Question 1

A gas station that does not offer pay at the pump service decides to require drivers to prepay for gas to decrease the amount of drive-offs. Which of the following could be an opportunity cost of this decision?

Accepted Answer

A)   The value of the gas that is no longer stolen by people who drove off
B)   The time saved from not having to look for people waiting for you to turn on the pump
C)   Lost revenue from people who underestimate how much their gas tank can hold so they don't end up overpaying
D)   A loss of snack sales due to people paying for gas before pumping rather than after pumpingE) B) and D)
F) B) and C)

Question 2

Individuals, firms, and societies are limited in the amount of goods and services that they can produce. This is a direct result of:

Accepted Answer

A)   unemployment.
B)   waste.
C)   irrational behavior.
D)   scarcity.E) All of the above
F) A) and B)

Question 3

Alan could apply the principles of economic decision making when deciding:how to spend his paycheck.who to marry.what to have for dinner after a long day at work.

Accepted Answer

A)   I, II, and III
B)   I only
C)   I and III
D)   II and IIIE) B) and C)
F) A) and D)

Question 4

Which of the following is an example of a positive statement?

Accepted Answer

A)   NCAA Football should have adopted a playoff system 10 years ago.
B)   An increase in the minimum wage results in higher teenage unemployment.
C)   No one should be allowed to carry guns into the classroom.
D)   Cats make better house pets than dogs.E) B) and D)
F) All of the above

Question 5

When we assume that consumers want to pay the lowest price possible, we assume that consumers are:

Accepted Answer

A)   cheap.
B)   deceitful.
C)   rational.
D)   informed.E) C) and D)
F) B) and D)

Question 6

A car dealership advertises free satellite radio for one year with the purchase of a new car. This is an example of:

Accepted Answer

A)   bait and switch.
B)   marginal sales.
C)   an incentive.
D)   voluntary exchange.E) A) and B)
F) A) and C)

Question 7

Your friend comments that "A hair stylist should not have to obtain a cosmetology license." Her statement is an example of what kind of statement?

Accepted Answer

A)   Uninformed
B)   Biased
C)   Positive
D)   NormativeE) All of the above
F) C) and D)

Question 8

The statement "People who drink coffee tend to wake up early" implies that:

Accepted Answer

A)   drinking coffee causes people to wake up early.
B)   drinking coffee is negatively correlated with waking up early.
C)   drinking coffee is positively correlated with waking up early.
D)   waking up early causes people to drink coffee.E) B) and C)
F) None of the above

Question 9

Yasmin has an idea, but she cannot implement it because a monopoly producer has placed a barrier to entry. What makes this an abnormal circumstance?

Accepted Answer

A)   Innovation
B)   Market failure
C)   Intervention
D)   Goals other than profitE) B) and D)
F) All of the above

Question 10

Which is not a characteristic of a good economic model?

Accepted Answer

A)   Focuses on important details
B)   Predicts cause and effect
C)   Utilizes vague assumptions
D)   Describes the world accuratelyE) None of the above
F) B) and C)

Question 11

Which broad field of economics would most likely study how consumers respond to a hike in alcohol taxes?

Accepted Answer

A)   Microeconomics
B)   Marginal economics
C)   Macroeconomics
D)   Monetary economicsE) A) and C)
F) C) and D)

Question 12

A positive statement:

Accepted Answer

A)   can actually be false.
B)   must always be true.
C)   provides an opinion with a positive outlook.
D)   is the same as a normative statement.E) B) and C)
F) C) and D)

Question 13

You have an idea to open a rooftop restaurant in the downtown area of your community, as none currently exists. However, after some investigation you discover that any rooftop restaurant would violate city regulations. What makes this an abnormal circumstance?

Accepted Answer

A)   Innovation
B)   Market failure
C)   Intervention
D)   Goals other than profitE) A) and B)
F) A) and C)

Question 14

Which of the following is considered a microeconomic issue?

Accepted Answer

A)   The local university decides to raise tuition for online course offerings.
B)   The country of Zimbabwe has experienced a decline in inflation.
C)   The economic growth rate rises in the United States.
D)   The unemployment rate in Greece falls.E) B) and C)
F) None of the above

Question 15

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

Accepted Answer

A)   The American Recovery and Reinvestment Act should not have been passed during the Great Recession.
B)   Unemployment soared to 25 percent during the Great Depression.
C)   An increase in alcohol taxes will reduce the number of drunk driving accidents.
D)   Great Britain has fewer hospital beds per capita today than they did in 1948.E) A) and D)
F) B) and C)

Question 16

When we believe the best result will come from the decision we have made, we are being:

Accepted Answer

A)   gullible.
B)   short-sighted.
C)   rational.
D)   considerate.E) B) and C)
F) C) and D)

Question 17

The drug approval process regulated by the Federal Drug Administration (FDA)  slows the pace at which helpful medications reach the marketplace. The alternative of having the medication available to consumers earlier is an example of:

Accepted Answer

A)   the opportunity cost of the FDA's regulation.
B)   how easy it is to identify and evaluate sunk costs.
C)   the marginal benefit of the FDA's regulation.
D)   promoting consumer health in the population.E) B) and C)
F) A) and B)

Question 18

Suppose a salon owner notices that their pedicures are very popular with customers. The owner decides to double of the price of the pedicure in order to raise more revenue. Which of the following statements is most likely to be true?

Accepted Answer

A)   The owner will double her revenue as a result of the price increase.
B)   More customers will get pedicures because the price indicates it is a desirable service.
C)   The salon's revenue will less than double as customers are disincentivized from getting a pedicure.
D)   Customers will no longer visit the salon as a result of the price increase.E) A) and C)
F) All of the above

Question 19

When attempting to understand why a model may not be accurate, which of the following is not an action you should take?

Accepted Answer

A)   Identify what important details were omitted when developing the model.
B)   Make sure assumptions made in the model are clear and accurate.
C)   Test the model for accuracy.
D)   Make sure the model includes all possible details.E) B) and D)
F) B) and C)

Question 20

Muhammad Yunus, founder of the Grameen bank, was highly successful in his use of applying social incentives through group responsibility in order to maximize loan repayment rates. This success created an incentive for other banks to:

Accepted Answer

A)   offer similar loans to the poor.
B)   go out of business.
C)   seek government action to ban group responsibility lending.
D)   avoid catering to a high risk group.E) All of the above
F) B) and C)

Exam 1: Economicsand Life

Which of the following is considered a microeconomic issue?

Correct AnswerverifiedShow Answer

You have an idea to open a rooftop restaurant in the downtown area of your community, as none currently exists. However, after some investigation you discover that any rooftop restaurant would violate city regulations. What makes this an abnormal circumstance?

Correct AnswerverifiedShow Answer

Individuals, firms, and societies are limited in the amount of goods and services that they can produce. This is a direct result of:

Correct AnswerverifiedShow Answer

Suppose a salon owner notices that their pedicures are very popular with customers. The owner decides to double of the price of the pedicure in order to raise more revenue. Which of the following statements is most likely to be true?

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When attempting to understand why a model may not be accurate, which of the following is not an action you should take?

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The statement "People who drink coffee tend to wake up early" implies that:

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Which broad field of economics would most likely study how consumers respond to a hike in alcohol taxes?

Correct AnswerverifiedShow Answer

The drug approval process regulated by the Federal Drug Administration (FDA) slows the pace at which helpful medications reach the marketplace. The alternative of having the medication available to consumers earlier is an example of:

Correct AnswerverifiedShow Answer

Muhammad Yunus, founder of the Grameen bank, was highly successful in his use of applying social incentives through group responsibility in order to maximize loan repayment rates. This success created an incentive for other banks to:

Correct AnswerverifiedShow Answer

Which is not a characteristic of a good economic model?

Correct AnswerverifiedShow Answer

Alan could apply the principles of economic decision making when deciding:how to spend his paycheck.who to marry.what to have for dinner after a long day at work.

Correct AnswerverifiedShow Answer

A gas station that does not offer pay at the pump service decides to require drivers to prepay for gas to decrease the amount of drive-offs. Which of the following could be an opportunity cost of this decision?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When we assume that consumers want to pay the lowest price possible, we assume that consumers are:

Correct AnswerverifiedShow Answer

Yasmin has an idea, but she cannot implement it because a monopoly producer has placed a barrier to entry. What makes this an abnormal circumstance?

Correct AnswerverifiedShow Answer

A car dealership advertises free satellite radio for one year with the purchase of a new car. This is an example of:

Correct AnswerverifiedShow Answer

A positive statement:

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When we believe the best result will come from the decision we have made, we are being:

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive statement?

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Your friend comments that "A hair stylist should not have to obtain a cosmetology license." Her statement is an example of what kind of statement?

Correct AnswerverifiedShow Answer

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