Question 1

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Accepted Answer

A)   is only the amount of money spent on gas.
B)   is zero, because the car is paid for.
C)   includes lost wages you could have earned instead of driving.
D)   equals the total expenses of the trip.E) All of the above
F) A) and B)

Question 2

When the unemployment rate rises, college enrollment increases as workers seek to expand training. This is an example of:

Accepted Answer

A)   correlation and causation.
B)   a negative correlation.
C)   normative economics.
D)   macroeconomics.E) B) and D)
F) All of the above

Question 3

You have paid all expenses to travel to your favorite beach for a vacation. You made these payments early in order to receive a discount, and all payments are nonrefundable. Unfortunately, the weatherman is now predicting that a hurricane will hit the area during your vacation dates. As you decide whether or not to take the trip, you should not consider the:

Accepted Answer

A)   money that has already been spent on the trip.
B)   satisfaction you are likely to receive at the beach during a hurricane.
C)   best alternative use of your time if you do not take the trip.
D)   additional costs you didn't anticipate while on the trip.E) A) and B)
F) B) and D)

Question 4

Which of the following statements best describes the study of economics?

Accepted Answer

A)   Economics studies how the Federal Reserve handles fluctuation in business cycles.
B)   Economics studies how individuals and groups manage scarce resources.
C)   Economics studies how people maximize returns in the stock market.
D)   Economics studies how governments determine appropriate tax rates.E) A) and C)
F) C) and D)

Question 5

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) All of the above
F) A) and B)

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) None of the above
F) B) and C)

Question 7

Which of the following questions would be studied in microeconomics?

Accepted Answer

A)   Why did our economic growth rate slow down during the 2000s?
B)   How did the recession end in 2009 if unemployment continued to rise?
C)   How will the legalization of marijuana in Colorado affect the market for cigarettes?
D)   When should Congress raise taxes in order to tackle the debt crisis?E) C) and D)
F) A) and D)

Question 8

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

Accepted Answer

A)   The average price of a Whopper Jr. is $2.19.
B)   The United States ought to adopt a flat rate personal income tax.
C)   Unemployment in the United States is too high.
D)   Average growth in real GDP per year was 1.84 percent between 2000 and 2010.E) C) and D)
F) A) and C)

Question 9

You read a news article that states "More people purchase ChapStick after the weather report predicts a windy week." Which of the following statements is true?

Accepted Answer

A)   Buying ChapStick is negatively correlated with the announcement of a windy week.
B)   Reverse causation can explain this observed correlation.
C)   Buying ChapStick is positively correlated with the announcement of a windy week.
D)   The observation reflects a normative statement.E) B) and C)
F) A) and C)

Question 10

When making a decision, it is often more difficult to identify the ______ associated with the decision because ______.

Accepted Answer

A)   costs; an individual must weigh monetary costs and opportunity costs differently
B)   costs; an individual should consider opportunity costs but ignore sunk costs
C)   benefits; it is impossible to put a dollar value on benefits
D)   benefits; individual people identify benefits while firms identify costsE) All of the above
F) B) and C)

Question 11

Thomas Malthus's model made the mistake of failing to consider:

Accepted Answer

A)   technological progress.
B)   inflation.
C)   comparative advantage.
D)   scarcity.E) A) and D)
F) A) and B)

Question 12

How should we best approach the issue of scarcity?

Accepted Answer

A)   We should only desire things that we are capable of consuming and producing.
B)   We should make changes to fiscal policy until the situation of scarcity is eliminated.
C)   We should make decisions that allow us to arrange our resources rationally.
D)   We should adopt economic policies that will lead to unlimited resources.E) B) and C)
F) A) and B)

Question 13

Cameron can spend his weekend afternoon doing one of three things: playing golf, driving his boat, or cleaning his house. Although he enjoys golfing, he sometimes becomes frustrated when playing so he decides to enjoy a more relaxing afternoon on his boat. Cameron never really considered the idea of cleaning the house, but he did give playing golf some serious thought. Cameron's opportunity cost of driving the boat is:

Accepted Answer

A)   having a messy house, since he decided not to clean it.
B)   the enjoyment he would have gotten from playing golf.
C)   having a messy house and not being able to enjoy playing golf.
D)   enjoying a relaxing day out on the lake.E) A) and D)
F) All of the above

Question 14

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 C)
F) A) and D)

Question 15

The two flows, or things being exchanged, in the circular flow model are:

Accepted Answer

A)   inputs and outputs.
B)   imports and exports.
C)   inputs/outputs and money.
D)   land and labor.E) None of the above
F) A) and D)

Question 16

Muhammad Yunus revolutionized banking in Bangladesh by issuing loans using group responsibility. This change to group responsibility:

Accepted Answer

A)   reduced the trade-offs faced when making a loan.
B)   provided an incentive for villagers to repay loans.
C)   increased scarcity, making it easier to repay loans.
D)   provided an incentive for villagers to offer collateral for loans.E) B) and C)
F) A) and D)

Question 17

After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. The marginal cost of an additional plate of food is:

Accepted Answer

A)   the benefit you will get from consuming the food.
B)   $12 minus the time it takes you to eat the food.
C)   zero dollars.
D)   a sunk cost, and therefore irrelevant.E) B) and C)
F) B) and D)

Question 18

Which of the following statements about rationality is true?Economists wish to prove that all individuals are rational.Engaging in a behavior for which the marginal costs exceed the marginal benefits is irrational.As long as the marginal benefit of an action is positive, the action is rational.Individuals are hardly ever rational.

Accepted Answer

A)   II only
B)   I and III
C)   II and IV
D)   II, III, and IVE) A) and B)
F) All of the above

Question 19

The assumption of rational behavior:

Accepted Answer

A)   offers a perfect framework for how people actually behave.
B)   helps economists explain how people behave in a way that will best achieve their goals.
C)   explains why people voluntarily engage in decisions for which costs exceed benefits.
D)   is best applied to psychology and should not be used in the science of economics.E) B) and C)
F) B) and D)

Question 20

An economic model:

Accepted Answer

A)   exactly explains what happens in the real economy.
B)   discards unnecessary details to clearly demonstrate the central principles of the economic activity.
C)   approximates all facets of what happens in the real economy.
D)   does not make clear assumptions about the economic activity.E) None of the above
F) B) and D)

Exam 1: Economicsand Life

Correct Answer
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Thomas Malthus's model made the mistake of failing to consider:

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

Correct Answer
verified

Correct Answer
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You read a news article that states "More people purchase ChapStick after the weather report predicts a windy week." Which of the following statements is true?

Correct Answer
verified

The two flows, or things being exchanged, in the circular flow model are:

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

Correct Answer
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Correct Answer
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When the unemployment rate rises, college enrollment increases as workers seek to expand training. This is an example of:

Correct Answer
verified

Muhammad Yunus revolutionized banking in Bangladesh by issuing loans using group responsibility. This change to group responsibility:

Correct Answer
verified

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Correct Answer
verified

Which of the following statements best describes the study of economics?

Correct Answer
verified

How should we best approach the issue of scarcity?

Correct Answer
verified

An economic model:

Correct Answer
verified

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

Correct Answer
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The assumption of rational behavior:

Correct Answer
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After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. The marginal cost of an additional plate of food is:

Correct Answer
verified

Which of the following questions would be studied in microeconomics?

Correct Answer
verified

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

Correct Answer
verified

When making a decision, it is often more difficult to identify the associated with the decision because .

Correct Answer
verified

Exam 1: Economicsand Life

Correct AnswerverifiedShow Answer

Thomas Malthus's model made the mistake of failing to consider:

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

Correct AnswerverifiedShow Answer

You read a news article that states "More people purchase ChapStick after the weather report predicts a windy week." Which of the following statements is true?

Correct AnswerverifiedShow Answer

The two flows, or things being exchanged, in the circular flow model are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the unemployment rate rises, college enrollment increases as workers seek to expand training. This is an example of:

Correct AnswerverifiedShow Answer

Muhammad Yunus revolutionized banking in Bangladesh by issuing loans using group responsibility. This change to group responsibility:

Correct AnswerverifiedShow Answer

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Correct AnswerverifiedShow Answer

Which of the following statements best describes the study of economics?

Correct AnswerverifiedShow Answer

How should we best approach the issue of scarcity?

Correct AnswerverifiedShow Answer

An economic model:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The assumption of rational behavior:

Correct AnswerverifiedShow Answer

After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. The marginal cost of an additional plate of food is:

Correct AnswerverifiedShow Answer

Which of the following questions would be studied in microeconomics?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When making a decision, it is often more difficult to identify the ______ associated with the decision because ______.

Correct AnswerverifiedShow Answer

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Correct Answer
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When making a decision, it is often more difficult to identify the associated with the decision because .

Correct Answer
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