Question 1

To help unscramble cause and effect,economists
A) use the concept of opportunity costs.
B) must use the ceteris paribus assumption.
C) answer the "what" question.
D) answer the "how" question.
E) must use normative statements.

Accepted Answer

The ceteris paribus assumption is essential for economists to isolate the cause and effect relationship between two variables. It means that all other variables except the ones being studied are held constant. This allows economists to determine the effect of one variable on another.

Question 2

When two variables in a graph are related to a third,changing the third causes
A) a movement along the curve.
B) a shift of the curve.
C) no change in the curve because the third variable isn't on the axes.
D) either a shift or a movement in the curve but more information is needed to determine which occurs.
E) None of the above answers is correct.

Accepted Answer

A change in a third variable that is not on the axes typically causes a shift of the curve, as it affects the relationship between the two variables on the axes.

Question 3

Which of the following is true?
i.A rational choice is made on the margin.
ii.Microeconomics is the study of the national economy while macroeconomics is the study of the global economy.
iii.Economists try to understand how the economic world works by testing normative statements.
A) only i
B) i and iii
C) only ii
D) only iii
E) i and ii

Accepted Answer

i. A rational choice is made on the margin, meaning decisions are made by comparing the additional benefits and costs of that choice. ii. Microeconomics actually studies individual and business decisions, while macroeconomics looks at the national and global economy. iii. Economists test positive statements (descriptive, factual statements about the world) rather than normative statements (which are prescriptive and value-based).

Question 4

Ceteris paribus when graphing a relationship refers to
A) letting all the variables change at once.
B) changing the origin of the graph.
C) holding constant all but two variables.
D) rescaling the coordinates.
E) swapping the axes so that the x-axis is the vertical axis and the y-axis is the horizontal axis.

Accepted Answer

Ceteris paribus means "all other things being equal". Therefore, when graphing a relationship, holding constant all but two variables (choice C) allows us to isolate the relationship between those two variables while holding all other factors constant. This helps to avoid the potential confounding effects of other variables and produce a clearer picture of the relationship of interest.

Question 5

When analyzing graphically the relationship between more than two variables,which of the following must be used?
A) positive slope assumption
B) assumption of little change
C) ceteris paribus
D) negative slope assumption
E) the assumption that only relevant factors change

Accepted Answer

Ceteris paribus, meaning "all other things being equal," is essential when analyzing the relationship between more than two variables graphically. It allows us to isolate the effects of one variable while assuming all other factors remain constant. The other assumptions listed (positive or negative slope, assumption of little change, and assumption that only relevant factors change) may not be applicable or necessary in all cases.

Question 6

-In the above figure,while drawing the line showing the relationship between the price of a pound of peanuts and the quantity sold,the
A) price of a pound of pecans does not change.
B) price of a pound of peanuts does not change.
C) the quantity of peanuts that farmers supply does not change.
D) Both answers A and B are correct.
E) Both answers B and C are correct.

Accepted Answer

When drawing a demand curve, we assume that the price of related goods, such as pecans, remains constant to isolate the relationship between the price of peanuts and the quantity sold.

Question 7

We are investigating the relationship among three variables.We have graphed two of them.Suppose that the variable that is not measured on the x-axis or the y-axis changes.Then,there is
A) a movement along the plotted curve.
B) a shift in the plotted curve.
C) no impact on the plotted curve because the variable is not measured on either of the axes.
D) an omitted variable.
E) a violation of the absence of trend assumption.

Accepted Answer

A change in the variable that is not plotted on the x-axis or y-axis would result in a shift in the plotted curve. This is because the relationship among the three variables would be altered, causing the plotted curve to move to a new position.

Question 8

Will,Bill,and Phil decide to study an extra hour for an exam.Instead of studying,they could have gone out to eat,played football,or watched TV.Which of the following statements is correct?
A) The benefit the three students receive must be the same because they all make the same choice.
B) The students made a rational choice as long as they face no scarcity.
C) The students could each have different opportunity costs.
D) The marginal cost of the decision is the same if they make the same score on the exam.
E) Going out to eat, playing football, and watching TV are all called sunk costs.

Accepted Answer

Each student may have different opportunity costs depending on their individual preferences and the value they place on each activity. One student may value studying more highly than going out to eat or watching TV, while another student may value playing football more highly than studying. Therefore, the best choice would depend on each student's individual opportunity cost.

Question 9

-To graph a relationship that involves more than two variables,we use
A) a positive relationship.
B) a direct relationship.
C) a negative relationship.
D) ceteris paribus.
E) movement up along one of the lines showing the relationship between x and y.

Accepted Answer

Ceteris paribus, a Latin phrase meaning "all other things being equal," is used in economics to isolate the relationship between two variables by holding other influencing factors constant. This concept allows for the graphical representation of relationships involving more than two variables by focusing on how changes in one variable affect another, assuming all other variables remain unchanged.

Question 10

Three variables are related and two of them are plotted in a figure.If the variable that is not measured on either the x-axis or the y-axis changes,then there is
A) a movement along the drawn curve.
B) a shift in the curve.
C) no impact on the curve because the variable is not measured on either of the axes.
D) either a shift in the curve or a movement along the curve, but more information is needed to determine which.
E) None of the above answers is correct.

Accepted Answer

If the variable that is not measured on either the x-axis or the y-axis changes, then it would cause a shift in the curve. This is because the third variable affects both the x-axis and y-axis variables and thus cannot be represented by a simple movement along the drawn curve. Therefore, the best choice would be B, a shift in the curve.

Question 11

On a graph showing the relationship between x and y,the ceteris paribus condition implies that
A) no other variables are related to x and y.
B) the value of x is held constant.
C) the value of y is held constant.
D) other variables not shown are held constant.
E) the value of x and the value of y are held constant.

Accepted Answer

The ceteris paribus condition means "all other things being equal" or that other variables not shown on the graph are held constant, allowing the relationship between x and y to be isolated and analyzed without interference from other variables.

Question 12

-In the figure above,suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply.If the price of pecans increases,
A) the curve will shift rightward.
B) the curve will shift leftward.
C) there is a movement along the curve.
D) the curve will be unaffected.
E) None of the above answers is correct because the graph assumes that the price of pecans does not change.

Accepted Answer

The curve will shift leftward because the quantity of peanuts that farmers are willing to supply is negatively related to the price of pecans. If the price of pecans increases, farmers will be willing to supply less peanuts.

Question 13

Suppose you decide to attend summer school and that this is considered a rational choice.When making this choice,
A) you must ignore the problem of scarcity.
B) you considered the marginal cost and marginal benefit of your choice.
C) you have used the ceteris paribus assumption.
D) you have made a positive statement.
E) you must have considered the social interest.

Accepted Answer

When making a rational choice, it is important to consider the marginal cost and marginal benefit. Attending summer school has a cost (tuition and potential loss of free time) and a benefit (the ability to take extra courses and hopefully improve academic performance). Therefore, weighing the marginal cost and benefit is necessary when making this decision. Options A, C, D, and E are not applicable or relevant to this scenario.

Question 14

Which of the following is true?
i.A rational choice is always made in the pursuit of social interest.
ii.Economics is a social science.
iii.Economists try to understand how the economic world works by testing positive statements.
A) ii and iii
B) only i
C) only ii
D) only iii
E) i and ii

Accepted Answer

ii. Economics is indeed a social science that studies how individuals, governments, firms, and nations make choices on allocating resources to satisfy their wants and needs. iii. Economists use positive statements, which are objective and fact-based, to understand and explain the economic world through testing and observation.

Question 15

Which of the following is true regarding a normative statement?
i.It uses the ceteris paribus assumption.
ii.It is a value judgment.
iii.It accounts for opportunity costs.
A) i and iii
B) ii and iii
C) i only
D) ii only
E) i, ii, and iii

Accepted Answer

A normative statement is a value judgment, as it deals with what should or ought to be, rather than what is. It does not use the ceteris paribus assumption, as it is unrelated to the other factors that may affect a situation. It may or may not account for opportunity costs, depending on the specific statement. Therefore, only statement ii is true regarding a normative statement.

Question 16

-The above figure shows how many pounds of peanuts farmers are willing to sell at different prices per pound of peanuts.If the price of a pound of peanuts is $1 and the price of a pound of pecans is $2,peanut farmers are willing to sell
A) no peanuts.
B) 1000 pounds of peanuts.
C) 2000 pounds of peanuts.
D) 4000 pounds of peanuts.
E) more than 4000 pounds of peanuts.

Accepted Answer

The answer of 
-The above figure shows how many pounds...

Question 17

-In the figure above,an increase in z leads to a
A) movement up along one of the lines showing the relationship between x and y.
B) movement down along one of the lines showing the relationship between x and y.
C) rightward shift of the line showing the relationship between x and y.
D) leftward shift of the line showing the relationship between x and y.
E) trend change in both x and y.

Accepted Answer

The answer of 
-In the figure above,an increase in z...

Question 18

To graph a relationship among several variables,we hold all but ________ variable(s)constant and use the ________ assumption.
A) one; scarcity
B) two; ceteris paribus
C) three; scarcity
D) one; ceteris paribus
E) one; absence of trend

Accepted Answer

When graphing a relationship among several variables, we hold all but two variables constant and use the ceteris paribus assumption. This means that we assume that all other factors that could affect the relationship between the two variables are held constant.

Question 19

-In the figure above,ceteris paribus,an increase in x is associated with
A) an increase in y.
B) a decrease in y.
C) an increase in z.
D) a random change in z.
E) no change in either y or z.

Accepted Answer

The answer of 
-In the figure above,ceteris paribus,an increase in...

Question 20

John decides to leave college early and play professional sports.Which of the following economic principles does John use?
i.personal economic policies
ii.marginal cost versus marginal benefit analysis
iii.normative versus positive economics
A) i and ii
B) i, ii and iii
C) ii only
D) i and iii
E) ii and iii

Accepted Answer

The answer of John decides to leave college early and...

Quiz 1: Getting Started

To help unscramble cause and effect,economists

When two variables in a graph are related to a third,changing the third causes

Which of the following is true? i.A rational choice is made on the margin. ii.Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. iii.Economists try to understand how the economic world works by testing normative statements.

Ceteris paribus when graphing a relationship refers to

When analyzing graphically the relationship between more than two variables,which of the following must be used?

-In the above figure,while drawing the line showing the relationship between the price of a pound of peanuts and the quantity sold,the

We are investigating the relationship among three variables.We have graphed two of them.Suppose that the variable that is not measured on the x-axis or the y-axis changes.Then,there is

Will,Bill,and Phil decide to study an extra hour for an exam.Instead of studying,they could have gone out to eat,played football,or watched TV.Which of the following statements is correct?

-To graph a relationship that involves more than two variables,we use

Three variables are related and two of them are plotted in a figure.If the variable that is not measured on either the x-axis or the y-axis changes,then there is

On a graph showing the relationship between x and y,the ceteris paribus condition implies that

-In the figure above,suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply.If the price of pecans increases,

Suppose you decide to attend summer school and that this is considered a rational choice.When making this choice,

Which of the following is true? i.A rational choice is always made in the pursuit of social interest. ii.Economics is a social science. iii.Economists try to understand how the economic world works by testing positive statements.

Which of the following is true regarding a normative statement? i.It uses the ceteris paribus assumption. ii.It is a value judgment. iii.It accounts for opportunity costs.

-The above figure shows how many pounds of peanuts farmers are willing to sell at different prices per pound of peanuts.If the price of a pound of peanuts is $1 and the price of a pound of pecans is $2,peanut farmers are willing to sell

-In the figure above,an increase in z leads to a

To graph a relationship among several variables,we hold all but variable(s) constant and use the assumption.

-In the figure above,ceteris paribus,an increase in x is associated with

John decides to leave college early and play professional sports.Which of the following economic principles does John use? i.personal economic policies ii.marginal cost versus marginal benefit analysis iii.normative versus positive economics