Question 1

A rational individual would make charitable contributions only if such contributions receive favorable tax treatment.

Accepted Answer

A) True 
 B)False  False

Question 2

The ceteris paribus assumption is a behavioral assumption.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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

Question 4

"There should be less discrimination against women" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 5

Economic theory allows economists to predict the behavior of a specific person or firm.

Accepted Answer

A) True 
 B)False

Question 6

An economist would classify 100 shares of the Apple Computers stock as capital.

Accepted Answer

A) True 
 B)False

Question 7

The assumption of rational self-interest means that economic decision makers:

Accepted Answer

A)  have no concern for the welfare of others.
B)  make reasonable decisions based on their expectations of results.
C)  know with certainty which choice will have the best result.
D)  consider the welfare of others to be more important than their own happiness.
E)  do not make incorrect decisions or bad choices.F) A) and C)
G) All of the above

Question 8

Benjamin works as an economist for the federal government.Which of the following questions is he trying to answer as part of his job?

Accepted Answer

A)  How can I get rich by playing the stock market?
B)  What are the best ways to reduce people's wants,given the scarcity of resources?
C)  How can rational government officials determine what goods should be produced?
D)  What is money?
E)  How do people use limited resources to try to satisfy unlimited wants?F) A) and B)
G) B) and C)

Question 9

If a business produces and sells only one unit of a good,its profit would be the:

Accepted Answer

A)  price received for the good.
B)  price of the product minus the cost of the resources used to produce the product.
C)  return paid to the firm's bank on its outstanding loans.
D)  price of the product minus the wages paid for the labor used to produce it.
E)  wages paid for the labor used to produce the product minus the price.F) A) and D)
G) C) and D)

Question 10

Economists generally believe that:

Accepted Answer

A)  buyers and sellers have all the information they can use.
B)  additional information is costly to acquire.
C)  decision makers have complete knowledge of all the alternatives available.
D)  economic decisions result from random behavior.
E)  decision makers never make mistakes.F) A) and D)
G) A) and B)

Question 11

Profit is the payment made for land resources.

Accepted Answer

A) True 
 B)False

Question 12

Labor and capital are exchanged in the resource market.

Accepted Answer

A) True 
 B)False

Question 13

A rational individual gives more to charity when such contributions receive favorable tax treatment.

Accepted Answer

A) True 
 B)False

Question 14

Economists tell stories:

Accepted Answer

A)  in order to breathe life into economic theory and personalize abstract ideas.
B)  because economics is an art,not a science.
C)  as a way of rigorously testing economic theory.
D)  because doing so is a required part of the scientific method.
E)  to show how their theory can predict at least one real-world situation.F) D) and E)
G) A) and C) A

Question 15

Normative economic statements refer to what should be.

Accepted Answer

A) True 
 B)False  True

Question 16

Which of the following is not an example of the fallacy of composition?

Accepted Answer

A)  If I can get to work fastest by taking the interstate,so can everyone else.
B)  If I can only get away from it all by going to Fairbanks,everyone who needs to get away should go to Fairbanks.
C)  Every time I play with my dog,it rains,so playing with my dog brings rain.
D)  If the best TV reception can be gotten with a Couch Potato antenna,then everyone should have a Couch Potato antenna.
E)  If I can get a better view by standing up at the baseball game,then everyone can get a better view by standing up.F) C) and E)
G) C) and D)

Question 17

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in:

Accepted Answer

A)  disequilibrium economics.
B)  normative economics.
C)  positive economics.
D)  microeconomics.
E)  macroeconomics.F) None of the above
G) A) and B)

Question 18

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 19

Microeconomics is the study of:

Accepted Answer

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

Question 20

Which of the following is an example of physical capital?

Accepted Answer

A)  The owner of a pizza shop
B)  Bulldozers
C)  A college education
D)  Carpentry skills
E)  MoneyF) A) and E)
G) A) and D)

Exam 1: The Art and Science of Economic Analysis

A rational individual would make charitable contributions only if such contributions receive favorable tax treatment.

Correct AnswerverifiedFalse

The ceteris paribus assumption is a behavioral assumption.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"There should be less discrimination against women" is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

Economic theory allows economists to predict the behavior of a specific person or firm.

Correct AnswerverifiedShow Answer

An economist would classify 100 shares of the Apple Computers stock as capital.

Correct AnswerverifiedShow Answer

The assumption of rational self-interest means that economic decision makers:

Correct AnswerverifiedShow Answer

Benjamin works as an economist for the federal government.Which of the following questions is he trying to answer as part of his job?

Correct AnswerverifiedShow Answer

If a business produces and sells only one unit of a good,its profit would be the:

Correct AnswerverifiedShow Answer

Economists generally believe that:

Correct AnswerverifiedShow Answer

Profit is the payment made for land resources.

Correct AnswerverifiedShow Answer

Labor and capital are exchanged in the resource market.

Correct AnswerverifiedShow Answer

A rational individual gives more to charity when such contributions receive favorable tax treatment.

Correct AnswerverifiedShow Answer

Economists tell stories:

Correct AnswerverifiedA

Normative economic statements refer to what should be.

Correct AnswerverifiedTrue

Which of the following is not an example of the fallacy of composition?

Correct AnswerverifiedShow Answer

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in:

Correct AnswerverifiedShow Answer

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

Microeconomics is the study of:

Correct AnswerverifiedShow Answer

Which of the following is an example of physical capital?

Correct AnswerverifiedShow Answer

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