Question 1

Economics can be divided into two main branches of study:

Accepted Answer

A)   capitalism and communism.
B)   capitalism and socialism.
C)   demand and supply.
D)   microeconomics and macroeconomics.E) A) and B)
F) B) and D)

Question 2

A good economic theory is more useful when it includes detailed facts even if the facts are not relevant to the questions being investigated.

Accepted Answer

A) True 
 B)False

Question 3

"The hotter it gets,the more water people drink." This statement implies that the relationship between temperature and water consumption must have:

Accepted Answer

A)   no relationship.
B)   a negative slope.
C)   a positive slope.
D)   either positive or negative slope.E) A) and B)
F) A) and C)

Question 4

Economics is a science that:

Accepted Answer

A)   typically uses controlled experiments to learn about consumer and firm behavior.
B)   uses models that cannot be tested empirically due to the complex nature of the economy.
C)   explores how choices are made between conflicting wants and desires in a world of scarcity.
D)   relies entirely upon normative analysis.E) B) and D)
F) B) and C)

Question 5

Identify whether each of the following topics would be primarily a concern of microeconomics or macroeconomics:

Accepted Answer

Microeconomic topics...

Question 6

From an economists' perspective,which of the following observations is not true?

Accepted Answer

A)   Self-interest is purely monetary in nature.
B)   Self-interest can include benevolence.
C)   Self-interest is a good predictor of human behavior in most situations.
D)   Self-interest is not the same as selfishness.E) A) and D)
F) A) and C)

Question 7

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Accepted Answer

These activities would be considered rat...

Question 8

Your mother tells you,"Watching ten hours of TV per day will make you stupid." This is a positive statement because:

Accepted Answer

A)   your mother says it with a positive tone in her voice.
B)   it is your mother's opinion.
C)   it is a proposition that can be tested.
D)   your mother is only thinking of your best interest.E) A) and B)
F) None of the above

Question 9

Which of the following is a statement of positive economics?

Accepted Answer

A)   The income tax reduces after-tax incomes of the rich.
B)   A reduction in tax rates makes the after-tax distribution of income fairer.
C)   Tax rates ought to be reduced so that people will work more.
D)   All of the above are statements of positive economics.E) A) and C)
F) C) and D)

Question 10

Most of economic analysis assumes that people's actions are:

Accepted Answer

A)   motivated by submerged emotional needs.
B)   driven by magnetic forces generated by planetary movements.
C)   motivated primarily by concern for the well-being of others.
D)   motivated by self-interest.E) B) and C)
F) B) and D)

Question 11

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m.as I did at noon." Which of the following best explains this occurrence?

Accepted Answer

A)   Many other fishermen also believe that they can catch a greater quantity of fish if they arrive earlier at the fishing area. So the area is crowded early in the day.
B)   The fish do not care when they eat, so they are likely to bite on the bait at any time during the day.
C)   The catching of fish is mostly luck, so timing is not important.
D)   The early bird catches the worm.E) None of the above
F) A) and B)

Question 12

Many people have heard that the stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl,and falls when a team from the American Football Conference (AFC) is victorious.If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices,you probably are:

Accepted Answer

A)   confusing correlation with causation.
B)   committing the fallacy of composition.
C)   confusing the direction of causality, since everyone knows that stock prices determine which team wins the Super Bowl.
D)   none of the aboveE) All of the above
F) None of the above

Question 13

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant,which of the following is the most likely group behavior prediction?

Accepted Answer

A)   Price reduction will have no impact on purchase patterns.
B)   Price reduction will be associated with a reduction in quality; thereby reducing sales.
C)   More game consoles will be sold at lower prices.
D)   Group behavior cannot be predicted.E) B) and D)
F) B) and C)

Question 14

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases,ceteris paribus.However,as the price of computers fell throughout the 1990s,more computers were sold.Which of the following best explains the apparent conflict between theory and data?

Accepted Answer

A)   The theory must be invalid.
B)   The theory rests on assumptions that are too simplistic.
C)   It is likely that variables other than the price and quantity of computers sold were changing.
D)   All variables other than the price and quantity of computers sold were unchanged.E) A) and B)
F) B) and C)

Question 15

Which of the following lies primarily within the realm of macroeconomics?

Accepted Answer

A)   a study of the elasticity of demand for gasoline
B)   a study of how tax cuts stimulate aggregate production
C)   an analysis of supply and demand conditions in the electricity market
D)   a study of the impact of "mad cow" disease on the price of beef worldwideE) All of the above
F) A) and C)

Question 16

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A)   If the price of a product rises, the quantity supplied will decline.
B)   The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation.
C)   Resources are scarce; therefore, there is no such thing as a free lunch.
D)   If I talk loudly at a party, I have a better chance of being heard by my listeners. If everyone at the party talks loudly, everyone can be heard more clearly.E) B) and D)
F) None of the above

Question 17

Macroeconomics primarily examines:

Accepted Answer

A)   the behavior of individual households and firms.
B)   how prices are determined within individual markets.
C)   the output levels that maximize the profits of business firms.
D)   broad issues such as national output, employment and inflation.E) All of the above
F) A) and B)

Question 18

The fallacy of composition is essentially the error of:

Accepted Answer

A)   confusing association with causation.
B)   confusing normative economics with positive economics.
C)   generalizing from the individual to the whole.
D)   omitting relevant variables from an economic model.E) A) and B)
F) All of the above

Question 19

A positive statement is prescriptive-it prescribes what should be done.

Accepted Answer

A) True 
 B)False

Question 20

Economics is a social science that primarily explores how:

Accepted Answer

A)   businesses market products under competitive conditions.
B)   stock and bond prices fluctuate when there are changes in demand or supply.
C)   the government allocates its budget among competing political interests.
D)   goods and services are produced and distributed in a world with limited resources.E) A) and C)
F) None of the above

Exam 1: The Role and Method of Economics

Correct Answer
verified

The fallacy of composition is essentially the error of:

Correct Answer
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Which of the following lies primarily within the realm of macroeconomics?

Correct Answer
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A good economic theory is more useful when it includes detailed facts even if the facts are not relevant to the questions being investigated.

Correct Answer
verified

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m.as I did at noon." Which of the following best explains this occurrence?

Correct Answer
verified

Economics can be divided into two main branches of study:

Correct Answer
verified

Economics is a science that:

Correct Answer
verified

Most of economic analysis assumes that people's actions are:

Correct Answer
verified

Macroeconomics primarily examines:

Correct Answer
verified

Economics is a social science that primarily explores how:

Correct Answer
verified

Which of the following best illustrates the fallacy of composition?

Correct Answer
verified

"The hotter it gets,the more water people drink." This statement implies that the relationship between temperature and water consumption must have:

Correct Answer
verified

Which of the following is a statement of positive economics?

Correct Answer
verified

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases,ceteris paribus.However,as the price of computers fell throughout the 1990s,more computers were sold.Which of the following best explains the apparent conflict between theory and data?

Correct Answer
verified

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant,which of the following is the most likely group behavior prediction?

Correct Answer
verified

From an economists' perspective,which of the following observations is not true?

Correct Answer
verified

Identify whether each of the following topics would be primarily a concern of microeconomics or macroeconomics:

Correct Answer
verified
Microeconomic topics...
View Answer

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Correct Answer
verified
These activities would be considered rat...
View Answer

Your mother tells you,"Watching ten hours of TV per day will make you stupid." This is a positive statement because:

Correct Answer
verified

A positive statement is prescriptive-it prescribes what should be done.

Correct Answer
verified

Exam 1: The Role and Method of Economics

Correct AnswerverifiedShow Answer

The fallacy of composition is essentially the error of:

Correct AnswerverifiedShow Answer

Which of the following lies primarily within the realm of macroeconomics?

Correct AnswerverifiedShow Answer

A good economic theory is more useful when it includes detailed facts even if the facts are not relevant to the questions being investigated.

Correct AnswerverifiedShow Answer

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m.as I did at noon." Which of the following best explains this occurrence?

Correct AnswerverifiedShow Answer

Economics can be divided into two main branches of study:

Correct AnswerverifiedShow Answer

Economics is a science that:

Correct AnswerverifiedShow Answer

Most of economic analysis assumes that people's actions are:

Correct AnswerverifiedShow Answer

Macroeconomics primarily examines:

Correct AnswerverifiedShow Answer

Economics is a social science that primarily explores how:

Correct AnswerverifiedShow Answer

Which of the following best illustrates the fallacy of composition?

Correct AnswerverifiedShow Answer

"The hotter it gets,the more water people drink." This statement implies that the relationship between temperature and water consumption must have:

Correct AnswerverifiedShow Answer

Which of the following is a statement of positive economics?

Correct AnswerverifiedShow Answer

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases,ceteris paribus.However,as the price of computers fell throughout the 1990s,more computers were sold.Which of the following best explains the apparent conflict between theory and data?

Correct AnswerverifiedShow Answer

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant,which of the following is the most likely group behavior prediction?

Correct AnswerverifiedShow Answer

From an economists' perspective,which of the following observations is not true?

Correct AnswerverifiedShow Answer

Identify whether each of the following topics would be primarily a concern of microeconomics or macroeconomics:

Correct AnswerverifiedMicroeconomic topics...View AnswerShow Answer

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Correct AnswerverifiedThese activities would be considered rat...View AnswerShow Answer

Your mother tells you,"Watching ten hours of TV per day will make you stupid." This is a positive statement because:

Correct AnswerverifiedShow Answer

A positive statement is prescriptive-it prescribes what should be done.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Microeconomic topics...
View Answer

Correct Answer
verified
These activities would be considered rat...
View Answer

Correct Answer
verified

Correct Answer
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