Economics Chapter 1

Which of the following does not support the concept of an economic​ agent? ​(Check all that apply​.) A. Groups are considered as a single decision maker. B. They make decisions by solving choice problems. C. Their decisions do not have an effect on the economy of a country. D. All economic agents are individuals.

C and D

Microeconomics is concerned​ with: A. Reasons for unemployment. B. Placing a greater emphasis on empirical data. C. Externalities arising from production and consumption. D. Shifts in aggregate demand due to changes in price.

C. Externalities arising from production and consumption.

The opportunity cost of an activity is a measure of (benefits you gain or what is given up) when you do that activity.

what is given up

The definition of economics states that it is the study of how​ _________. A. businesses make decisions and how those decisions impact other​ firms, the​ government, and consumers. B. money influences the economy in the short run and the long run. C. agents choose to allocate scarce resources and the impact of those choices on society. D. the government determines​ policies, businesses set​ prices, and consumers choose how much to buy.

C. agents choose to allocate scarce resources and the impact of those choices on society.

Which of the following statements explain positive​ economics? ​(Check all that apply​.) A. It is not factual. B. It depends upon value judgements. C. It can be rejected or amended depending on the evidence available. D. The predictions are testable.

All of these

Policy decisions made by the government are analyzed by​ _________. A. neither microeconomics nor macroeconomics. C. only microeconomics. D. only macroeconomics.

B. both microeconomics and macroeconomics.

The ethical implications of a hotly debated government policy would best be considered a​ _________. A. normative​ question, since it deals with an objective issue based on factual evidence. B. positive​ question, since it deals with an objective issue based on factual evidence. C. normative​ question, since it deals with a subjective issue based on personal preferences. D. positive​ question, since it deals with a subjective issue based on personal preferences.

C. normative​ question, since it deals with a subjective issue based on personal preferences.

Which of the following is not a correct explanation of​ economics? A. It studies the effects of any individual​ agent's choices on society. B. It helps in evaluating the costs and benefits of alternative actions. C. It is concerned with every type of human behavior. D. It is concerned only with money and financial aspects of human behavior.

D. It is concerned only with money and financial aspects of human behavior

Which of the following is not an item studied under microeconomics​? A. Economic output. B. Individual preferences. C. The well minus being of agents. D. Firm profits.

Economic Output

Clara visits the local bakery shop several times a week and knows the​ owner, Sam, very well. Her favorite​ cupcakes, chocolate​ cream, sell for ​$2 each. She buys them regularly. The ​$2 charged per cupcake is the (equilibrium or optimum) price. If Sam raised the price to ​$2.50​, Clara would buy her favorite cupcake from the coffee shop down the street for ​$2.25​, which would be the (equilibrium or optimum) price for her.

Equilibrium, optimum

Troy has set up experimental groups. One group has mostly women and the other has mostly men. What do you tell Troy?

He has done a bad job because the groups are not randomly constructed

In which of the following examples is prescriptive economic analysis​ necessary? A. Higher interest rates will reduce home prices. B. The government is right to introduce a ban on smoking in public places. C. Jay chooses to go to Europe rather than China because of the huge discounts. D. If the government raises the tax on​ beer, this will lead to a fall in profits of the brewers.

Jay chooses to go to Europe rather than China because of the huge discounts.

​Economics, anthropology,​ psychology, sociology, and political science all study human behavior. Economics differs from these other social sciences because it also addresses these three key​ concepts: _________. A. ​Empiricism, ideology, and social responsibility. B. ​Optimization, equilibrium, and empiricism. C. Culture, optimization, and trade. D. ​Equilibrium, government​ actions, and incentives.

Optimization, equilibrium, and empiricism.

In which of the following examples is the cause and the effect hard to​ untangle? A. The relation between smoking cigarettes and lung cancer. B. The relation between marine pollution and coral reef death. C. The relation between smoke and fire. D. The relation between dense forests and heavy rains.

The relationship between dense forests and heavy rains

Which of the following cases can create a​ free-rider problem? ​(Check all that apply​.) A. The street light on the road. B. Use of a personal television by the owner. C. Opening a savings account in a bank. D. Use of public parks by locals.

The street light on the road and the use of public parks

The concept of opportunity cost is a measure of​ _________. A. the dollar amount you must pay to do any activity. B. the value of the best alternative use of a resource. C. the benefit that you receive from doing any activity. D. all the possible alternative uses of a resource.

The value of the best alternative use of a resource

Which of the following is not true about economic​ models? A. A model is only an approximation. B. They are not​ useful, since they do not include all variables. C. Models are not perfect replicas of reality. D. They can be highly complex and based on lengthy mathematical analysis.

They are not​ useful, since they do not include all variables.

​Debbie, a member of your​ team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey.​ Troy, another member of your​ team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase in the price of gas. ​Debbie's method is a controlled experiment and​ Troy's method is a natural experiment . Group A is the (treatment group, control group) and Group B is the (treatment group, control group)

Treatment group, control group

Economists study _______​; ​therefore, the unifying feature of economics is a focus on ________. .

all human behavior, choice

To say that economists use the scientific method means that they are using​ ___________. A. a process to develop models that are intended to exactly represent all the details of a system. B. a method to determine the best course of action for fiscal and monetary policy. C. a method to develop recommendations for policy makers to run economies. D. an ongoing process to develop models of the world and then test and evaluate those models.

an ongoing process to develop models of the world and then test and evaluate those models.

Which of the following statements is not a correct explanation of​ empiricism? ​(Check all that apply.​) A. It involves data analysis and drawing inferences. B. It tests whether theories are applicable to real life situations. C. It cannot be monitored. D. It has nothing to do with optimization and equilibrium.

c and d

Economists conduct research on the​ "effects of global warming on the​ economy". This means they study the effects of global warming on the national​ income, international trade etc. It is considered a (macroeconomic or microeconomic) study.

macroeconomic

A policy such as whether to increase the money supply would be studied under (Macro or micro)​, since it deals with the ______________.

macroeconomics, economy as a whole

All of the following would fall under the study of microeconomics​ except: A. the stock​ market's response to an interest rate increase. B. a factory polluting a lake used for fishing. C. an international trade dispute. D. a labor union strike.

the stock​ market's response to an interest rate increase.

There's a line on a graph with a positive slope

there's a positive relationship because they move together