Question 1

If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line is

Accepted Answer

A)  positive.
B)  negative.
C)  zero.
D)  infinity.E) A) and D)
F) A) and C)

Question 2

What assumption about human motivation is made in economics?
 Explain.

Accepted Answer

Economists assume that people act as if ...

Question 3

The primary objective of economics is

Accepted Answer

A)  to learn how to create more resources.
B)  to study how people make choices with limited resources.
C)  to learn how to make the most profits with a given amount of resources.
D)  to study why some people are never happy with the resources they have.E) A) and B)
F) A) and C)

Question 4

________ are the things that are used to produce items that satisfy people's wants.

Accepted Answer

A)  Concepts
B)  Production possibilities curves
C)  Resources
D)  CostsE) B) and C)
F) All of the above

Question 5

Which of the following statements is a positive economic statement?

Accepted Answer

A)  The number of families living in poverty in the United States is too high.
B)  One in every five children in the United States is living in poverty.
C)  Government programs to help the poor are just making problems worse.
D)  Increases in poverty rates signify a deterioration of the U.S. economy.E) A) and D)
F) C) and D)

Question 6

If people act as if they systematically pursue their own self-interest, then they will most likely

Accepted Answer

A)  respond irrationally to any incentive.
B)  respond to a given incentive in a random manner.
C)  respond predictably to a given incentive.
D)  not respond to any incentive.E) B) and C)
F) A) and D)

Question 7

Economic models are

Accepted Answer

A)  always based on laboratory methods similar to natural sciences.
B)  a simplified representations of the real world.
C)  used only in microeconomic analysis by households.
D)  used only in macroeconomic analysis by business firms.E) B) and D)
F) B) and C)

Question 8

An economic theory is also known as an economic

Accepted Answer

A)  model.
B)  prediction.
C)  conclusion.
D)  assumption.E) A) and B)
F) A) and C)

Question 9

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

Accepted Answer

A)  the student has a positive incentive to attend the study session because she may get a higher grade.
B)  the student has a negative incentive to attend the study session because she will be punished if she does not go.
C)  the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam.
D)  a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.E) None of the above
F) B) and C)

Question 10

"Economists assume people are selfish." Do you agree with this statement or not?
 Explain.

Accepted Answer

Economists do not assume people are self...

Question 11

The United States is best known as a

Accepted Answer

A)  pure price system.
B)  dictatorship.
C)  command and control system.
D)  mixed economic system.E) B) and C)
F) A) and D)

Question 12

Which of the following is a TRUE statement about the economic assumption of rationality?

Accepted Answer

A)  Individuals who are rational necessarily ignore the interests of others.
B)  Individuals generally act as though they are rational.
C)  Individual behavior may be irrational but group behavior is always rational.
D)  People make decisions as if they are omniscient.E) C) and D)
F) A) and D)

Question 13

"Ceteris paribus" means

Accepted Answer

A)  "invisible hand."
B)  "other things constant."
C)  "making all the necessary changes."
D)  "individual."E) All of the above
F) A) and B)

Question 14

Positive economic analysis is said to be

Accepted Answer

A)  true.
B)  right.
C)  value-laden.
D)  objective.E) A) and C)
F) B) and C)

Question 15

Which of the following is TRUE of incentives?

Accepted Answer

A)  Different people are motivated by different incentives.
B)  Money is the only measure of incentives.
C)  All of the people in a particular nation are motivated by the same incentives.
D)  In economics, people are assumed to respond to disincentives instead of incentives.E) C) and D)
F) None of the above

Question 16

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

Accepted Answer

A)  How to eliminate choices?
B)  What to produce?
C)  How will goods and services be produced?
D)  For whom will goods and services be produced?E) None of the above
F) A) and B)

Question 17

Which of the following would most likely be part of the study of microeconomics?

Accepted Answer

A)  how General Motors makes decisions regarding its production goals
B)  national income
C)  the total economic output of our domestic economy
D)  overall price stability in the United StatesE) None of the above
F) A) and B)

Question 18

The term ceteris paribus is an economic assumption that means

Accepted Answer

A)  let the buyer beware.
B)  common sense is reality.
C)  the detail is in the interrelationship.
D)  other things being equal.E) None of the above
F) All of the above

Question 19

The slope of a nonlinear curve

Accepted Answer

A)  is constant.
B)  is always negative.
C)  changes along the various points of the curve.
D)  is always equal to 1.E) A) and D)
F) B) and D)

Question 20

A poll conducted by a national firm finds that most Americans say they care more about safety when buying a car than about fuel efficiency. As a result, a car maker produces a car with many safety features, but it doesn't sell well. This behavior

Accepted Answer

A)  contradicts economic theory because the people didn't do what they said they would do.
B)  contradicts economic theory because it is irrational not to purchase safer cars.
C)  does not contradict economic theory because economists focus on what people do rather than on what they say.
D)  does not contradict economic theory because economic theory only relates to prices and not to features such as safety.E) A) and B)
F) All of the above

Exam 1: The Nature of Economics

A poll conducted by a national firm finds that most Americans say they care more about safety when buying a car than about fuel efficiency. As a result, a car maker produces a car with many safety features, but it doesn't sell well. This behavior

Correct AnswerverifiedShow Answer

"Economists assume people are selfish." Do you agree with this statement or not? Explain.

Correct AnswerverifiedEconomists do not assume people are self...View AnswerShow Answer

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

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What assumption about human motivation is made in economics? Explain.

Correct AnswerverifiedEconomists assume that people act as if ...View AnswerShow Answer

________ are the things that are used to produce items that satisfy people's wants.

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Which of the following is TRUE of incentives?

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Economic models are

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The term ceteris paribus is an economic assumption that means

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If people act as if they systematically pursue their own self-interest, then they will most likely

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Which of the following would most likely be part of the study of microeconomics?

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Positive economic analysis is said to be

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If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line is

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The United States is best known as a

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Which of the following is NOT one of the basic questions that an economic system attempts to answer?

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An economic theory is also known as an economic

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Which of the following statements is a positive economic statement?

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Which of the following is a TRUE statement about the economic assumption of rationality?

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The slope of a nonlinear curve

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The primary objective of economics is

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"Ceteris paribus" means

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Economists do not assume people are self...
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Economists assume that people act as if ...
View Answer

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