Econ Exam 1
D
The concept of opportunity cost is a measure of _________. A) all the possible alternative uses of a resource. B) the dollar amount you must pay to do any activity. C) the benefit that you receive from doing any activity. D) the value of the best alternative use of a resource.
A
The relationship between a firm's advertising expenditure and its profit is studied under: A) microeconomics. B) macroeconomics. C) public economics. D) international economics.
B
What is meant by randomization in the context of an economic experiment? A) Economic experiments are not arranged in a logical sequence. B) Subjects are assigned by chance, rather than by choice, to a group. C) Group numbers are arranged in a nonsequential order. D) Subjects are assigned to control and test groups by noneconomic factors such as race.
D
10) An omitted variable is a variable that: A) is purposely left out as it does not aid an economic analysis. B) does not cause other variables in a study to change when it changes. C) is removed from a study as it can lead to the problem of reverse causality. D) has been left out, and if included, would explain why the variables considered in a study are correlated.
A
A consumer has a monthly income of $100 that he wants to spend on two goods: rugs priced at $10 and chairs priced at $5. What is the consumer's opportunity cost of buying a rug? A) Two chairs B) Half of a chair C) $5 D) Ten rugs
D
Which of the following best describes scarce resources? A) Resources that most people cannot afford to buy B) Resources that can only be distributed efficiently by the government C) Resources for which the quantity demanded is the same for all economic agents D) Resources for which the quantity that people want exceeds the quantity that is freely available
A
Which of the following pairs of variables are likely to be positively correlated? A) Income and consumption B) Price and consumption C) Education and unemployment D) Availability of health care and death rate
C
Which of the following statements is true? A) All economic agents are necessarily individuals. B) A worker who shirks work is not an economic agent. C) A government is an example of an economic agent. D) A street gang is not an economic agent.
D
Which of the following statements is true? A) Models that economists use are perfect replicas of reality. B) The scientific method used by economists is based on idealism and not empiricism. C) Models help economists to explain the past, but do not help in predicting the future. D) Testing with data enables economists to distinguish between good models and bad models.
A
Which of these statements correctly differentiates between positive and normative economics? A) Positive economics is descriptive, whereas normative economics is advisory. B) Positive economics describes what people ought to do, whereas normative economics describes what people actually do. C) Positive economics is based on judgments, whereas normative economics is not. D) Positive economics can only be applied to microeconomics, whereas normative economics can be applied to both microeconomics and macroeconomics.