Deck 1: Introduction

Question 1

Which of the follow is NOT an example of a market?

A) Retail trade of chocolate ice cream in Boston.
B) The buying and selling of homes in Kansas City.
C) The farmer's market in Madison, Wisconsin.
D) The buying and selling of used cars.

Answer 1

The farmer's market in Madison, Wisconsin.

Question 2

Economists think of products as being in the same market if they

A) are traded in the same geographic location.
B) cannot be substituted for other goods and services.
C) are highly interchangeable.
D) produced by companies that complete with each other.

Answer 2

are highly interchangeable.

Question 3

The most common form of economic decentralization involves

A) having very little government involvement in the economy.
B) markets, where people buy and sell goods and services.
C) government officials making economic decisions.
D) government ownership of the means of production.

Answer 3

markets, where people buy and sell goods and services.

Question 4

In a capitalist economy,

A) the state controls the means of production.
B) the means of production are mostly owned by private individuals.
C) economic decisions are centralized.
D) government officials decide what to produce, how to produce it and who gets it.

Question 5

Positive economic analysis

A) involves value judgments.
B) concerns what ought to happen.
C) addresses factual issues.
D) is subjective.

Question 6

In a ______ economy,the allocation of resources is governed by voluntary trading among businesses and consumers.

A) capitalist
B) communist
C) socialist
D) traditional

Question 7

Microeconomists usually assume that people are motivated by

A) selfishness.
B) material self-interest.
C) altruism.
D) property rights.

Question 8

A _______ is an enforceable claim on a good or service.

A) deed
B) government decree
C) price
D) property right

Question 9

Trade can occur only if property rights are

A) not enforced.
B) transferable.
C) legally binding.
D) not transferable.

Question 10

Microeconomics

A) studies individual decision making.
B) studies aggregate behavior.
C) cannot be applied too behaviors such as marriage.
D) cannot be used to address questions of what ought to be.

Question 11

Which of the following topics is related to microeconomics?

A) Explanations of why recessions occur.
B) Determining how much output a firm should produce.
C) The rate of unemployment.
D) The rate of economic growth.

Question 12

In a free market system

A) there is no government involvement in the economy.
B) resources are allocated on a first-come first-served basis.
C) buyers and sellers make all of the economic decisions.
D) government mostly allows markets to operate with little intervention or regulation.

Question 13

The rate at which someone can swap money for a good is called the _____ of the good.

A) price
B) opportunity cost
C) total cost
D) rate of substitution

Question 14

In deciding on how to spend their resources,consumers try to

A) maximize expenditures.
B) choose the combination of goods that yield the highest level of personal satisfaction.
C) choose the combination of goods that costs the least.
D) maximize profit.

Question 15

According to economists,which of the following is the best example of a market?

A) A flea market.
B) The trading floor of the New York Stock Exchange.
C) The local shopping mall.
D) The retail market for winter coats in Chicago.

Question 16

In a communist economy,

A) the state controls the means of production.
B) individuals decide what to produce, how to produce it and who gets it.
C) economic decisions are decentralized.
D) the market system is used to allocate resources.

Question 17

Questions that address what did,will or would actually happen are called ________ questions.

A) normative
B) positive
C) efficiency
D) equity

Question 18

A society's institutions

A) include the laws and customs that influence the allocation of resources.
B) have no effect on people's abilities to make decisions.
C) are irrelevant when studying an economy.
D) are not related to the control of society's resources.

Question 19

To an economist,a single market is associated with

A) a single group of closely related products.
B) a specific building where trade takes place.
C) all goods traded in a specific geographic region.
D) all buyers living in a specific geographic location.

Question 20

In most countries,decisions that affect medical expenditures are

A) centralized.
B) decentralized.
C) determined by government policy.
D) both centralized and decentralized.

Question 21

The real test of a good model is

A) its degree of mathematical rigor.
B) the degree to which its assumptions conform to the "real world."
C) its usefulness in predicting outcomes.
D) how detailed it is.

Question 22

In conducting positive economic analysis,economists apply

A) subjective value judgments.
B) the principle of individual sovereignty.
C) moral values.
D) the scientific method.

Question 23

In order to explain how societies deal with the problem of scarcity,economists apply simplified representations known as

A) simplifying assumptions.
B) empirical tests.
C) normative questions.
D) models.

Question 24

A useful theory must

A) apply to every conceivable situation.
B) be broadly applicable.
C) be agreed upon by all economists.
D) not be able to be refined.

Question 25

A possible explanation for a natural phenomenon is called

A) the scientific method.
B) a theory.
C) a value judgment.
D) normative economics.

Question 26

Which of the following is NOT a reason why economists usually work with mathematical models?

A) Because most economic choices are quantitative in nature.
B) Mathematical models can provide precision, while quantitative models cannot.
C) Mathematical modeling imposes intellectual rigor.
D) Mathematical models can be used to settle disputes over normative economic questions.

Question 27

Economists use assumptions in order to

A) make models more realistic.
B) simplify complex real-world behavior.
C) make their models fit the data.
D) avoid using mathematics.

Question 28

Which of the following is a normative question?

A) Should the government require cars to be fuel efficient?
B) Does legalized abortion lead to lower crime rates?
C) Will moving a plant overseas reduce production costs?
D) Will an increase in the minimum wage reduce poverty?

Question 29

Which of the following best exemplifies the theorizing step in the scientific process?

A) Observing a line of cars outside of a gas station.
B) Suggesting that lower gasoline prices are encouraging consumers to buy more gas.
C) Collecting data on the amount of gasoline sold at different prices.
D) Drawing a graph of the relationship between gasoline prices and the amount of gasoline sold at each price.

Question 30

The general procedure used to learn about natural phenomena is called

A) positive economics.
B) the scientific method.
C) normative economics.
D) a theory.

Question 31

Questions that address the cause-and-effect analysis of actions and their consequences are

A) positive questions.
B) normative questions.
C) not testable.
D) subjective.

Question 32

Which of the following is a positive question?

A) Is society better off if we restrict trade with other countries?
B) Should we increase taxes on the rich or the middle class?
C) Will an increase in the minimum wage cause more unemployment for teenagers?
D) Should the government provide health care?

Question 33

Which of the following top is NOT studied using microeconomics?

A) Ford's decision to introduce a new car model.
B) An individual's decision to get married.
C) A person's decision whether or not to commit a crime.
D) An individual's moral values.

Question 34

A theory

A) is usually based on a set of value judgments.
B) cannot be tested.
C) is a possible explanation for a natural phenomenon.
D) always fits with real-world data.

Question 35

In their study of the effect of legalized abortion on crime rates,Steven Levitt and John Donohue applied

A) positive economic analysis.
B) normative economic analysis.
C) the principle of individual sovereignty.
D) value judgments.

Question 36

In conducting normative analysis,economists apply

A) the principle of comparative advantage.
B) the principle of individual sovereignty.
C) the law of one price.
D) objective value judgments.

Question 37

Positive economic questions

A) involve value judgments.
B) address what ought to happen.
C) are potentially testable.
D) cannot be tested.

Question 38

Normative economic analysis addresses

A) what ought to happen.
B) factual issues.
C) the cause-and-effect analysis of actions and their consequences.
D) are potentially testable.

Question 39

Questions that involve value judgments are

A) Positive questions.
B) Normative questions.
C) Not relevant to microeconomics.
D) Objective.

Question 40

A model

A) is a complete representation of some phenomenon.
B) is a simplified representation of some phenomenon.
C) is always expressed mathematically.
D) cannot be qualitative in nature.

Question 41

The competitive market price of a good

A) is equal to the value consumers place on the last unit they purchased.
B) must reflect both the value to consumers and cost to producers.
C) must exceed the cost of producing an extra unit of the good.
D) must be less than what consumers are willing to pay for an additional unit of the good.

Question 42

How does marriage fall within the scope of microeconomics?

Question 43

The accumulation of scientific evidence can

A) resolve normative disputes.
B) resolve positive disagreements.
C) determine whether one person's gain is more important than another person's loss.
D) always settle disputes over public policy.

Question 44

Compare and contrast the institutions of a capitalist economy with those of a communist economy.

Question 45

The application of statistical methods to empirical questions in economics is known as

A) positive economic analysis.
B) normative economic analysis.
C) the scientific method.
D) econometrics.

Question 46

What are the roles of markets and prices in an economy?

Question 47

An increase in the price of a good

A) increases the incentive to buy the good, but decreases the incentive to sell the good.
B) decreases the incentive to buy the good, but increases the incentive to sell the good.
C) increases both the incentive to buy the good and the incentive to sell the good.
D) decreases both the incentive to buy the good and the incentive to sell the good.

Question 48

A small adjustment in a choice is called

A) a marginal change.
B) an incremental change.
C) a positive change.
D) a net change.

Question 49

Suppose you are thinking about spending an additional hour studying for your next microeconomics exam.You should spend that extra hour studying as long as

A) the extra study time leads to a higher grade on the exam.
B) your only other alternative is spending an hour reading a novel.
C) the benefit of an additional hour of study is greater than what you have to give up in order to study one more hour.
D) you enjoy studying microeconomics.

Question 50

In a situation where a market failure occurs,

A) any government intervention will improve on the market outcome.
B) there is nothing that the government can do to improve on the market outcome.
C) government intervention might improve on the market outcome.
D) it will always be preferable to have the government intervene in the market.

Question 51

Scarcity forces society to confront three critical issues.List those issues and explain how they are related to the problem of scarcity.

Question 52

Which of the following statements is false?

A) Recognizing tradeoffs is an essential part of good decision making.
B) Most government policies provide people with incentives to take certain actions and avoid others.
C) People will pursue an action as long as it has benefits associated to it.
D) Every choice involves a tradeoff.

Question 53

In a natural experiment,

A) similar people face very different circumstances.
B) the circumstances of otherwise identical people differ entirely by chance.
C) the circumstances of one group of people is compared to a "control" group of people.
D) similar people face very similar circumstances.

Question 54

Which of the following is NOT a beneficial aspect of trade?

A) Someone who owns a good of relatively little value can trade it for something they value more.
B) Trade frees people from the need to produce everything themselves.
C) Trade allows people to specialize in whatever they do best.
D) Trade eliminates the problem of scarcity.

Question 55

How would you apply the scientific process to the question of why men typically earn more than women?

Question 56

According to the text,which of the following best describes the process the FCC used to allocate spectrum licenses to telecommunications providers?

A) Licenses were auctioned one at a time, to the highest bidder.
B) Licenses were first sold to telecommunications providers that already had contracts with the government.
C) All licenses were auctioned off at the same time.
D) The government charged the same price for each license.

Question 57

Contrast positive and normative economics.How can economists carry out normative analysis?

Question 58

Using the Themes of Microeconomics,provide an economic explanation of your decision to attend college.How would you explain your decision to take your microeconomics class?