CH 1 IN MACRO QUESTIONS

POSITIVE OR NORMATIVE ANALYSIS? The federal government should spend more on AIDS research

Normative analysis

POSITIVE OR NORMATIVE ANALYSIS? The price of coffee at Starbucks is too high

Normative analysis

POSITIVE OR NORMATIVE ANALYSIS? A 50-cent-per-pack tax on cigarettes will reduce smoking by teenagers by 12 percent

Positive analysis

POSITIVE OR NORMATIVE ANALYSIS? Rising paper prices will increase textbook prices

Positive analysis

Which of the following statements about a hypothesis is correct? a. A hypothesis is a statement that could in principle turn out to be incorrect b. To be called a hypothesis, a statement must first be shown to be correct c. A hypothesis is another name for a model d. A hypothesis will always incorporate a value judgment

a. A hypothesis is a statement that could in principle turn out to be incorrect

In a market system, how does society decide what goods and services will be produced? a. Consumers, firms, and the government determine what goods and services will be produced by the choices they make b. The government decides what goods and services will be produced c. What goods and services will be produced is determined by a vote of consumers d. Firms alone determine what goods and services will be produced

a. Consumers, firms, and the government determine what goods and services will be produced by the choices they make

In a market system, what determines how goods and services will be produced? a. Firms determine how goods and services will be produced b. Consumers determine how goods and services will be produced c. The government determines how goods and services will be produced d. Consumers, firms, and the government determine together how good and services will be produced

a. Firms determine how goods and services will be produced

Which of the following statements about microeconomics and macroeconomics is correct? a. Microeconomics involves the study of how households and firms make choices b. All economic situations can be categorized as being microeconomics or macroeconomics c. Microeconomics does not involve the analysis of economic policy d. Macroeconomics does not involve the analysis of economic policy

a. Microeconomics involves the study of how households and firms make choices

Assuming that these statistics are available or could be gathered, are they likely to resolve the normative issues in this debate? a. No, because normative issues involve value judgments that incorporate an individual's full range of experiences, beliefs, and emotions b. Yes, the quantitative analysis of hard economic data leaves no unsettled questions. Subjective considerations cannot override objective analysis

a. No, because normative issues involve judgments that incorporate an individual's full range of experiences, beliefs, and emotions

Which of the following statements about positive analysis is correct? a. Positive analysis is concerned with what is b. Positive analysis can be used to determine whether policies are good or bad c. Positive analysis involves value judgments d. Positive analysis is concerned with what ought to be

a. Positive analysis is concerned with what is

In market system, how does society decide who will receive the goods and services produced? a. Who receives the goods and services produced depends largely on how income is distributed b. The government determines the goods and services produced c. Consumers determine who receives the goods and services produced d. Firms determine who received the goods and services produced

a. Who receives the goods and services produced depends largely on how income is distributed

When an employer offers a wellness program to its employees, the health insurance premiums the employer pays on behalf of the employees are likely to ______ a. decrease b. increase

a. decrease

Economists believe that an activity should be continued up to the point where... a. the marginal benefit from the activity is equal to the marginal cost b. the marginal benefit from the activity plus the marginal cost equals zero c. the marginal benefit from the activity is greater than the marginal cost d. the marginal benefit from the activity is less than the marginal cost

a. the marginal benefit from the activity is equal to the marginal cost

Economists assume that the only reason people take the actions they do is in response to economic incentives a. True b. False

b. False

Which of the following statements about microeconomics and macroeconomics is correct? a. Microeconomics does not involve the analysis of economic policy b. Macroeconomics is the study of the economy as a whole c. All economic situations can be categorized as being microeconomics or macroeconomics d. Macroeconomics does not involve the analysis of economic policy

b. Macroeconomics is the study of the economy as a whole

(Refer to Mcdonalds article?) From an economics perspective, to determine whether to serve breakfast all day, Mcdonalds should, a. calculate whether the total cost of serving breakfast all day is large b. compare the marginal revenue from serving breakfast all day with the marginal cost of serving breakfast all day c. compare the total revenue from serving breakfast all day with the average revenue from serving breakfast all day d. compare the average cost of serving breakfast all day to the total cost of serving breakfast all day e. conduct customer surveys to better understand how its customers feel about the change

b. compare the marginal revenue from serving breakfast all day with the marginal cost of serving breakfast all day

The incentives of employees to improve or maintain their health once they obtain health insurance may be _________ impacted a. positively b. negatively

b. negatively

Why are models based on assumptions? a. Because models are not intended to analyze real-world events b. Because models are only concerned about questions of equity, not questions of efficiency c. Because models have to be simplified to be useful d. Because models are very different from theories

c. Because models have to be simplified to be useful

Which of the following statements about economics as a social science is correct? a. Economics considers human behavior only in the context of business b. Economics uses normative analysis but not positive analysis c. Economics studies the actions of individuals d. Economics is not useful in analyzing the effects of government policy

c. Economics studies the actions of individuals

Which of the following statements is correct? a. A company is owned by one person, while a firm is owned by more than one person b. A business has multiple locations, while a company has only a single location c. Economists use the terms firm, company, and business interchangeably d. A business is always larger than a firm

c. Economists use the terms firm, company, and business interchangeably

Which of the following statements about normative analysis is correct? a. Normative analysis is concerned with what is b. Normative analysis measures the costs and benefits of different courses of action c. Normative analysis is concerned with what ought to be d. Normative analysis should not involve value judgments

c. Normative analysis is concerned with what ought to be

How are economic resources allocated in a market economy? a. by firms acting alone b. by consumers acting alone c. by the decisions of households and firms interacting in markets d. by the government

c. by the decisions of households and firms interacting in markets

What do economists mean by the word "marginal"? a. unimportant b. small c. extra or additional d. first

c. extra or additional

Which of the following statements about an economic variable is correct? a. An economic variable is always measured in dollars b. An economic variable must either be the price of a good or service or the quantity of a good or service c. An economic variable must always be a positive number d. An economic variable is something measurable that can have different values

d. An economic variable is something measurable that can have different values

Which of the following statements is correct? a. The word "technology" and the word "innovation" have the same meaning b. The word "technology" and the word "invention" have the same meaning c. An invention is the practical application of an innovation d. An innovation is the practical application of an invention

d. An innovation is the practical application of an invention

Which of the following is a correct statement about a mixed economy? a. In a mixed economy, the government makes all economic decisions b. In a mixed economy, most economic decisions are made by the government but markets play a significant role in the allocation of resources c. In a mixed economy, all economic decisions are made in markets d. In a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources

d. In a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources

(Refer to Mcdonalds article?) Would Mcdonald's decision have to be all or nothing- either serve breakfast only up to 10:30 A.M. or serve breakfast all day? a. Yes, because customers would want it to be all or nothing b. Yes, because it would be difficult for employees to set the grill at the right temperature for both foods c. No. The employees could learn to adjust to this situation and serve breakfast all day as well as lunch and dinner d. No. Mcdonalds could evaluate serving items from the breakfast menu that could be cooked in better coordination with the dinner menu for a period after 10:30 A.M.

d. No. Mcdonalds could evaluate serving items from the breakfast menu that could be cooked in better coordination with the dinner menu for a period after 10:30 A.M.

Which of the following statements about the idea that people are rational is correct? a. The idea assumes that consumers and firms take into account the costs of their actions but ignore the benefits b. The idea assumes that consumers and firms always make correct decisions c. The idea assumes that consumers and firms take into account the benefits of their actions but ignore the costs d. The idea assumes that consumers and firms use all available information as they act to achieve their goals

d. The idea assumes that consumers and firms use all available information as they act to achieve their goals

A news story on declining attendance at college football games noted that schools in the central time zone had particular problems with attendance at games that started at 11 a.m. The athletic director at the University of Illinois was quoted as saying, "I'm a big fan of evening games." Playing games in the late afternoon or evening, rather than in the morning, would... a. take the same amount of time, so the opportunity cost would not change b. only change the opportunity cost if the ticket prices changed c. not change attendance because the real fans would attend no matter what the time d. change the opportunity cost for students whose alternative activities vary throughout the day

d. change the opportunity cost for students whose alternative activities vary throughout the day

Under the Affordable Care Act, low-income people receive subsidies to help them pay for health insurance. These subsidies decline as income increases, which may result in some low-income workers supplying fewer hours to keep their income from increasing and their subsidies from declining. This outcome is an example of which key economic idea? a. optimal decisions are made at the margin b. scarcity c. voluntary exchange d. people respond to economic incentives

d. people respond to economic incentives

Many universities and corporations offer a health wellness program that helps their employees improve or maintain their health and get paid (a relatively small amount) for doing so. The programs vary, but typically consist of employees completing a health assessment, receiving a healthy living program, and monitoring their monthly health activities Corporations and universities are willing to pay employees to take care of themselves because a healthier workplace.... a. translates into lower costs, in part by reducing illness-related absenteeism and premature retirements b. performs more efficiently, thereby improving overall productivity in the workplace c. is a happier workforce and thus less likely to become confrontational with management d. all of the above e. A and B only

e. A and B only a. translates into lower costs, in part by reducing illness-related absenteeism and premature retirements b. performs more efficiently, thereby improving overall productivity in the workplace

There are both positive and normative elements to the debate over whether medical schools should charge tuition and whether hospitals should continue to pay residents who pursue primary care but not residents who specialize Which of the following economic statements would be the most useful in evaluating the positive elements in this debate? a. Physician incomes by specialty and geographic region b. Med school tuition rates, applications, and enrollments c. Poverty rates by geographic region d. Age distribution characteristics of the population by geographic region e. All of the above

e. All of the above