Question 1

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Accepted Answer

Secondary effects are the unintended consequences of an economic change that may not be immediately identifiable but are felt only with time. These effects may have a ripple effect on the economy and may not be limited to the affected sector or industry. For example, a policy change that benefits one industry may have adverse effects on others, leading to job losses or changes in consumer behavior.

Question 2

Which of the following is an example of a normative economic statement?

Accepted Answer

A normative economic statement involves expressing an opinion or recommendation about what ought to be done. Option E expresses an opinion about what should be done to address the issue of low income workers not being able to keep up with the cost of living. The other options are either descriptive (A and B) or positive (C and D) economic statements that describe what has happened or what is likely to happen without expressing an opinion.

Question 3

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Accepted Answer

The statement emphasizes the importance of considering secondary effects, which are effects that may only become observable over time. This suggests that mediocre economists only consider the immediate apparent effects, while good economists consider the full range of effects, including those that may become evident later. Therefore, the answer is C, the importance of secondary effects.

Question 4

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Accepted Answer

All of the options listed could be considered secondary effects of making drugs such as cocaine illegal. The higher prices can lead to property theft, the usage of law enforcement resources for drug enforcement can result in lower enforcement of other crimes, and without the legal system to enforce contracts, violence can result from drug deals gone wrong.

Question 5

What is the best test of an economic theory?

Accepted Answer

The best test of an economic theory is its ability to predict real-world events, as this demonstrates its practical applicability and validity.

Question 6

Which of the following is a positive economic statement?

Accepted Answer

The answer of Which of the following is a positive...

Question 7

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement.

Accepted Answer

The Secretary of Labor's statement about the increase in wage rates is a positive economic statement because it is a factual statement that can be verified through data and evidence. On the other hand, the head of the local labor union's statement about wage gains being insufficient is a normative economic statement because it involves a subjective judgment about what should have happened.

Question 8

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Accepted Answer

The answer of Which of the following is consistent with...

Question 9

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Accepted Answer

The economic way of thinking emphasizes that the value of goods is subjective and varies from person to person based on individual preferences and circumstances. Therefore, the value of goods cannot be objectively determined.

Question 10

The value of a good

Accepted Answer

The value of a good is subjective and depends on various factors such as the needs, preferences, and circumstances of the individual or group using it. Therefore, option A is the best answer as it considers the various factors that contribute to the value of a good. Options B, C, and D do not fully capture the multifaceted nature of value.

Question 11

Which of the following is true?

Accepted Answer

Positive economic statements are based on facts and can be tested, while normative statements are based on opinions and cannot be tested. This is a fundamental concept in economics.

Question 12

What is the best test of an economic theory?

Accepted Answer

The best test of an economic theory is its ability to predict real-world events, patterns, and changes, as this demonstrates the theory's practical applicability and validity.

Question 13

In economics, secondary effects refer to the

Accepted Answer

Secondary effects are unintended consequences of a change that are not immediately identifiable but are felt only with time. These effects can be positive or negative and can have significant impacts on the economy. For example, a government policy to increase taxes on cigarettes to discourage smoking may have the unintended consequence of increasing the demand for black market cigarettes, leading to increased criminal activity and reduced tax revenue for the government.

Question 14

Economic analysis is based on the premise that

Accepted Answer

Economic analysis assumes that changes in personal benefits or costs of an action will influence behavior in a predictable way. This is the basis for the law of supply and demand, and other economic principles. However, economic analysis does not assume that people always act out of selfish motives, nor does it assume that people are always fully informed when making choices. Economic analysis recognizes that human behavior may not always be entirely predictable, but it still seeks to provide useful insights and guidance for decision-making.

Question 15

Positive economics

Accepted Answer

Positive economics deals with empirical analysis and explanation of economic phenomena based on observable facts and data. It postulates relationships among economic variables that are potentially refutable by real-world events. This means that positive economics does not necessarily indicate which economic policy is best and is distinct from normative economics, which deals with value judgments and subjective opinions on what policies should be implemented.

Question 16

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Accepted Answer

The value of the information in avoiding a mistake on a purchase is much higher for an automobile than for a pen or pencil, thus making it more worthwhile to gather this information.

Question 17

The difference between a positive economic statement and a normative statement is that

Accepted Answer

The answer of The difference between a positive economic statement...

Question 18

Which of the following is a positive economic statement?

Accepted Answer

Option D is a positive economic statement as it is a factual observation of the relationship between tax rates and job creation. It does not express an opinion or value judgment, but rather presents a cause-and-effect relationship. Options A, B, and C express value judgments or normative opinions about the economy and therefore are not positive economic statements.

Question 19

Economists are generally opposed to tariffs or other restrictions on imported goods because of the negative secondary effects they create that more than offset the benefits to employment in the domestic industry. Which of the following could be considered a secondary effect of these trade restrictions?

Accepted Answer

All of the above are negative secondary effects of trade restrictions. A higher price for the restricted good makes consumers worse off, reduced spending on other goods leads to employment losses in other domestic industries, and decreased imports could result in lower domestic employment in export industries due to reduced demand for domestic exports from other countries.

Question 20

Which of the following most clearly distinguishes between positive and normative economics?

Accepted Answer

Positive economics deals with objective facts and cause-and-effect relationships, while normative economics deals with value judgments and subjective opinions about what ought to be. Therefore, choice B accurately distinguishes between the two.

Quiz 1: The Economic Approach

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Which of the following is an example of a normative economic statement?

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

What is the best test of an economic theory?

Which of the following is a positive economic statement?

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) economic statement, and the labor head's statement is a(n) economic statement.

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

The value of a good

Which of the following is true?

What is the best test of an economic theory?

In economics, secondary effects refer to the

Economic analysis is based on the premise that

Positive economics

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

The difference between a positive economic statement and a normative statement is that

Which of the following is a positive economic statement?

Which of the following most clearly distinguishes between positive and normative economics?