Question 1

Which of the following is an assumption that economists make?

Accepted Answer

A)  Most people possess entrepreneurial talent.
B)  People are very good at assessing the costs of decisions accurately.
C)  Individuals and firms will act to provide the things people want.
D)  Individuals usually fail to optimize the use of their resources because they think on the margin.E) All of the above
F) C) and D)

Question 2

When the occurrence of one event brings about the other, the relationship between the two events is best described as:

Accepted Answer

A)  a pattern.
B)  a trend.
C)  causation.
D)  correlation.E) None of the above
F) B) and D)

Question 3

Which of the following statements about scarcity is true?

Accepted Answer

A)  Scarcity is an undeniable part of everyone's reality due to the world's limited resources.
B)  Scarcity is not a problem for billionaires like Bill Gates.
C)  Scarcity in the world can be eliminated by rational decision making.
D)  Scarcity is a problem studied in microeconomics and is not a macroeconomic concern.E) C) and D)
F) B) and D)

Question 4

A positive statement:

Accepted Answer

A)  can actually be false.
B)  must always be true.
C)  provides an opinion with a positive outlook.
D)  is the same as a normative statement.E) B) and D)
F) B) and C)

Question 5

Suppose the government would like to reduce smoking rates among teenagers. Which of the following policies is designed to achieve this goal by changing incentives?

Accepted Answer

A)  The government requires all high school students to take a health class, and the harmful effects of cigarette smoke will be a required component of the curriculum.
B)  The government asks all high schools to post "Thank you for not smoking" signs around the school grounds.
C)  The government raises the legal age for purchasing cigarettes to 20.
D)  The government raises the tax on cigarettes.E) B) and C)
F) A) and C)

Question 6

The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is:

Accepted Answer

A)  not having qualified loan officers to make the loans.
B)  having limited funds available for loans.
C)  not being able to determine appropriate currency exchange rates.
D)  counterfeit financial reports that make it difficult to properly assess collateral.E) B) and D)
F) B) and C)

Question 7

Applying for a loan in five-person groups is an example of:

Accepted Answer

A)  family and friends lending.
B)  party of five lending.
C)  group responsibility.
D)  trade-off.E) B) and C)
F) A) and D)

Question 8

Which of the following is a topic that would be studied in macroeconomics?

Accepted Answer

A)  Gasoline price changes
B)  Unemployment rates over time
C)  Taxation strategies of major corporations
D)  Consumer participation in FacebookE) A) and D)
F) B) and C)

Question 9

Which actor in the simplified circular flow model is on the supply side of the goods market?

Accepted Answer

A)  Firms
B)  Households
C)  Markets for factors of production
D)  GovernmentE) B) and D)
F) None of the above

Question 10

Scarcity reflects our inability to satisfy wants due to:

Accepted Answer

A)  an unequal distribution of resources.
B)  limited resources.
C)  inefficient political systems.
D)  unemployed workers.E) B) and C)
F) A) and C)

Question 11

You are shopping at the local mall with an $80 gift card that expires tomorrow. Only three items catch your attention: a bottle of perfume, a remote control helicopter, and an "Amazing Ab Belt." You would be willing to give up $60 for the perfume, $70 for the belt, and $80 for the helicopter. Knowing this, you decide to purchase the helicopter. The opportunity cost of the helicopter is:

Accepted Answer

A)  $130, the combined value of the alternatives forgone.
B)  $80, the amount spent using the gift card.
C)  $70, the value of the ab belt.
D)  $60, the value of the perfume.E) All of the above
F) B) and C)

Question 12

Emir decides to sign up for a college accounting course. He pays the $500 tuition, but before the course starts he is offered a job that would conflict with the class time. The tuition is no longer refundable. In deciding whether to accept or decline the job offer, the $500 spent on the class is:

Accepted Answer

A)  the opportunity cost of the job.
B)  the expected gain in pay from taking the accounting course.
C)  a sunk cost.
D)  a sunk benefit.E) B) and C)
F) None of the above

Question 13

Which of the following is an example of a positive incentive?

Accepted Answer

A)  Discover offers 0 percent balance transfer rates to anyone who opens a new credit card.
B)  McDonald's decides to add a white chocolate mocha to its menu.
C)  A teacher who has taught for 30 years decides to retire and focus on gardening.
D)  A business decides to leave the industry after facing stiff competition.E) A) and B)
F) A) and C)

Question 14

You have an idea to open a rooftop restaurant in the downtown area of your community, as none currently exists. However, after some investigation you discover that any rooftop restaurant would violate city regulations. What makes this an abnormal circumstance?

Accepted Answer

A)  Innovation
B)  Market failure
C)  Intervention
D)  Goals other than profitE) None of the above
F) A) and B)

Question 15

If you generate a new idea that has not yet been implemented by others, and the idea offers a more profitable use of some resource, it is likely an example of:

Accepted Answer

A)  innovation.
B)  market failure.
C)  intervention.
D)  a goal other than profit.E) All of the above
F) C) and D)

Question 16

Which of the following is an example of a positive statement?

Accepted Answer

A)  The state government should allocate more funds toward education.
B)  Teachers should be paid higher salaries.
C)  Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma.
D)  The consumption of marijuana is unacceptable and should never be legally allowed in a society.E) B) and D)
F) B) and C)

Question 17

Which of the following is considered a macroeconomic topic?

Accepted Answer

A)  iTunes raises the price of all its music.
B)  iTunes raises the price of its pop artists' music only.
C)  A local McDonald's franchise decides to hire more workers.
D)  The U.S. labor force participation rate falls.E) A) and C)
F) C) and D)

Question 18

The statement "People who drink coffee tend to wake up early" implies that:

Accepted Answer

A)  drinking coffee causes people to wake up early.
B)  drinking coffee is negatively correlated with waking up early.
C)  drinking coffee is positively correlated with waking up early.
D)  waking up early causes people to drink coffee.E) B) and C)
F) None of the above

Question 19

As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Accepted Answer

A)  scarcity.
B)  incentives.
C)  normative analysis.
D)  correlation and causation.E) None of the above
F) All of the above

Question 20

Jasmin purchases a coffee cup from her local gas station for $5.00 that can be refilled at any time for $0.50. The marginal cost of her 10th cup of coffee is:

Accepted Answer

A)  $0.50.
B)  $5.00.
C)  $10.00.
D)  $5.50.E) A) and D)
F) C) and D)

Exam 1: Economics and Life

Which of the following is an example of a positive incentive?

Correct Answer
verified

Which of the following is considered a macroeconomic topic?

Correct Answer
verified

Scarcity reflects our inability to satisfy wants due to:

Correct Answer
verified

As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Correct Answer
verified

You have an idea to open a rooftop restaurant in the downtown area of your community, as none currently exists. However, after some investigation you discover that any rooftop restaurant would violate city regulations. What makes this an abnormal circumstance?

Correct Answer
verified

Emir decides to sign up for a college accounting course. He pays the $500 tuition, but before the course starts he is offered a job that would conflict with the class time. The tuition is no longer refundable. In deciding whether to accept or decline the job offer, the $500 spent on the class is:

Correct Answer
verified

Which of the following is a topic that would be studied in macroeconomics?

Correct Answer
verified

Which actor in the simplified circular flow model is on the supply side of the goods market?

Correct Answer
verified

When the occurrence of one event brings about the other, the relationship between the two events is best described as:

Correct Answer
verified

A positive statement:

Correct Answer
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Which of the following statements about scarcity is true?

Correct Answer
verified

The statement "People who drink coffee tend to wake up early" implies that:

Correct Answer
verified

Jasmin purchases a coffee cup from her local gas station for $5.00 that can be refilled at any time for $0.50. The marginal cost of her 10th cup of coffee is:

Correct Answer
verified

The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is:

Correct Answer
verified

If you generate a new idea that has not yet been implemented by others, and the idea offers a more profitable use of some resource, it is likely an example of:

Correct Answer
verified

Suppose the government would like to reduce smoking rates among teenagers. Which of the following policies is designed to achieve this goal by changing incentives?

Correct Answer
verified

Which of the following is an example of a positive statement?

Correct Answer
verified

Applying for a loan in five-person groups is an example of:

Correct Answer
verified

Which of the following is an assumption that economists make?

Correct Answer
verified

Correct Answer
verified

Exam 1: Economics and Life

Which of the following is an example of a positive incentive?

Correct AnswerverifiedShow Answer

Which of the following is considered a macroeconomic topic?

Correct AnswerverifiedShow Answer

Scarcity reflects our inability to satisfy wants due to:

Correct AnswerverifiedShow Answer

As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Correct AnswerverifiedShow Answer

You have an idea to open a rooftop restaurant in the downtown area of your community, as none currently exists. However, after some investigation you discover that any rooftop restaurant would violate city regulations. What makes this an abnormal circumstance?

Correct AnswerverifiedShow Answer

Emir decides to sign up for a college accounting course. He pays the $500 tuition, but before the course starts he is offered a job that would conflict with the class time. The tuition is no longer refundable. In deciding whether to accept or decline the job offer, the $500 spent on the class is:

Correct AnswerverifiedShow Answer

Which of the following is a topic that would be studied in macroeconomics?

Correct AnswerverifiedShow Answer

Which actor in the simplified circular flow model is on the supply side of the goods market?

Correct AnswerverifiedShow Answer

When the occurrence of one event brings about the other, the relationship between the two events is best described as:

Correct AnswerverifiedShow Answer

A positive statement:

Correct AnswerverifiedShow Answer

Which of the following statements about scarcity is true?

Correct AnswerverifiedShow Answer

The statement "People who drink coffee tend to wake up early" implies that:

Correct AnswerverifiedShow Answer

Jasmin purchases a coffee cup from her local gas station for $5.00 that can be refilled at any time for $0.50. The marginal cost of her 10th cup of coffee is:

Correct AnswerverifiedShow Answer

The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is:

Correct AnswerverifiedShow Answer

If you generate a new idea that has not yet been implemented by others, and the idea offers a more profitable use of some resource, it is likely an example of:

Correct AnswerverifiedShow Answer

Suppose the government would like to reduce smoking rates among teenagers. Which of the following policies is designed to achieve this goal by changing incentives?

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive statement?

Correct AnswerverifiedShow Answer

Applying for a loan in five-person groups is an example of:

Correct AnswerverifiedShow Answer

Which of the following is an assumption that economists make?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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