Question 1

The competitive market price of a good
A) is equal to the value consumers place on the last unit they purchased.
B) must reflect both the value to consumers and cost to producers.
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.

Accepted Answer

In a competitive market, the price of a good is determined by the forces of supply and demand. The price must reflect both the value that consumers place on the good and the cost of producing it for producers to make a profit. If the price is too high, consumers may not be willing to pay it, resulting in a surplus of the product. If the price is too low, producers may not be able to cover their costs, resulting in a shortage of the product. Therefore, the competitive market price of a good must balance the interests of both consumers and producers.

Question 2

How does marriage fall within the scope of microeconomics?

Accepted Answer

The answer of How does marriage fall within the scope...

Question 3

The accumulation of scientific evidence can
A) resolve normative disputes.
B) resolve positive disagreements.
C) determine whether one person's gain is more important than another person's loss.
D) always settle disputes over public policy.

Accepted Answer

The accumulation of scientific evidence can clarify or resolve positive disagreements, meaning disputes over factual claims or empirical evidence. Normative disputes, or disagreements over values, are not necessarily resolvable through scientific evidence alone. Additionally, determining the relative importance of gains and losses is a value judgement, not a strictly scientific determination. Finally, scientific evidence may be one input into public policy decisions, but it does not always settle disputes over what policy is best.

Question 4

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

Accepted Answer

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Question 5

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.

Accepted Answer

The application of statistical methods to empirical questions in economics is known as econometrics. Econometrics combines economic theory, mathematics, and statistical inference to analyze economic phenomena and test hypotheses.

Question 6

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

Accepted Answer

The answer of What are the roles of markets and...

Question 7

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.

Accepted Answer

If the price of a good increases, the demand for the good generally decreases, reducing the incentive to buy the good. However, the increase in price incentivizes sellers to produce and sell more of the good, increasing the incentive to sell. Therefore, the correct answer is B, which states that an increase in the price of a good decreases the incentive to buy the good but increases the incentive to sell the good.

Question 8

A small adjustment in a choice is called
A) a marginal change.
B) an incremental change.
C) a positive change.
D) a net change.

Accepted Answer

A marginal change refers to a small adjustment in a choice or decision. It is a change that has a relatively small impact or effect. Therefore, Option A is the best choice. Option B involves a gradual change, Option C relates to a change in a positive direction, and Option D refers to the total change in a particular situation.

Question 9

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.

Accepted Answer

The key consideration for making the decision to spend an additional hour studying is whether the benefit of studying for an extra hour is greater than the opportunity cost of spending that hour doing something else. Option A is correct in that better grades are generally a benefit of studying more, but it does not address the opportunity cost. Option B is not a relevant consideration here because it assumes that reading a novel is the only other option. Option D is a personal preference that is not relevant to the decision-making process. Therefore, the best choice is C, which takes into account both the benefits and the costs of spending an additional hour studying.

Question 10

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.

Accepted Answer

Government intervention might improve on the market outcome, but it's not guaranteed to do so. However, there are cases where market failures can have negative consequences for society, such as environmental pollution or the under-provision of public goods. In these cases, government intervention, such as regulations or public provision, could improve outcomes. It's important to consider the specific market failure and the potential effectiveness of government intervention before implementing any policies.

Question 11

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

Accepted Answer

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Question 12

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 has benefits associated to it.
D) Every choice involves a tradeoff.

Accepted Answer

People may not pursue an action if the costs associated with the action outweigh the benefits. Therefore, not every action is pursued solely based on benefits.

Question 13

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.

Accepted Answer

In a natural experiment, the circumstances of otherwise identical people differ entirely by chance. This allows for a comparison between groups who, on average, are similar in all other relevant ways except for the circumstance being studied. This helps to isolate the effect of the variable being studied while controlling for other factors.

Question 14

Which of the following is NOT a beneficial aspect of trade?
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.

Accepted Answer

Trade cannot eliminate the problem of scarcity, as resources are limited and wants are unlimited. However, trade can help allocate resources more efficiently to maximize benefits to society.

Question 15

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

Accepted Answer

The answer of How would you apply the scientific process...

Question 16

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 first sold to telecommunications providers that already had contracts with the government.
C) All licenses were auctioned off at the same time.
D) The government charged the same price for each license.

Accepted Answer

The answer of According to the text,which of the following...

Question 17

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

Accepted Answer

The answer of Contrast positive and normative economics.How can economists...

Question 18

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?

Accepted Answer

The answer of Using the Themes of Microeconomics,provide an economic...

Quiz 1: Introduction

The competitive market price of a good

How does marriage fall within the scope of microeconomics?

The accumulation of scientific evidence can

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

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

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

An increase in the price of a good

A small adjustment in a choice is called

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

In a situation where a market failure occurs,

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

Which of the following statements is false?

In a natural experiment,

Which of the following is NOT a beneficial aspect of trade?

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

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

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

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?