ cost of getting from Disneyworld to
LEGOLAND.
A) efficiency
B) marginal time and money
C) opportunity
D) profit-maximizing
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
30) The Industrial Revolution refers to the rise of the modern factory system in ________ during the late
eighteenth and early nineteenth centuries.
A) the United States
B) England
C) France
D) Germany
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
31) Which of the following statements is correct?
A) Economics is a natural science.
B) In large measure, economics is the study of how people make choices.
C) If poverty was eliminated there would be no reason to study economics.
D) Economic analysis can be used to explain how societies, but not individuals, make decisions.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
32) Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
33) You decide to go to LEGOLAND after you visit Disneyworld in Orlando. The cost of going to
LEGOLAND after you visit Disneyworld is the ________ cost of getting from Disneyworld to
LEGOLAND.
A) efficiency
B) marginal time and money
C) opportunity
D) profit-maximizing
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 10...
10
34) Suppose that you sign up for a one-day cooking class at the local culinary school for $75. Once you
arrive at the class, you discover that you must purchase an apron for an additional $5. In this situation,
the additional $5 you pay for the apron is an example of
A) an inefficient cost.
B) marginal cost.
C) opportunity cost.
D) an economic loss.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
35) You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it
will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the
additional pieces you need will cost you $20 more. The marginal cost of completing the costume is
A) $20.
B) $60.
C) $80.
D) $100.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
36) You have narrowed down your Friday night plans to either going bowling or playing billiards. If you
choose to go bowling, then for you playing billiards is the ________ of going bowling.
A) opportunity cost
B) marginal cost
C) empirical cost
D) variable cost
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
34) Suppose that you sign up for a one-day cooking class at the local culinary school for $75. Once you
arrive at the class, you discover that you must purchase an apron for an additional $5. In this situation,
the additional $5 you pay for the apron is an example of
A) an inefficient cost.
B) marginal cost.
C) opportunity cost.
D) an economic loss.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
35) You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it
will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the
additional pieces you need will cost you $20 more. The marginal cost of completing the costume is
A) $20.
B) $60.
C) $80.
D) $100.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
36) You have narrowed down your Friday night plans to either going bowling or playing billiards. If you
choose to go bowling, then for you playing billiards is the ________ of going bowling.
A) opportunity cost
B) marginal cost
C) empirical cost
D) variable cost
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 11...
11
37) That which we forgo, or give up, when we make a choice or a decision is known as
A) equity.
B) causation.
C) correlation.
D) opportunity cost.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
38) Scarce resources give rise to the concept of
A) efficient markets.
B) opportunity costs.
C) laissez-faire.
D) positive economics.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
39) Which of the following is an opportunity cost of attending college?
A) the cost of your apartment or dorm
B) the income you could have earned if you didn't attend college
C) the cost of the food that you consume while you are attending college
D) the education you gain from attending college
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
40) If your tuition is $2,000 this semester, your books cost $400, you can only work 10 rather than 40 hours
per week during the 15 weeks you are taking classes and you make $12 per hour, and your room and
board is $4,000 this semester (same as if not attending college), then your opportunity cost of attending
college this semester is
A) $2,400.
B) $2,760.
C) $7,800.
D) $11,800.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
37) That which we forgo, or give up, when we make a choice or a decision is known as
A) equity.
B) causation.
C) correlation.
D) opportunity cost.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
38) Scarce resources give rise to the concept of
A) efficient markets.
B) opportunity costs.
C) laissez-faire.
D) positive economics.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
Learning Outcome: Micro-1
39) Which of the following is an opportunity cost of attending college?
A) the cost of your apartment or dorm
B) the income you could have earned if you didn't attend college
C) the cost of the food that you consume while you are attending college
D) the education you gain from attending college
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
40) If your tuition is $2,000 this semester, your books cost $400, you can only work 10 rather than 40 hours
per week during the 15 weeks you are taking classes and you make $12 per hour, and your room and
board is $4,000 this semester (same as if not attending college), then your opportunity cost of attending
college this semester is
A) $2,400.
B) $2,760.
C) $7,800.
D) $11,800.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
Loading page 12...
12
41) If your tuition is $20,000 this semester, your books cost $2,000, you can only work 10 rather than 40
hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room
and board is $8,000 this semester (same as if not attending college), then your opportunity cost of
attending college this semester is
A) $22,000.
B) $22,150.
C) $28,750.
D) $36,750.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
42) If you own a condo and you decide to lease it to your cousin,
A) there is no opportunity cost of leasing the condo because you own it.
B) there is an opportunity cost of leasing the condo because you could have chosen to live in it.
C) there is no opportunity cost of leasing the condo because you collect rent from your cousin.
D) the only cost relevant to this decision is the price you paid for the condo.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
43) You own American Sniper on DVD. The opportunity cost of watching this DVD for the fourth time
A) is zero, since you own it.
B) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.
C) is the value of the alternative use of the time you spend watching the DVD.
D) must be the same as the opportunity cost of watching it the first time.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
44) Opportunity cost is
A) what we give up to get something else.
B) marginal cost divided by total cost.
C) the same as real cost.
D) all of the above
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
41) If your tuition is $20,000 this semester, your books cost $2,000, you can only work 10 rather than 40
hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room
and board is $8,000 this semester (same as if not attending college), then your opportunity cost of
attending college this semester is
A) $22,000.
B) $22,150.
C) $28,750.
D) $36,750.
Answer: C
Diff: 3
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
42) If you own a condo and you decide to lease it to your cousin,
A) there is no opportunity cost of leasing the condo because you own it.
B) there is an opportunity cost of leasing the condo because you could have chosen to live in it.
C) there is no opportunity cost of leasing the condo because you collect rent from your cousin.
D) the only cost relevant to this decision is the price you paid for the condo.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
43) You own American Sniper on DVD. The opportunity cost of watching this DVD for the fourth time
A) is zero, since you own it.
B) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.
C) is the value of the alternative use of the time you spend watching the DVD.
D) must be the same as the opportunity cost of watching it the first time.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
44) Opportunity cost is
A) what we give up to get something else.
B) marginal cost divided by total cost.
C) the same as real cost.
D) all of the above
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Loading page 13...
13
45) Economists often refer to "good deals" as
A) profit opportunities.
B) break-even propositions.
C) efficient market outcomes.
D) those with no opportunity cost.
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
46) If you can download 10 ring tones for your cell phone for $10 or you could download 11 ring tones for
your cell phone for $10.50, then the marginal cost of the eleventh ring tone is
A) $0.50.
B) $10.00.
C) $10.50.
D) $20.50.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
47) If you eat at a Las Vegas casino that charges $12 for its all you can eat buffet, then the marginal cost of
your third trip to the buffet is
A) zero.
B) $4.
C) $12.
D) $36.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
48) An efficient market is a market
A) that deals in unlimited resources.
B) in which long-term profits are guaranteed.
C) in which profit opportunities are eliminated almost instantaneously.
D) in which there are no opportunity costs.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
45) Economists often refer to "good deals" as
A) profit opportunities.
B) break-even propositions.
C) efficient market outcomes.
D) those with no opportunity cost.
Answer: A
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
46) If you can download 10 ring tones for your cell phone for $10 or you could download 11 ring tones for
your cell phone for $10.50, then the marginal cost of the eleventh ring tone is
A) $0.50.
B) $10.00.
C) $10.50.
D) $20.50.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
47) If you eat at a Las Vegas casino that charges $12 for its all you can eat buffet, then the marginal cost of
your third trip to the buffet is
A) zero.
B) $4.
C) $12.
D) $36.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-1
48) An efficient market is a market
A) that deals in unlimited resources.
B) in which long-term profits are guaranteed.
C) in which profit opportunities are eliminated almost instantaneously.
D) in which there are no opportunity costs.
Answer: C
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Loading page 14...
14
49) If information is more costly and less easily available, then usually this
A) makes markets more efficient.
B) makes markets less efficient.
C) decreases profit opportunities.
D) decreases the opportunity cost of acquiring more information.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
50) The common way of expressing the efficient market concept is
A) "the only true market is a profitable market."
B) "there's no such thing as a free lunch."
C) "only without government interference can a market survive."
D) "once an efficient market, always an efficient market."
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
51) Opportunity cost is
A) the additional cost incurred from the consumption of one more unit of output.
B) the cost involved when choosing between alternatives.
C) the cost of production which cannot be recaptured.
D) the total cost incurred from the consumption of additional output.
Answer: B
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
52) The cost involved when choosing between alternatives is known as the
A) marginal cost.
B) sunk cost.
C) opportunity cost.
D) normative cost.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
49) If information is more costly and less easily available, then usually this
A) makes markets more efficient.
B) makes markets less efficient.
C) decreases profit opportunities.
D) decreases the opportunity cost of acquiring more information.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
50) The common way of expressing the efficient market concept is
A) "the only true market is a profitable market."
B) "there's no such thing as a free lunch."
C) "only without government interference can a market survive."
D) "once an efficient market, always an efficient market."
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
51) Opportunity cost is
A) the additional cost incurred from the consumption of one more unit of output.
B) the cost involved when choosing between alternatives.
C) the cost of production which cannot be recaptured.
D) the total cost incurred from the consumption of additional output.
Answer: B
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
52) The cost involved when choosing between alternatives is known as the
A) marginal cost.
B) sunk cost.
C) opportunity cost.
D) normative cost.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Loading page 15...
15
53) Related to the Economics in Practice on p. 5: According to the Economics in Practice, ________ of the $10
retail value of a Barbie doll is captured in the United States.
A) none
B) 35 cents
C) $2
D) $8
Answer: D
Diff: 1
Topic: Why Study Economics?: Economics in Practice
Skill: Fact
Learning Outcome: Micro-1
54) Related to the Economics in Practice on p. 5: The opportunity cost to Apple of having the hard drive
produced in Japan by Toshiba is
A) the wages paid to Japanese workers.
B) the components of the hard drive which are not produced by Toshiba.
C) having the hard drive produced by the next best available company.
D) the value-added captured by Apple in the United States.
Answer: C
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
55) Resources are unlimited in a wealthy society.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
56) The value of the best alternative foregone is the opportunity cost of making a decision.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
57) Opportunity costs arise due to scarce resources.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
53) Related to the Economics in Practice on p. 5: According to the Economics in Practice, ________ of the $10
retail value of a Barbie doll is captured in the United States.
A) none
B) 35 cents
C) $2
D) $8
Answer: D
Diff: 1
Topic: Why Study Economics?: Economics in Practice
Skill: Fact
Learning Outcome: Micro-1
54) Related to the Economics in Practice on p. 5: The opportunity cost to Apple of having the hard drive
produced in Japan by Toshiba is
A) the wages paid to Japanese workers.
B) the components of the hard drive which are not produced by Toshiba.
C) having the hard drive produced by the next best available company.
D) the value-added captured by Apple in the United States.
Answer: C
Diff: 2
Topic: Why Study Economics?: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
55) Resources are unlimited in a wealthy society.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
56) The value of the best alternative foregone is the opportunity cost of making a decision.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
57) Opportunity costs arise due to scarce resources.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 16...
16
58) Marginal cost refers to the incremental cost arising from a decision.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
59) A market is considered efficient if profit opportunities remain continually available.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
60) Resources are limited in both wealthy and poor societies.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
61) A basic understanding of economics is needed to be an informed citizen.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
62) Opportunity costs are another name for marginal costs.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
63) The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of
efficient markets.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
64) Studying economics helps us to better understand society.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
58) Marginal cost refers to the incremental cost arising from a decision.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
59) A market is considered efficient if profit opportunities remain continually available.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
60) Resources are limited in both wealthy and poor societies.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
61) A basic understanding of economics is needed to be an informed citizen.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
62) Opportunity costs are another name for marginal costs.
Answer: FALSE
Diff: 1
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
63) The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of
efficient markets.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
64) Studying economics helps us to better understand society.
Answer: TRUE
Diff: 1
Topic: Why Study Economics?
Skill: Definition
Learning Outcome: Micro-1
Loading page 17...
17
1.2 The Scope of Economics
1) The branch of economics that examines the functioning of individual industries and the behavior of
individual decision-making units is
A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
2) Studying how the management of Hewlett Packard decides how many computers to produce and the
price to charge for its computers would be considered
A) descriptive economics.
B) empirical economics.
C) microeconomics.
D) macroeconomics.
Answer: C
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Studying how Joshua allocates his time between school and video games is an example of
A) macroeconomics.
B) microeconomics.
C) industrial organization.
D) descriptive economics.
Answer: B
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
4) The study of how benefits are determined for city employees would be considered
A) microeconomics.
B) macroeconomics.
C) descriptive economics.
D) institutional economics.
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
1.2 The Scope of Economics
1) The branch of economics that examines the functioning of individual industries and the behavior of
individual decision-making units is
A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
2) Studying how the management of Hewlett Packard decides how many computers to produce and the
price to charge for its computers would be considered
A) descriptive economics.
B) empirical economics.
C) microeconomics.
D) macroeconomics.
Answer: C
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) Studying how Joshua allocates his time between school and video games is an example of
A) macroeconomics.
B) microeconomics.
C) industrial organization.
D) descriptive economics.
Answer: B
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
4) The study of how benefits are determined for city employees would be considered
A) microeconomics.
B) macroeconomics.
C) descriptive economics.
D) institutional economics.
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 18...
18
5) Inflation and unemployment
A) are the focus of normative economics.
B) are a focus of microeconomics.
C) are a focus of positive economics.
D) are a focus of macroeconomics.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) Microeconomics is best described as the study of
A) the choices made by individual households, firms, and governments.
B) inflation, unemployment, gross national product, and the nation's economy as a whole.
C) how markets interact in the aggregate economy.
D) marginal changes in the economy.
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
7) Macroeconomics is best described as the study of
A) very large issues.
B) the choices made by individual households, firms, and governments.
C) the nation's economy as a whole.
D) the relationship between inflation and wage inequality.
Answer: C
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
8) Which of the following is a microeconomics question?
A) Is it sensible for a government to subsidize tobacco production?
B) Why do some countries grow faster than others?
C) Should Congress and the president take action to reduce global warming?
D) Should the government attempt to influence the interest rate to lower inflation?
Answer: A
Diff: 2
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
5) Inflation and unemployment
A) are the focus of normative economics.
B) are a focus of microeconomics.
C) are a focus of positive economics.
D) are a focus of macroeconomics.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) Microeconomics is best described as the study of
A) the choices made by individual households, firms, and governments.
B) inflation, unemployment, gross national product, and the nation's economy as a whole.
C) how markets interact in the aggregate economy.
D) marginal changes in the economy.
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
7) Macroeconomics is best described as the study of
A) very large issues.
B) the choices made by individual households, firms, and governments.
C) the nation's economy as a whole.
D) the relationship between inflation and wage inequality.
Answer: C
Diff: 1
Topic: The Scope of Economics
Skill: Definition
Learning Outcome: Micro-1
8) Which of the following is a microeconomics question?
A) Is it sensible for a government to subsidize tobacco production?
B) Why do some countries grow faster than others?
C) Should Congress and the president take action to reduce global warming?
D) Should the government attempt to influence the interest rate to lower inflation?
Answer: A
Diff: 2
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 19...
19
9) Which of the following is a macroeconomics question?
A) Should we have a constitutional amendment to balance the federal budget?
B) Why does a firm decide to enter a particular market?
C) Should the government prevent the merger of two large firms?
D) Should the government put a tax on alcohol in an attempt to reduce highway fatalities?
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
10) We can use macroeconomic analysis to
A) learn how to balance a checkbook.
B) study the choices made by households.
C) understand marginal changes in the macroeconomy.
D) understand why economies grow.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
11) The rate of economic growth is a topic of microeconomics.
Answer: FALSE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
12) The aggregate price level is a topic of macroeconomics.
Answer: TRUE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
13) The rate of unemployment is a topic of microeconomics.
Answer: FALSE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
9) Which of the following is a macroeconomics question?
A) Should we have a constitutional amendment to balance the federal budget?
B) Why does a firm decide to enter a particular market?
C) Should the government prevent the merger of two large firms?
D) Should the government put a tax on alcohol in an attempt to reduce highway fatalities?
Answer: A
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
10) We can use macroeconomic analysis to
A) learn how to balance a checkbook.
B) study the choices made by households.
C) understand marginal changes in the macroeconomy.
D) understand why economies grow.
Answer: D
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
11) The rate of economic growth is a topic of microeconomics.
Answer: FALSE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
12) The aggregate price level is a topic of macroeconomics.
Answer: TRUE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
13) The rate of unemployment is a topic of microeconomics.
Answer: FALSE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 20...
20
14) The rate of inflation is a topic of macroeconomics.
Answer: TRUE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
1.3 The Method of Economics
1) Better insurance benefits increase the incentive of some individuals to work. This statement is best
described as
A) a positive statement.
B) an example of the ceteris paribus assumption.
C) a normative statement.
D) a comparative economics statement.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
2) The government should extend the duration of unemployment benefits to those workers who lost their
jobs due to outsourcing. This statement is best described as
A) an example of marginalism.
B) an example of the fallacy of composition.
C) a normative statement.
D) a positive statement.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) The amount of education that one has is an important factor in the determination of his or her wage
rate. This is best described as
A) a positive statement.
B) an example of the fallacy of composition.
C) a normative statement.
D) an example of marginalism.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
14) The rate of inflation is a topic of macroeconomics.
Answer: TRUE
Diff: 1
Topic: The Scope of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
1.3 The Method of Economics
1) Better insurance benefits increase the incentive of some individuals to work. This statement is best
described as
A) a positive statement.
B) an example of the ceteris paribus assumption.
C) a normative statement.
D) a comparative economics statement.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
2) The government should extend the duration of unemployment benefits to those workers who lost their
jobs due to outsourcing. This statement is best described as
A) an example of marginalism.
B) an example of the fallacy of composition.
C) a normative statement.
D) a positive statement.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
3) The amount of education that one has is an important factor in the determination of his or her wage
rate. This is best described as
A) a positive statement.
B) an example of the fallacy of composition.
C) a normative statement.
D) an example of marginalism.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 21...
21
4) Positive economics is an approach to economics that
A) seeks to understand behavior and the operation of systems while making judgments about their
usefulness to society.
B) analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred
courses of action.
C) seeks to understand behavior and the operation of systems without making judgments.
D) examines the role of government in the economy.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
5) Normative economics is an approach to economics that
A) seeks to understand behavior and the operation of systems without making judgments.
B) analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred
courses of action.
C) applies statistical techniques and data to economic problems.
D) examines the role of government in the economy.
Answer: B
Diff: 1
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) Which of the following is a normative question?
A) Why do gasoline prices increase between Memorial Day and Labor Day?
B) What will happen to gasoline consumption if the federal tax on gasoline is eliminated?
C) To reduce the regressive nature of the gasoline excise tax, should the portion of the gasoline excise tax
paid by high-income individuals be increased?
D) How will oil exploration be affected if the government subsidizes oil producers?
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
4) Positive economics is an approach to economics that
A) seeks to understand behavior and the operation of systems while making judgments about their
usefulness to society.
B) analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred
courses of action.
C) seeks to understand behavior and the operation of systems without making judgments.
D) examines the role of government in the economy.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
5) Normative economics is an approach to economics that
A) seeks to understand behavior and the operation of systems without making judgments.
B) analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred
courses of action.
C) applies statistical techniques and data to economic problems.
D) examines the role of government in the economy.
Answer: B
Diff: 1
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
6) Which of the following is a normative question?
A) Why do gasoline prices increase between Memorial Day and Labor Day?
B) What will happen to gasoline consumption if the federal tax on gasoline is eliminated?
C) To reduce the regressive nature of the gasoline excise tax, should the portion of the gasoline excise tax
paid by high-income individuals be increased?
D) How will oil exploration be affected if the government subsidizes oil producers?
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 22...
22
7) Which of the following is a positive question?
A) Will the level of teenage unemployment increase if the minimum wage is increased?
B) Should the minimum wage be set at one-half the average manufacturing wage to guarantee
individuals a decent standard of living?
C) Wouldn't it be more equitable if the minimum wage increased automatically with the cost of living?
D) Wouldn't it be better to try to increase people's wages through job-training programs rather than by
requiring employers to pay minimum wages?
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
8) Health insurance should be provided to every citizen in a wealthy nation such as the United States.
This statement is best described as
A) a positive statement.
B) a normative statement.
C) a marginal statement.
D) an implication of an efficient market.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
9) There is great concern over the idea that citizens should have to provide specific identification to be
able to vote in elections. A study of the costs and benefits of implementing a voter identification program
is an example of
A) laissez-faire economics.
B) positive economics.
C) labor economics.
D) normative economics.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
7) Which of the following is a positive question?
A) Will the level of teenage unemployment increase if the minimum wage is increased?
B) Should the minimum wage be set at one-half the average manufacturing wage to guarantee
individuals a decent standard of living?
C) Wouldn't it be more equitable if the minimum wage increased automatically with the cost of living?
D) Wouldn't it be better to try to increase people's wages through job-training programs rather than by
requiring employers to pay minimum wages?
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
8) Health insurance should be provided to every citizen in a wealthy nation such as the United States.
This statement is best described as
A) a positive statement.
B) a normative statement.
C) a marginal statement.
D) an implication of an efficient market.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
9) There is great concern over the idea that citizens should have to provide specific identification to be
able to vote in elections. A study of the costs and benefits of implementing a voter identification program
is an example of
A) laissez-faire economics.
B) positive economics.
C) labor economics.
D) normative economics.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 23...
23
10) A measure that can change from observation to observation is known as a(n)
A) empirical measure.
B) model.
C) causality.
D) variable.
Answer: D
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
11) A formal statement of a theory is known as a(n)
A) model.
B) positive statement.
C) empirical measure.
D) causal statement.
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Refer to Scenario 1.1 below to answer the questions that follow.
SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the
level of teenage unemployment. The economist collects data on the values of the minimum wage and the
levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum
wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the
minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment
among teenagers.
12) Refer to Scenario 1.1. The statement that a 1% increase in the minimum wage causes a 0.2% increase in
teenage unemployment is an example of
A) equity.
B) normative economics.
C) positive economics.
D) Ockham's razor.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
10) A measure that can change from observation to observation is known as a(n)
A) empirical measure.
B) model.
C) causality.
D) variable.
Answer: D
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
11) A formal statement of a theory is known as a(n)
A) model.
B) positive statement.
C) empirical measure.
D) causal statement.
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Refer to Scenario 1.1 below to answer the questions that follow.
SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the
level of teenage unemployment. The economist collects data on the values of the minimum wage and the
levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum
wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the
minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment
among teenagers.
12) Refer to Scenario 1.1. The statement that a 1% increase in the minimum wage causes a 0.2% increase in
teenage unemployment is an example of
A) equity.
B) normative economics.
C) positive economics.
D) Ockham's razor.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 24...
24
13) Refer to Scenario 1.1. The statement, "the minimum wage is harmful to teenagers and should be
reduced or eliminated to increase employment among teenagers," is an example of
A) marginal economics.
B) normative economics.
C) positive economics.
D) Ockham's razor.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
14) Refer to Scenario 1.1. The collection and use of the data on minimum wage and teenage
unemployment over time is an example of
A) law and economics.
B) economic history.
C) econometrics.
D) empirical economics.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
15) Refer to Scenario 1.1. The statement that an increase in the minimum wage causes an increase in
teenage unemployment is an example of
A) a fallacy.
B) an economic theory.
C) normative economics.
D) deductive reasoning.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
16) Refer to Scenario 1.1. A graph of the value of the minimum wage on one axis and the level of teenage
unemployment on the other axis is an example of
A) an economic theory.
B) an economic model.
C) inductive reasoning.
D) a variable theory.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
13) Refer to Scenario 1.1. The statement, "the minimum wage is harmful to teenagers and should be
reduced or eliminated to increase employment among teenagers," is an example of
A) marginal economics.
B) normative economics.
C) positive economics.
D) Ockham's razor.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
14) Refer to Scenario 1.1. The collection and use of the data on minimum wage and teenage
unemployment over time is an example of
A) law and economics.
B) economic history.
C) econometrics.
D) empirical economics.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
15) Refer to Scenario 1.1. The statement that an increase in the minimum wage causes an increase in
teenage unemployment is an example of
A) a fallacy.
B) an economic theory.
C) normative economics.
D) deductive reasoning.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
16) Refer to Scenario 1.1. A graph of the value of the minimum wage on one axis and the level of teenage
unemployment on the other axis is an example of
A) an economic theory.
B) an economic model.
C) inductive reasoning.
D) a variable theory.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 25...
25
17) To isolate the impact of one single factor, economists invoke the assumption of
A) inductive reasoning.
B) Ockham's razor.
C) ceteris paribus.
D) post hoc, ergo propter hoc.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
18) The principle that irrelevant detail should not be included in a model is known as
A) a fallacy.
B) ceteris paribus.
C) Ockham's razor.
D) normative economics.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
19) Economists use the phrase ceteris paribus to express the assumption
A) "all else equal."
B) "everything affects everything else."
C) "scarcity is a fact of life."
D) "there is no such thing as a free lunch."
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
20) The Latin phrase economists use that means all else equal is
A) ceteris paribus.
B) cogito ergo sum.
C) carpe diem.
D) caveat emptor.
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
17) To isolate the impact of one single factor, economists invoke the assumption of
A) inductive reasoning.
B) Ockham's razor.
C) ceteris paribus.
D) post hoc, ergo propter hoc.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
18) The principle that irrelevant detail should not be included in a model is known as
A) a fallacy.
B) ceteris paribus.
C) Ockham's razor.
D) normative economics.
Answer: C
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
19) Economists use the phrase ceteris paribus to express the assumption
A) "all else equal."
B) "everything affects everything else."
C) "scarcity is a fact of life."
D) "there is no such thing as a free lunch."
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
20) The Latin phrase economists use that means all else equal is
A) ceteris paribus.
B) cogito ergo sum.
C) carpe diem.
D) caveat emptor.
Answer: A
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Loading page 26...
26
21) Marco observed that every time the temperature rises above 90 degrees, he forgets to take out the
trash. Based on this observation he concluded that temperatures above 90 degrees result in temporary
memory loss. In actuality, Marco
A) committed the fallacy of logic.
B) committed the ceteris paribus error.
C) was confusing causality.
D) showed good reasoning relating to the relationship between temperatures and memory.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
22) Whenever the Democrats gain control of the Congress, spending on social programs increases;
whenever Republicans gain control of the Congress, spending on defense increases. Hence, we know
what the next party in control will do. This statement is an example of the
A) fallacy of inductive reasoning.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of stability.
D) ceteris paribus fallacy.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
23) Whenever I go to the grocery store, I always stop at Starbucks on the way home. Therefore, going to
the grocery store causes me to go to Starbucks. This statement is an example of the
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of inductive reasoning.
D) ceteris paribus fallacy.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
21) Marco observed that every time the temperature rises above 90 degrees, he forgets to take out the
trash. Based on this observation he concluded that temperatures above 90 degrees result in temporary
memory loss. In actuality, Marco
A) committed the fallacy of logic.
B) committed the ceteris paribus error.
C) was confusing causality.
D) showed good reasoning relating to the relationship between temperatures and memory.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
22) Whenever the Democrats gain control of the Congress, spending on social programs increases;
whenever Republicans gain control of the Congress, spending on defense increases. Hence, we know
what the next party in control will do. This statement is an example of the
A) fallacy of inductive reasoning.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of stability.
D) ceteris paribus fallacy.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
23) Whenever I go to the grocery store, I always stop at Starbucks on the way home. Therefore, going to
the grocery store causes me to go to Starbucks. This statement is an example of the
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of inductive reasoning.
D) ceteris paribus fallacy.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 27...
27
24) The economy was expanding during all of the years that I was a student, but as soon as I graduated,
the economy contracted. Therefore, the labor market was waiting until I started looking for a job to
contract. This statement is an example of the
A) ceteris paribus fallacy.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of logic.
D) fallacy of inductive reasoning.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
25) Every citizen in the United States should be required to become licensed to carry a firearm for the
sake of protection. This statement is best described as
A) a positive statement.
B) a normative statement.
C) a marginal statement.
D) an implication of an efficient market.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
26) Rent control laws are imposed when city officials believe landlords have been exploiting tenants.
Which of the following criteria are they using to guide their actions?
A) efficiency
B) equity
C) growth
D) stability
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
24) The economy was expanding during all of the years that I was a student, but as soon as I graduated,
the economy contracted. Therefore, the labor market was waiting until I started looking for a job to
contract. This statement is an example of the
A) ceteris paribus fallacy.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of logic.
D) fallacy of inductive reasoning.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
25) Every citizen in the United States should be required to become licensed to carry a firearm for the
sake of protection. This statement is best described as
A) a positive statement.
B) a normative statement.
C) a marginal statement.
D) an implication of an efficient market.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
26) Rent control laws are imposed when city officials believe landlords have been exploiting tenants.
Which of the following criteria are they using to guide their actions?
A) efficiency
B) equity
C) growth
D) stability
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 28...
28
27) A government policy that tries to minimize inflation and unemployment can best be described as
trying to achieve economic
A) efficiency.
B) equity.
C) profitability.
D) stability.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
28) Redistribution of income from the rich to the poor is achieved from a tax system that requires taxes to
rise with income. Which of the following criteria best explains the goal of this tax system?
A) efficiency
B) equity
C) growth
D) stability
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
29) Normative economics ________ and positive economics ________.
A) involves judgments; does not involve judgments
B) involves judgments; also involves judgments
C) does not involve judgments; involves judgments
D) does not involve judgments; also does not involve judgments
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
30) It always rains about an hour after you finish washing your car. Concluding that washing your car
caused it to rain is an example of the
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of inductive reasoning.
D) ceteris paribus conditions.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
27) A government policy that tries to minimize inflation and unemployment can best be described as
trying to achieve economic
A) efficiency.
B) equity.
C) profitability.
D) stability.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
28) Redistribution of income from the rich to the poor is achieved from a tax system that requires taxes to
rise with income. Which of the following criteria best explains the goal of this tax system?
A) efficiency
B) equity
C) growth
D) stability
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
29) Normative economics ________ and positive economics ________.
A) involves judgments; does not involve judgments
B) involves judgments; also involves judgments
C) does not involve judgments; involves judgments
D) does not involve judgments; also does not involve judgments
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
30) It always rains about an hour after you finish washing your car. Concluding that washing your car
caused it to rain is an example of the
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) fallacy of inductive reasoning.
D) ceteris paribus conditions.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
Loading page 29...
29
31) Debbie observes that leaves fall from trees before the fist day of winter, and concludes that the falling
leaves cause winter to begin. This is an example of
A) ceteris paribus.
B) the post hoc, ergo propter hoc fallacy.
C) the fallacy of logic.
D) Ockham's razor.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
32) You have observed that every time you do 30 minutes of cardio exercise before taking an exam you
get an A. You therefore conclude that to get an A on an exam, all you have to do is 30 minutes of cardio
exercise before you take an exam. You have committed the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) post hoc, ergo propter hoc fallacy.
D) fallacy of division.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
33) If you observe that Event A happens before Event B happens, and you erroneously conclude that
Event A caused Event B, you would be guilty of an error called the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) fallacy of ceteris paribus.
D) post hoc, ergo propter hoc fallacy.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
34) The mistake of inferring causality from two events happening one after the other is called
A) the post hoc, ergo propter hoc fallacy.
B) the fallacy of composition.
C) Ockham's razor.
D) the fallacy of co-dependence.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
31) Debbie observes that leaves fall from trees before the fist day of winter, and concludes that the falling
leaves cause winter to begin. This is an example of
A) ceteris paribus.
B) the post hoc, ergo propter hoc fallacy.
C) the fallacy of logic.
D) Ockham's razor.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
32) You have observed that every time you do 30 minutes of cardio exercise before taking an exam you
get an A. You therefore conclude that to get an A on an exam, all you have to do is 30 minutes of cardio
exercise before you take an exam. You have committed the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) post hoc, ergo propter hoc fallacy.
D) fallacy of division.
Answer: C
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
33) If you observe that Event A happens before Event B happens, and you erroneously conclude that
Event A caused Event B, you would be guilty of an error called the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) fallacy of ceteris paribus.
D) post hoc, ergo propter hoc fallacy.
Answer: D
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
34) The mistake of inferring causality from two events happening one after the other is called
A) the post hoc, ergo propter hoc fallacy.
B) the fallacy of composition.
C) Ockham's razor.
D) the fallacy of co-dependence.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Loading page 30...
30
35) The post hoc, ergo propter hoc fallacy is the belief that
A) if Event A happens before Event B happens, then Event A causes Event B to occur.
B) what is true for the whole is necessarily true of the parts.
C) what is true for a part is necessarily true for the whole.
D) it is impossible to draw generalizations about cause and effect.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
36) The collection and use of data to test economic theories is
A) empirical economics.
B) descriptive economics.
C) normative economics.
D) positive economics.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
37) A change in economic output is potentially efficient
A) if the value of the resulting gains exceeds the value of the resulting losses.
B) if the value of the resulting gains exactly equals the value of the resulting losses.
C) only if no one is made worse off.
D) if the value of the resulting gains is less than the value of the resulting losses.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
38) An efficient economy is an economy
A) in which output is steady or growing and there is low inflation.
B) that produces what consumers demand and does so at the least possible cost.
C) that distributes output equally among all consumers.
D) in which there is a fair distribution of wealth.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
35) The post hoc, ergo propter hoc fallacy is the belief that
A) if Event A happens before Event B happens, then Event A causes Event B to occur.
B) what is true for the whole is necessarily true of the parts.
C) what is true for a part is necessarily true for the whole.
D) it is impossible to draw generalizations about cause and effect.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
36) The collection and use of data to test economic theories is
A) empirical economics.
B) descriptive economics.
C) normative economics.
D) positive economics.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
37) A change in economic output is potentially efficient
A) if the value of the resulting gains exceeds the value of the resulting losses.
B) if the value of the resulting gains exactly equals the value of the resulting losses.
C) only if no one is made worse off.
D) if the value of the resulting gains is less than the value of the resulting losses.
Answer: A
Diff: 2
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
38) An efficient economy is an economy
A) in which output is steady or growing and there is low inflation.
B) that produces what consumers demand and does so at the least possible cost.
C) that distributes output equally among all consumers.
D) in which there is a fair distribution of wealth.
Answer: B
Diff: 2
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
Loading page 31...
28 more pages available. Scroll down to load them.
Preview Mode
Sign in to access the full document!
100%
Study Now!
XY-Copilot AI
Unlimited Access
Secure Payment
Instant Access
24/7 Support
AI Assistant
Document Details
Subject
Economics