Deck 1: Introduction

Question 1

In deciding on how to spend their resources,consumers try to

A) Buy goods at the lowest possible price
B) Choose the combination of goods that yield the highest level of personal satisfaction
C) Choose the combination of goods that costs the least
D) Maximize profit

Answer 1

Choose the combination of goods that yield the highest level of personal satisfaction

Question 2

The most common form of economic decentralization involves

A) Having very little government involvement in the economy
B) Markets, where people buy and sell goods and services
C) Government officials making economic decisions
D) Government ownership of the means of production

Answer 2

Markets, where people buy and sell goods and services

Question 3

A society's institutions

A) Include the laws and customs that determine the allocation of resources
B) Have no effect on people's abilities to make decisions
C) Are irrelevant when studying an economy
D) Are not related to the control of society's resources

Answer 3

Include the laws and customs that determine the allocation of resources

Question 4

Economists think of products as being in the same market if they

A) Are traded in a particular geographic location
B) Cannot be substituted for other goods and services
C) Are highly interchangeable
D) Produced by companies that complete with each other

Question 5

assume that people are motivated by

A) Human sacrifice
B) Material self-interest
C) Altruism
D) Property rights

Question 6

Microeconomics

A) Studies individual decision making
B) Studies aggregate behavior
C) Cannot be applied to behaviors such as marriage
D) Cannot be use to address questions of what ought to be

Question 7

Which of the following is NOT an example of a market?

A) Retail trade of chocolate ice cream in Winnipeg
B) The buying and selling of homes in Halifax
C) The farmer's market in Bala
D) The buying and selling of used cars

Question 8

In a capitalist economy,

A) The state controls the means of production
B) The means of production are mostly owned by private individuals
C) Economic decisions are centralized
D) Government officials decide what to produce, how to produce it and who gets it

Question 9

A _______ is an enforceable claim on a good or service.

A) Deed
B) Government decree
C) Price
D) Property right

Question 10

In a free market system

A) There is no government involvement in the economy
B) Resources are allocated on a first-come first-served basis
C) Buyers and sellers make all of the economic decisions
D) Government mostly allows markets to operate with little intervention or regulation

Question 11

In a communist economy,

A) The state controls the means of production
B) Individuals decide what to produce, how to produce it and who gets it
C) Economic decisions are decentralized
D) The market system is used to allocate resources

Question 12

To an economist,a market refers to

A) A single group of closely related products
B) A specific location where trade takes place
C) Buyers and sellers trading in a particular region
D) Buyers living in a specific geographic location

Question 13

The rate at which someone can swap money for a good is called the _____ of the good.

A) Price
B) Opportunity cost
C) Total cost
D) Rate of substitution

Question 14

According to economists,which of the following is the best example of a market?

A) A flea market
B) The trading floor of the New York Stock Exchange
C) The local shopping mall
D) The retail market for winter coats in Nunavut

Question 15

In most countries,decisions that affect medical expenditures are

A) Centralized
B) Decentralized
C) Determined by government policy
D) Both centralized and decentralized

Question 16

In a capitalist economy,the opportunities and procedures for buying and selling goods and services are determined by

A) Government
B) Markets
C) Custom
D) Laws

Question 17

People respond to incentives in different ways,depending on whether they act as

A) Individuals or in a group
B) Consumers, employers or government officials
C) Consumers, government officials or owners of firms
D) Consumers, employers (Employees) or owners of firms

Question 18

Which of the following topics is related to microeconomics?

A) Explanations of why recessions occur
B) Determining how much output a firm should produce
C) The rate of unemployment
D) The rate of economic growth

Question 19

In a ______ economy,the allocation of resources is governed by voluntary trading among businesses and consumers.

A) Capitalist
B) Communist
C) Socialist
D) Traditional

Question 20

Trade can occur only if property rights are

A) Not enforced
B) Transferable
C) Legally binding
D) Clearly defined

Question 21

Which of the following is a positive question?

A) Is society better off if we restrict trade with other countries?
B) Should we increase taxes on the rich or the middle class?
C) Will an increase in the minimum wage cause more unemployment for teenagers?
D) Should the government provide health care?

Question 22

In conducting positive economic analysis,economists apply

A) Subjective value judgments
B) The principle of individual sovereignty
C) Moral values
D) The scientific method

Question 23

In their study of the effect of legalized abortion on crime rates,Steven Levitt and John Donohue applied

A) Positive economic analysis
B) Normative economic analysis
C) The principle of individual sovereignty
D) Value judgments

Question 24

Questions that address what did,will or would actually happen are called ________ questions.

A) Normative
B) Positive
C) Efficiency
D) Equity

Question 25

A possible explanation for a natural phenomenon is called

A) The scientific method
B) A theory
C) Positive economics
D) Normative economics

Question 26

Normative economic analysis addresses

A) What ought to happen
B) Factual issues
C) The cause-and-effect analysis of actions and their consequences
D) Are potentially testable

Question 27

Positive economic analysis

A) Involves value judgments
B) Concerns what ought to happen
C) Addresses factual issues
D) Is subjective

Question 28

Which of the following best represents the theorizing step in the scientific process?

A) Observing a line of cars outside of a gas station
B) Suggesting that lower gasoline prices are encouraging consumers to buy more gas
C) Collecting data on the amount of gasoline sold at different prices
D) Drawing a graph of the relationship between gasoline prices and the amount of gasoline sold at each price

Question 29

Positive economic questions

A) Involve value judgments
B) Address what ought to happen
C) Are potentially testable
D) Cannot be tested

Question 30

In conducting normative analysis,economists apply

A) The principle of comparative advantage
B) The principle of individual sovereignty
C) The law of one price
D) The scientific method

Question 31

The scientific method is most consistent with

A) Normative economic analysis
B) Positive economic analysis
C) Market analysis
D) Subjective judgment

Question 32

A model

A) Is a complete representation of some phenomenon
B) A simplified representation of some phenomenon
C) Is always expressed mathematically
D) Cannot be qualitative in nature

Question 33

A useful theory must

A) Apply to every conceivable situation
B) Be broadly applicable and specific in its implications
C) Be agreed upon by all economists
D) Not be able to be refined

Question 34

Using a model to explain the cause-and-effect analysis of actions and their outcomes is most consistent with

A) Normative economic analysis
B) Positive economic analysis
C) Subjective analysis
D) Institutional analysis

Question 35

Questions that involve value judgments are

A) Positive questions
B) Normative questions
C) Not relevant to microeconomics
D) Objective

Question 36

Questions that address the cause-and-effect analysis of actions and their consequences are

A) Positive questions
B) Normative questions
C) Not be testable
D) Subjective

Question 37

Which of the following is a normative question?

A) Should the government require cars to be fuel efficient?
B) Does legalized abortion lead to lower crime rates?
C) Will moving a plant overseas reduce production costs?
D) Will an increase in the minimum wage reduce poverty?

Question 38

Which of the following topics is NOT studied using microeconomics?

A) Ford's decision to introduce a new car model
B) An individual's decision to get married
C) A person's decision whether or not to commit a crime
D) The rate at which an economy can grow

Question 39

A theory

A) Is usually based on a set of value judgments
B) Cannot be tested
C) Is a possible explanation for a natural phenomenon
D) Always fits with real-world data

Question 40

The general procedure used to learn about natural phenomena is called

A) Positive economics
B) The scientific method
C) Normative economics
D) A theory

Question 41

Which of the following is NOT a reason why economists usually work with mathematical models?

A) Because most economic choices are quantitative in nature
B) Mathematical models can provide precision, while quantitative models can not
C) Mathematical modeling imposes intellectual rigor
D) Mathematical models can be used to settle disputes over normative economic questions

Question 42

An increase in the price of a good

A) Increases the incentive to buy the good, but decreases the incentive to sell the good
B) Decreases the incentive to buy the good, but increases the incentive to sell the good
C) Increases both the incentive to buy the good and the incentive to sell the good
D) Decreases both the incentive to buy the good and the incentive to sell the good

Question 43

The application of statistical methods to empirical questions in economics is known as

A) Positive economic analysis
B) Normative economic analysis
C) The scientific method
D) Econometrics

Question 44

In order to explain how societies deal with the problem of scarcity,economists apply simplified representations known as

A) Simplifying assumptions
B) Theories
C) Normative questions
D) Models

Question 45

In a natural experiment,

A) Similar people face very different circumstances
B) The circumstances of otherwise identical people differ entirely by chance
C) The circumstances of one group of people is compared to a "control" group of people
D) Similar people face very similar circumstances

Question 46

Suppose you are thinking about spending an additional hour studying for your next microeconomics exam.You should spend that extra hour studying as long as

A) The extra study time leads to a higher grade on the exam
B) Your only other alternative is spending an hour reading a novel
C) The benefit of an additional hour of study is greater than what you have to give up in order to study one more hour
D) You enjoy studying microeconomics

Question 47

Economists use assumptions in order to

A) Make models more realistic
B) Simplify complex real-world behavior
C) Make their models fit the data
D) Avoid using mathematics

Question 48

A small adjustment in a choice is called

A) A marginal change
B) An incremental change
C) A positive change
D) A net change

Question 49

The competitive market price of a good is equal to

A) The value consumers place on the last unit they purchased
B) The value consumers place on what they have to give up to get the good
C) The value consumers place on an additional unit of the good
D) The value consumers place on a substitute good

Question 50

Suppose that two economists reach different positive conclusions based on the same evidence.Most likely,the two economists

A) Have different values judgments
B) Are using different assumptions
C) Are using different subjective criteria
D) Are not using the scientific method

Question 51

The accumulation of scientific evidence

A) Can resolve normative disputes
B) Can resolve positive disagreements
C) Can determine whether one person's gain is more important than another person's loss
D) Can always settle disputes over public policy

Question 52

Which of the following is NOT a reason that trade can benefit everyone?

A) Someone who owns a good of relatively little value can trade it for something they value more
B) Trade frees people from the need to produce everything themselves
C) Trade allows people to specialize in whatever they do best
D) Trade eliminates the problem of scarcity

Question 53

Which of the following is generally NOT a way that economists collect data?

A) Records
B) Surveys
C) Controlled Experiments
D) Natural Experiments

Question 54

According to the text,which of the following best describes the process the FCC used to allocate spectrum licenses to telecommunications providers?

A) Licenses were auctioned one at a time, to the highest bidder
B) Licenses were sold to telecommunications providers that already had contracts with the government
C) All licenses were auctioned of at the same time
D) The government charged the same price for each license

Question 55

The competitive market price of a good

A) Is equal to the value consumers place on the last unit they purchased
B) Is equal to the cost of producing an extra unit of the good
C) Must exceed the cost of producing an extra unit of the good
D) Must be less than what consumers are willing to pay for an additional unit of the good

Question 56

The real test of a good model is

A) Its degree of mathematical rigor
B) The degree to which it conforms to the "real world."
C) Its usefulness in predicting outcomes
D) How detailed it is

Question 57

Which of the following does NOT justify government intervention in a market?

A) Free markets can create inequality across consumers
B) The market price fails to reflect the benefits to consumers and the costs to producers
C) The market it price is just high enough to cover the cost of producing one more unit of the good
D) The production of some goods generates pollution

Question 58

In a situation where a market failure occurs,

A) Any government intervention will improve on the market outcome
B) There is nothing that the government can do to improve on the market outcome
C) Government intervention might improve on the market outcome
D) It will always be preferable to have the government intervene in the market

Question 59

Which of the following statements is false?

A) Recognizing tradeoffs is an essential part of good decision making
B) Most government policies provide people with incentives to take certain actions and avoid others
C) People will pursue an action as long as it is beneficial for them to do so
D) Every choice involves a tradeoff

Question 60

A market failure occurs when

A) A government policy fails to improve the well-being of society
B) Buyers of a good can't get all of the good they want at the current price
C) Sellers can't find buyers for their goods
D) The market price of a good or service fails to reflect the costs and benefits to all consumers and producers

Question 61

Scarcity forces society to confront three critical issues.List those issues and explain how they are related to the problem of scarcity.

Question 62

How would you apply the scientific process to the question of why men typically earn more than women?

Question 63

Compare and contrast the institutions of a capitalist economy with those of a communist economy.

Question 64

What are the roles of markets and prices in an economy?

Question 65

How does marriage fall within the scope of microeconomics?

Question 66

Contrast positive and normative economics.How can economists carry out normative analysis?

Question 67

Using the Themes of Microeconomics,provide an economic explanation of your decision to attend college.How would you explain your decision to take your microeconomics class?