Econ 202, Quiz 2.1-2.7

Economists assume that the goal of consumers is to

make themselves as well off as possible.

Which of the following are assumptions needed for simple arithmetic Numbers exist. Multiplication. Addition. All of the above. A and C above

A and C above

Which of the following can be derived from other assumptions about numbers. Subtraction. Multiplication. Division All of the above. B and C above.

All of the above

Which of the following can be derived from other assumptions of economics Scarcity. Tradeoffs. Opportunity costs. B and C above. A and B above.

B and C above.

Which of the following statements is true of the scientific method? When a researcher looks at a large data set, she is more likely to jump to the wrong conclusions. The larger the size of the data set, the greater the scope of inaccuracy in an analysis. Arguments based on a few anecdotes are mostly true. Empirical arguments are more credible when they are based on a large data set.

Empirical arguments are more credible when they are based on a large data set.

(T/F) Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

False

Which of the following is a normative economic statement?

Farmers should not be allowed to grow and sell genetically-modified crops.

Which of the following is a positive economic statement? If the price of beef falls, a larger quantity of it will be bought. The government should implement a national consumption tax. The U.S. government should increase regulations on the banking industry. The standard of living in the United States is too low.

If the price of beef falls, a larger quantity of it will be bought.

Which of the following is a positive economic statement? The standard of living in the United States should be higher. The U.S. government should not have bailed out U.S. auto manufacturers. The government should revamp the health care system. If the price of iPhones falls, a larger quantity of iPhones will be purchased.

If the price of iPhones falls, a larger quantity of iPhones will be purchased.

The video describes the steps in simple arithmetic as proceeding from

Numbers to cardinal numbers to addition to subtraction to multiplication to division.

Which of the following is a normative economic statement? The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. Rising global demand for coal has led to increases in the price of coal. With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Which of the following is a positive economic statement? Raising the tax on gasoline raises the selling price of gasoline. U.S. citizens should only buy products which are produced in the United States. The government should ban the production and sale of incandescent light bulbs. The government should revamp its immigration policies.

Raising the tax on gasoline raises the selling price of gasoline.

Which of the following is a positive economic statement? People should not buy SUVs. Foreign workers should not be allowed to work for lower wages than the citizens of a country. The government should mandate electric automobiles. Scarcity necessitates that people make trade-offs.

Scarcity necessitates that people make trade-offs.

Which of the following are assumptions of economics

Scarcity.

Which of the following statements is true? Models help economists to explain the past, but do not help in predicting the future. The scientific method used by economists is based on idealism and not empiricism. Testing with data enables economists to distinguish between good models and bad models. Models that economists use are perfect replicas of reality.

Testing with data enables economists to distinguish between good models and bad models.

The highest valued alternative that must be given up to engage in an activity is the definition of

opportunity cost

Which of the following is a normative economic statement? The current high price of gasoline is the result of strong worldwide demand. The price of gasoline is too high. When the price of gasoline rises, the quantity of gasoline purchased falls. When the price of gasoline rises, transportation costs rise.

The price of gasoline is too high.

Which of the following is a normative economic statement? When the price of wheat falls, the quantity of wheat purchased rises. The current low price of wheat is the result of increased worldwide supply. When the price of wheat falls, the cost of wheat-based products falls. The price of wheat is too low.

The price of wheat is too low

(T/F) "An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

True

(T/F) The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

True

(T/F) When voluntary exchange takes place, both parties gain from the exchange.

True

A model refers to:

a simplified description, or representation, of reality.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

an additional unit

Economists assume that individuals

are rational and respond to incentives.

Making "how much" decisions involves

determining the additional benefits and the additional costs of that activity.

The opportunity cost of going to an outdoor music festival is

equal to the highest value of an alternative use of the time and money spent on the festival.

Economists assume that rational behavior is useful in explaining choices people make

even though people may not behave rationally all the time.

Marginal utility is the

extra satisfaction received from consuming one more unit of a product.

An item has utility for a consumer if it

generates enjoyment or satisfaction.

In economics, the term ________ means "additional" or "extra."

marginal

The extra cost associated with undertaking an activity is called

marginal cost

The extra cost associated with undertaking an activity is called

marginal cost.

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that

people are rational.

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

people with health insurance are more likely to be overweight than people without health insurance.

Economic models do all of the following except make economic ideas explicit and concrete for use by decision makers. portray reality in all its minute details. answer economic questions. simplify some aspect of economic life.

portray reality in all its minute details.

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.

rationally

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources.

The principle of opportunity cost is that

the economic cost of using a factor of production is the alternative use of that factor that is given up.

A correlation between two variables implies that:

there is a mutual relationship between both the variables.

Economists assume that rational people do all of the following except

undertake activities that benefit others and hurt themselves.