Question 1

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that
A)people with health insurance will be less likely to be overweight than people without health insurance.
B)people with health insurance will be more likely to be overweight than people without health insurance.
C)people with health insurance will be equally likely to be overweight as people without health insurance.
D)there is no correlation between having health insurance and being overweight.

Accepted Answer

B

Question 2

Economists assume that rational behavior is useful in explaining choices people make
A)because irrational people do not make economic choices.
B)even though people may not behave rationally all the time.
C)because individuals act rationally all the time in all circumstances.
D)even though people rarely,if ever,behave in a rational manner.

Accepted Answer

Economists recognize that individuals do not always make rational decisions, but the assumption of rational behavior is still useful in explaining the majority of economic choices that individuals make.

Question 3

The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.
A)collective
B)cooperative
C)market
D)trade-off

Accepted Answer

The term that describes a group of buyers and sellers coming together to trade is a market. A collective refers to a group of individuals or entities working towards a common goal, but not necessarily related to buying and selling. A cooperative is a type of business structure in which members share in the profits and decision-making process. A trade-off refers to giving up one thing to gain another, and is not related to buyers and sellers coming together in a market.

Question 4

Since 1994,obesity rates in the United States
A)have been on a slow and steady decline.
B)have increased in all 50 states.
C)have primarily increased in the Southeast and remained constant or slightly decreased in the remainder of the country.
D)have remained fairly constant throughout the country.

Accepted Answer

The answer of Since 1994,obesity rates in the United States
A)have...

Question 5

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in
A)a growing number of doctor's choosing to open private practices.
B)more medical practices being owned by hospitals than by individual doctors.
C)a majority of hospitals closing routine medical practices in order to focus only on emergency care facilities.
D)a majority of doctors working directly for insurance companies.

Accepted Answer

Lower insurance reimbursement rates have led to a trend of hospitals acquiring more medical practices than individual doctors owning them. This provides better negotiating power for reimbursement rates from insurance companies and helps to offset the financial difficulty faced by individual medical practices.

Question 6

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky,and therefore carry a higher cost than not retiring.By using all available information as they act to achieve their goals,these teachers are exemplifying the economic idea that
A)people are rational.
B)people respond to economic incentives.
C)optimal decisions are made at the margin.
D)equity is more important than efficiency.

Accepted Answer

The answer of Suppose that some teachers have decided that...

Question 7

Economists reason that the optimal decision is to continue any activity up to the point where the
A)marginal benefit is zero.
B)marginal benefit is greater than the marginal cost.
C)marginal cost is zero.
D)marginal benefit equals the marginal cost.

Accepted Answer

If marginal benefit equals the marginal cost, then the activity is creating the maximum net benefit. Any further increase in the activity beyond this point would mean that the marginal cost exceeds the marginal benefit, resulting in a reduction in net benefit. Therefore, the optimal decision is to continue the activity up to the point where marginal benefit equals marginal cost. This ensures that the net benefit is maximized.

Question 8

In economics,the term ________ means "additional" or "extra."
A)allocative
B)marginal
C)equity
D)optimal

Accepted Answer

In economics, the term "marginal" means "additional" or "extra." Therefore, the correct choice is B. Allocative refers to the efficient allocation of resources, equity refers to fairness or justice, and optimal refers to the best possible outcome.

Question 9

Economists assume that rational people do all of the following except
A)use all available information as they act to achieve their goals.
B)undertake activities that benefit others and hurt themselves.
C)weigh the benefits and costs of all possible alternative actions.
D)respond to economic incentives.

Accepted Answer

Economists assume that people act in their own self-interest and weigh the benefits and costs of their actions. They also respond to economic incentives and use all available information to achieve their goals. However, economists do not assume that people intentionally undertake activities that benefit others and hurt themselves.

Question 10

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________,meaning they make the best decisions given their knowledge of the costs and benefits.
A)equitably
B)rationally
C)emotionally
D)selfishly

Accepted Answer

Economics assumes that economic agents behave rationally, meaning they make decisions that maximize their own well-being given their knowledge of the costs and benefits. This does not necessarily mean they behave selfishly or unethically, but rather that they weigh the costs and benefits of different options and choose the one that provides the most benefit given their limited resources.

Question 11

Economists assume that individuals
A)behave in unpredictable ways.
B)will never take actions to help others.
C)prefer to live in a society that values fairness above all else.
D)are rational and respond to incentives.

Accepted Answer

Economists generally assume that individuals are rational and respond to incentives. This means they make calculated decisions and take action based on the benefits and costs associated with their choices.

Question 12

Where do economic agents such as individuals,firms and nations,interact with each other?
A)in public locations monitored by the government
B)in any arena that brings together buyers and sellers
C)in any physical location people where people can physically get together for selling goods,such as shopping malls
D)in any location where transactions can be monitored by consumer groups and taxed by the government

Accepted Answer

Economic agents such as individuals, firms, and nations interact with each other in any arena that brings together buyers and sellers, which is commonly known as a marketplace. This could be a physical location like a bazaar or mall or an online marketplace like Amazon or eBay. It is not necessary for the location to be monitored by the government or consumer groups, although governments may impose regulations or taxes on transactions that take place in these marketplaces.

Question 13

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that
A)people are rational.
B)people respond to economic incentives.
C)optimal decisions are made at the margin.
D)equity is more important than efficiency.

Accepted Answer

The U.S. government is creating an economic incentive for new medical school graduates to take over existing practices, which suggests that people respond to economic incentives.

Question 14

The basic economic problem of ________ has always existed and will continue to exist.
A)scarcity
B)efficiency
C)inflation
D)recession

Accepted Answer

Scarcity refers to the limited resources that are available to satisfy unlimited wants and needs. This problem has always existed and will continue to exist as human wants and needs are insatiable, while resources are not.

Question 15

In economics,choices must be made because we live in a world of
A)unemployment.
B)scarcity.
C)greed.
D)unlimited resources.

Accepted Answer

Scarcity is the fundamental problem of economics, which means that there are limited resources to satisfy unlimited wants and needs. Therefore, choices must be made about how to allocate these scarce resources efficiently.

Question 16

Which of the following statements is true about scarcity?
A)Scarcity refers to the situation in which unlimited wants exceed limited resources.
B)Scarcity is not a problem for the wealthy.
C)Scarcity is only a problem when a country has too large a population.
D)Scarcity arises when there is a wide disparity in income distribution.

Accepted Answer

Scarcity refers to the economic problem of having unlimited human wants in a world of limited resources. This is a fundamental concept of economics, and it affects all individuals, organizations, and governments. Scarcity is not limited to certain groups or countries; it is a universal problem.

Question 17

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
A)marginal revenue
B)gross earnings
C)pure profit
D)marginal costs
E)net benefit

Accepted Answer

Marginal revenue is the money earned from the sale of an additional unit of a product. In this scenario, the sale of an additional bag of potatoes would provide the store with marginal revenue.

Question 18

By definition,economics is the study of
A)how to make money in the stock market.
B)how to make money in a market economy.
C)the choices people make to attain their goals,given their scarce resources.
D)supply and demand.

Accepted Answer

Economics is the study of how individuals, businesses, and societies allocate their limited resources to satisfy their unlimited wants and needs. It is concerned with the choices people make to attain their goals, given their scarce resources. While the concept of supply and demand is an important aspect of economics, it is only one of many topics studied within the field. Option A is too narrow in its focus, as economics encompasses much more than just making money in the stock market. Option B is not entirely accurate, as economics is not solely concerned with making money in a market economy, but rather understanding the workings and choices within a market economy.

Question 19

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
A)market
B)trade-off
C)variable
D)model

Accepted Answer

An economic model is a simplified version of some aspect of economic life used to analyze an economic issue. A market is a place where buyers and sellers come together to exchange goods and services. A trade-off is a decision to give up one thing in return for another. A variable is a measurable quantity that can take different values.

Question 20

Consider the following statements: a.Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
B.Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
C.Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?
A)a only.
B)b only.
C)c only.
D)a and b.
E)a,b,and c.

Accepted Answer

The answer of Consider the following statements: a.Car owners purchase...

Quiz 1: Economics: Foundations and Models

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Economists assume that rational behavior is useful in explaining choices people make

The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Since 1994,obesity rates in the United States

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in

Economists reason that the optimal decision is to continue any activity up to the point where the

In economics,the term ________ means "additional" or "extra."

Economists assume that rational people do all of the following except

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________,meaning they make the best decisions given their knowledge of the costs and benefits.

Economists assume that individuals

Where do economic agents such as individuals,firms and nations,interact with each other?

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that

The basic economic problem of ________ has always existed and will continue to exist.

In economics,choices must be made because we live in a world of

Which of the following statements is true about scarcity?

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

By definition,economics is the study of

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.