Econ Ch. 1 Quiz Questions

Economics is most importantly concerned with:

Economic choices or tradeoffs are the result of:

Economics is concerned with: A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires. D. all of the answers are correct.

Economic resources are also known as:

Which of the following is not an example of a resource? a forest, a river, a John Deere tractor, the chef at the city's best café

Human capital is:

Which of the following is true? A. Poverty could be eliminated but scarcity could not. B. Scarcity could be eliminated but poverty could not. C. Both scarcity and poverty could be eliminated. D. Neither scarcity nor poverty could be eliminated.

Which of the following is true of resources? A. Their availability is unlimited. B. They are the inputs used to produce goods and services. C. Increasing the amount of resources available could eliminate scarcity. D. They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity.

An example of a capital resource is: A.stock in a computer software company. B.the funds in a CD account at a bank. C.a bond issued by a company selling electric generators. D. A dump truck E. an employee of a moving company.

Entrepreneurship is:

Which of the following is an example of an individual motivated be self-interest? A. a student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. a man buying a new Camaro

Economists believe that individuals act as if they are motivated by self-interest and: A.respond selfishly. B.respond in predictable ways to changing circumstances. C.it leads to inconsistent and unpredictable behavior. D.all of the above.

From an economists' perspective, which of the following observations is not true? A.Self-interest is purely monetary in nature. B.Self-interest can include benevolence. C.Self-interest is a good predictor of human behavior in most situations. D.Self-interest is not the same as selfishness.

When economists refer to economic behavior, they mean that:

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

"As a rational person, you would expect individuals to always avoid actions that are illegal." T or F

When economists speak of markets, they primarily mean:

Which of the following serve as the language of the market system? A.Monetary and fiscal policies B.Morals C. Market Prices D. Governments

Which of the following is an example of market failure? A. Overuse of highways that leads to traffic congestion B. Reduced levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub-prime lending

Market failure occurs when:

A hypothesis is:

A theory can best be defined as:

The importance of the ceteris paribus assumption is that it:

Economics is different from a "hard" science like physics because:

Macroeconomic topics do not usually include: the rate of inflation the rate of unemployment economic growth the profit maximizing decisions of an individual manufacturer the control of money supply by an individual bank

Which of the following lies primarily within the realm of microeconomics? an empirical analysis of the relationship between the growth of the money supply and the rate of inflation an economic model forecasting the impact of a tax increase on consumer spending and national output a study of supply and demand conditions in the market for orange juice a model forecasting the impact of a change in interest rates on the level of investment in the economy

Which of the following best illustrates the fallacy of composition? -If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods. -If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods. -If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected. -Aggregate consumption may not behave in the same manner as the consumption of a particular individual.

Which of the following is a statement of positive economics? - The income tax reduces after-tax incomes of the rich. -A reduction in tax rates makes the after-tax distribution of income fairer. -Tax rates ought to be reduced so that people will work more. -All of the above are statements of positive economics. -None of the above is statements of positive economics.

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Which of the following is not an example of the use of the problem solving perspective provided by economics? -An investor considers the tax consequences of selling stocks in order to buy bonds (which she believes offer a better return). -A rancher recognizes that raising more cattle this year will damage his pasture and limit next year's herd size. -The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember. -An economics student considers the scarcity of available study time for studying the other subjects that she should be studying before deciding to study economics this evening.

The problem of scarcity:

The real core of most economic problem is to:

Human capital is:

Which of the following is an example of a capital resource? -redwood trees -unskilled labor -stocks and bonds -an oil rig

The function of an entrepreneur is to:

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of:

Economic goods are:

An economy's resources:

Which of the following would reflect self-interested behavior? A. A worker pursuing a higher paying job and better working conditions. B. A consumer seeking a higher level of satisfaction with her current income. C. Donating a cell phone to a woman's shelter. D. Mother Theresa using her Nobel Prize money to care for the poor.

Negative incentives:

A market economy depends on market mechanisms to:

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

Which of the following is not a resource exchanged in the factor markets? A. land B. capital C. labor D. entrepreneurship

A good economic theory:

Which of the following is correct? A. "Theory" and "hypothesis" are interchangeable terms meaning the same thing. B. A hypothesis may result from a tested and confirmed theory. C. A theory may result from a tested and confirmed hypothesis. D. A hypothesis is a theory whose formulation relies on mathematics.

The term "ceteris paribus" means that:

An economic hypothesis is tested:

Which of the following is most likely a topic of discussion in a microeconomics course? A. a decrease in the share of national income paid to the government in taxes B. an increase in the price of lumber used to construct houses C. an increase in the rate of inflation D. an increase in the number of jobless individuals filing unemployment claims E. the size of the national debt

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

Which of the following is most likely an example of correlation but not an example of causation? A.In the U.S., more pizza is consumed on Super Bowl Sunday than any other day of the year. B. The cost of advertising during the first half of the Super Bowl is greater than the cost of advertising in the second half. C.Usually, if I eat a chili dog and drink a beer before a game, my teams wins. D.Generally speaking winning football teams tend to average more rushing yards than losing football teams.

The fallacy of composition is:

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Which of the following represents a normative statement? A. A decrease in price leads to an increase in quantity demanded. B. The temperature outside is 90 degrees. C. The study of economics is more important than the study of history. D. People will buy less butter at $1.50 per pound then they will at $1.00 per pound. E. Normally, as an economy develops, the nation's birth rate tends to fall.