Question 1

Which of the following statements about economic resources is false?

Accepted Answer

A)  Economic resources include financial capital and money.
B)  Economic resources are also called factors of production.
C)  Economic resources are used to produce goods and services.
D)  Some economic resources are human-made while others are found in nature.

Question 2

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Accepted Answer

A)  The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents.
B)  The student is using an inadequate sample size.
C)  The student is drawing a false conclusion; he is confusing cause and effect.
D)  The student has failed to take into account other causes of gray hair.

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A)  Falling global demand for pesticides has led to decreases in the price of pesticides.
B)  With falling mortgage rates and falling unemployment rates,the number of new homes being built has increased.
C)  The state of Florida's unemployment rate dropped when several large companies relocated to the Miami area.
D)  Global warming should be at the top of every economic agenda.

Question 4

Which of the following best describes an assumption economists make about human behavior?

Accepted Answer

A)  They assume that individuals act rationally all the time in all circumstances.
B)  They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.
C)  They assume that people take into account the question of fairness in all decisions they make.
D)  They assume that individuals act randomly.

Question 5

Human capital refers to the accumulated skills and training that workers possess.

Accepted Answer

A) True 
 B)False

Question 6

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

Accepted Answer

A)  marginal benefit; marginal cost
B)  marginal benefit; marginal benefit
C)  marginal cost; marginal cost
D)  marginal cost; marginal benefit

Question 7

What is an economic variable? Give an example of an economic variable.

Accepted Answer

An economic variable is someth...

Question 8

Which of the following is a positive economic statement?

Accepted Answer

A)  The inflation rate in the United States is too high.
B)  Unemployment insurance payments increase when the unemployment rate rises.
C)  The government should defund Obamacare.
D)  States should be able to enact their own marijuana legalization laws.

Question 9

Tabitha shares a flea market booth with her sister.Her share of the rent is $150 per month.She is considering moving to her own,larger booth which she will not have to share with anyone.The larger booth rents for $450 per month.Recently,you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth.Tabitha is as rational as any other person.As an economics major,you rightly conclude that

Accepted Answer

A)  Tabitha did not have a choice; her sister was overcharging her.
B)  Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $300.
C)  Tabitha figures that the benefit of having her own booth (as opposed to sharing) is at least $450.
D)  the cost of having one's own booth outweighs the benefits.

Question 10

The government makes all economic decisions in a centrally planned economy.

Accepted Answer

A) True 
 B)False

Question 11

When voluntary exchange takes place,neither party usually gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is false?

Accepted Answer

A)  Anytime you have to decide which action to take you are facing an economic trade-off.
B)  Trade-offs do not apply when the consumers purchase a product for which there is excess supply,such as a stock clearance sale.
C)  Every individual,no matter how rich or poor,is faced with making trade-offs.
D)  Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Question 13

Which of the following contributed to the downfall of the Soviet Union in 1991?

Accepted Answer

A)  government dissatisfaction with high living standards and political freedom
B)  an inability to produce low-cost consumer goods that households wanted
C)  an overabundance of high-quality goods and services
D)  the lack of a strong dictator who can coordinate economic activities

Question 14

Which of the following are positive economic statements and which are normative economic statements?
a.An increase in the minimum wage causes unemployment.
b.The government should raise the minimum wage above $7.25 per hour.
c.The prolonged recession has caused the unemployment rate to reach a 30-year high.
d.Interest rates need to be lower for the economy to emerge from the recession.
e.Inflation has decreased since the onset of the recession.
f.Once the recession has ended,interest rates should increased to assure that inflation does not go up.

Accepted Answer

Statements a,c,and e are posit...

Question 15

Every society faces economic trade-offs.This means

Accepted Answer

A)  some people live better than others do.
B)  not everyone can have enough goods to survive.
C)  producing more of one good means less of another good can be produced.
D)  society's output cannot be made available to all.

Question 16

Scenario 1-1

Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."

-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 500 cigars?

Accepted Answer

A)  marginal cost
B)  operating cost
C)  explicit cost
D)  Any of the above terms are correct.

Question 17

In market economies,income distribution is always going to be completely equitable.

Accepted Answer

A) True 
 B)False

Question 18

In a centrally planned economy,the government decides how economic resources will be allocated.

Accepted Answer

A) True 
 B)False

Question 19

In a market economy,who decides what goods and services will be produced?

Accepted Answer

A)  only the producers
B)  only consumers
C)  consumers and producers
D)  the government

Question 20

In the first six months of 2003,branches of Commerce Bank in New York City were robbed 14 times.The New York City Police recommended steps the bank could take to deter robberies,including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice.According to a deputy commissioner of police,"Commerce does very little of what we recommend.They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce bank would have a strong incentive to install "bandit barriers" to deter robberies.Why wouldn't they do it?

Accepted Answer

A)  The banks would rather delay installation of any theft deterring equipment in anticipation of new lower cost innovations in the security devices market.
B)  The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers."
C)  The banks are concerned that "bandit barriers" would send the wrong message to customers - that the bank is unsafe.
D)  The banks probably resent any interference from the police department.

Exam 1: Economics: Foundations and Models

What is an economic variable? Give an example of an economic variable.

Correct Answer
verified
An economic variable is someth...
View Answer

Every society faces economic trade-offs.This means

Correct Answer
verified

When voluntary exchange takes place,neither party usually gains from the exchange.

Correct Answer
verified

In a centrally planned economy,the government decides how economic resources will be allocated.

Correct Answer
verified

Which of the following statements about economic resources is false?

Correct Answer
verified

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Correct Answer
verified

The government makes all economic decisions in a centrally planned economy.

Correct Answer
verified

Which of the following best describes an assumption economists make about human behavior?

Correct Answer
verified

Which of the following is a positive economic statement?

Correct Answer
verified

Correct Answer
verified
Statements a,c,and e are posit...
View Answer

In market economies,income distribution is always going to be completely equitable.

Correct Answer
verified

Correct Answer
verified

Which of the following contributed to the downfall of the Soviet Union in 1991?

Correct Answer
verified

Competition forces firms to produce and sell products as long as the to consumers exceeds the of production.

Correct Answer
verified

Which of the following is a normative economic statement?

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

Correct Answer
verified

In a market economy,who decides what goods and services will be produced?

Correct Answer
verified

Human capital refers to the accumulated skills and training that workers possess.

Correct Answer
verified

Correct Answer
verified

Exam 1: Economics: Foundations and Models

What is an economic variable? Give an example of an economic variable.

Correct AnswerverifiedAn economic variable is someth...View AnswerShow Answer

Every society faces economic trade-offs.This means

Correct AnswerverifiedShow Answer

When voluntary exchange takes place,neither party usually gains from the exchange.

Correct AnswerverifiedShow Answer

In a centrally planned economy,the government decides how economic resources will be allocated.

Correct AnswerverifiedShow Answer

Which of the following statements about economic resources is false?

Correct AnswerverifiedShow Answer

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Correct AnswerverifiedShow Answer

The government makes all economic decisions in a centrally planned economy.

Correct AnswerverifiedShow Answer

Which of the following best describes an assumption economists make about human behavior?

Correct AnswerverifiedShow Answer

Which of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedStatements a,c,and e are posit...View AnswerShow Answer

In market economies,income distribution is always going to be completely equitable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following contributed to the downfall of the Soviet Union in 1991?

Correct AnswerverifiedShow Answer

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a market economy,who decides what goods and services will be produced?

Correct AnswerverifiedShow Answer

Human capital refers to the accumulated skills and training that workers possess.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
An economic variable is someth...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Statements a,c,and e are posit...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Competition forces firms to produce and sell products as long as the to consumers exceeds the of production.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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