Question 1

Suppose a university offers college seniors one "free" course. Is this course also free to society?

Accepted Answer

A)   Yes, because the seniors live in society.
B)   Yes, because the school has satisfied the assumption of making a rational choice.
C)   No, because if a college senior takes the last seat in the class, then a paying student will not have the opportunity to take it.
D)   No, because some students will not take a free class seriously and will ultimately become less productive workers.E) All of the above
F) B) and C)

Question 2

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Accepted Answer

A)   marginal benefit.
B)   incentives.
C)   sunk cost.
D)   opportunity cost.E) C) and D)
F) All of the above

Question 3

Which of the following economic decisions would most likely be studied by a macroeconomist?

Accepted Answer

A)   Domino's Pizza decides to provide quantity discounts in order to increase revenue.
B)   A local entrepreneur decides to open a Waffle House in the local Walmart parking lot.
C)   The government of Estonia implements a flat rate personal income tax for all citizens.
D)   Prices for train fares rise as labor unions negotiate higher wage rates.E) None of the above
F) All of the above

Question 4

Economic analysis requires us to combine:

Accepted Answer

A)   unlimited resources with limited wants.
B)   theory with observations.
C)   developed and developing nations.
D)   views from different political parties.E) C) and D)
F) B) and C)

Question 5

As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Accepted Answer

A)   scarcity.
B)   incentives.
C)   normative analysis.
D)   correlation and causation.E) C) and D)
F) B) and D)

Question 6

You and a friend decide to go see a movie at the theater, spending $15 each on the tickets. Halfway through the movie you're struggling to stay awake and your friend is scrolling through Facebook. You suggest leaving the movie to do something else, since you're both obviously bored. However, your friend declines, stating he doesn't want to waste the $15 he spent on the ticket. Your friend is considering the ______ of the movie.

Accepted Answer

A)   opportunity cost
B)   sunk cost
C)   marginal benefit
D)   total costE) C) and D)
F) B) and D)

Question 7

People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

Accepted Answer

A)   political statements and non-political statements.
B)   rational statements and irrational statements.
C)   macroeconomic theories and microeconomic theories.
D)   positive statements and normative statements.E) A) and D)
F) All of the above

Question 8

A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the third movie?

Accepted Answer

A)   $1
B)   $8
C)   $4
D)   $2E) A) and D)
F) B) and C)

Question 9

Good economic models should:

Accepted Answer

A)   attempt to include every detail of the situation being studied.
B)   attempt to describe a situation with perfect accuracy.
C)   not be applied to microeconomics.
D)   describe a real-life situation accurately.E) None of the above
F) A) and C)

Question 10

Suppose researchers are interested in the health effects of diet soda. It has been observed that individuals who consume diet soda are more likely to be overweight. Which of the following describes how reverse causation could explain this correlation?

Accepted Answer

A)   Overweight individuals have a genetic predisposition to seek out sweet foods and beverages.
B)   Individuals who wish to lose weight choose to drink diet soda.
C)   Diet soda advertises to people who wish to lose weight.
D)   All of these could be correct.E) B) and D)
F) C) and D)

Question 11

The purpose of an economic model is to:

Accepted Answer

A)   describe the way economists think the world should be.
B)   provide a simplified representation of a complicated situation.
C)   describe the best possible outcomes for society.
D)   explain a situation without making strong assumptions.E) A) and B)
F) A) and C)

Question 12

Scarcity can best be defined as a situation in which:

Accepted Answer

A)   consumers look for bargains.
B)   some producers are selfish with resources.
C)   people respond to incentives.
D)   all wants cannot be satisfied due to resource constraints.E) C) and D)
F) B) and C)

Question 13

The sentence "Economies that adopt more open trade policies have often historically enjoyed faster economic growth rates as a result." is an example of a _____ statement.

Accepted Answer

A)   marginal
B)   normative
C)   positive
D)   biasedE) C) and D)
F) A) and B)

Question 14

Consider two neighbors who each run a small business. Juan grows and sells vegetables. Amber grows and sells flowers. Currently, Juan uses a herbicide on his vegetables, because he can grow more crops with the use of herbicide. Specifically, he earns $1,500 more during the years when he uses herbicide. Amber's flower farm is harmed by Juan's use of herbicide because it drifts to her farm and kills $3,000 worth of flowers each year. Which would be an efficient solution to this problem?

Accepted Answer

A)   The government bans the use of herbicide.
B)   Amber sells her flower business.
C)   Amber pays Juan $1,500 not to use a herbicide.
D)   There is no need for an intervention, as the current situation is efficient.E) None of the above
F) All of the above

Question 15

After paying the membership fee for a warehouse club like Costco, members are able to purchase items at a discounted price. Suppose the price of one pound of chicken is $4.99 at a typical grocery store but $2.99 at Costco. Also suppose the annual price of a Costco membership is $60. The marginal cost of your 5th pound of chicken purchased at Costco is:

Accepted Answer

A)   $2.99.
B)   $2.00.
C)   −$2.00.
D)   $62.99.E) C) and D)
F) A) and B)

Question 16

A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the second movie?

Accepted Answer

A)   $1
B)   $8
C)   $4
D)   $2E) B) and C)
F) None of the above

Question 17

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

Accepted Answer

A)   College tuition rates are rising.
B)   Twenty-eight percent of U.S. adults have a bachelor's degree.
C)   The average income of a college graduate exceeds that of the average high school graduate.
D)   State governments should pay for the first two years of college at public institutions.E) None of the above
F) All of the above

Question 18

When speed boat sales rise, the city of Las Vegas takes in more revenue. The omitted common variable between these outcomes is likely to be:

Accepted Answer

A)   life jacket sales.
B)   prices of Las Vegas flights.
C)   childhood obesity.
D)   increased disposable income.E) B) and D)
F) A) and D)

Question 19

You're trying to determine whether to spend your Saturday afternoon attending a street festival, working to earn $100, or studying for your midterm exam. You really don't want to work, so you flip a coin between attending the street festival and studying. The coin flip determines that you should stay home and study. The opportunity cost of your time spent studying includes:

Accepted Answer

A)   the loss of $100 worth of wages and the joy from going to the street festival.
B)   earning a high score on your midterm and thus improving your grade in the class.
C)   the benefit that you could have received from attending the street festival.
D)   the time you spent deciding and using a coin flip to determine your Saturday afternoon activity.E) C) and D)
F) B) and D)

Question 20

A journal reports that both minivan sales and birth rates are on the rise. If you were to conclude that minivans cause people to have children you would be making the mistake of:

Accepted Answer

A)   extrapolation.
B)   omitted variables.
C)   correlation without causation.
D)   reverse causality.E) A) and C)
F) C) and D)

Exam 1: Economicsand Life

Correct Answer
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Correct Answer
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Good economic models should:

Correct Answer
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Correct Answer
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Economic analysis requires us to combine:

Correct Answer
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A journal reports that both minivan sales and birth rates are on the rise. If you were to conclude that minivans cause people to have children you would be making the mistake of:

Correct Answer
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Which of the following economic decisions would most likely be studied by a macroeconomist?

Correct Answer
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Suppose a university offers college seniors one "free" course. Is this course also free to society?

Correct Answer
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The purpose of an economic model is to:

Correct Answer
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People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

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

Correct Answer
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As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Correct Answer
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If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Correct Answer
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Correct Answer
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When speed boat sales rise, the city of Las Vegas takes in more revenue. The omitted common variable between these outcomes is likely to be:

Correct Answer
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Scarcity can best be defined as a situation in which:

Correct Answer
verified

Suppose researchers are interested in the health effects of diet soda. It has been observed that individuals who consume diet soda are more likely to be overweight. Which of the following describes how reverse causation could explain this correlation?

Correct Answer
verified

Correct Answer
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The sentence "Economies that adopt more open trade policies have often historically enjoyed faster economic growth rates as a result." is an example of a _____ statement.

Correct Answer
verified

Correct Answer
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Exam 1: Economicsand Life

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Good economic models should:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic analysis requires us to combine:

Correct AnswerverifiedShow Answer

A journal reports that both minivan sales and birth rates are on the rise. If you were to conclude that minivans cause people to have children you would be making the mistake of:

Correct AnswerverifiedShow Answer

Which of the following economic decisions would most likely be studied by a macroeconomist?

Correct AnswerverifiedShow Answer

Suppose a university offers college seniors one "free" course. Is this course also free to society?

Correct AnswerverifiedShow Answer

The purpose of an economic model is to:

Correct AnswerverifiedShow Answer

People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As monthly rain levels rise, golf course revenue falls because casual golfers prefer to stay dry. This is an example of:

Correct AnswerverifiedShow Answer

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When speed boat sales rise, the city of Las Vegas takes in more revenue. The omitted common variable between these outcomes is likely to be:

Correct AnswerverifiedShow Answer

Scarcity can best be defined as a situation in which:

Correct AnswerverifiedShow Answer

Suppose researchers are interested in the health effects of diet soda. It has been observed that individuals who consume diet soda are more likely to be overweight. Which of the following describes how reverse causation could explain this correlation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The sentence "Economies that adopt more open trade policies have often historically enjoyed faster economic growth rates as a result." is an example of a _____ statement.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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