Question 1

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) None of the above
F) A) and B)

Question 2

Your sister always brags about how savvy of a grocery shopper she is. She believes that she saves lots of money by paying with coupons and making her grocery purchases at multiple stores to get the lowest prices on all goods. She may overestimate her savings because:

Accepted Answer

A)   she does not count the value of the time it took to sort and clip coupons as a cost.
B)   she does not count the cost of the gas used driving extra miles to multiple grocery stores.
C)   she does not count the value of the extra time it takes to stand in multiple lines at multiple stores and use multiple coupons compared to a trip to one store with no coupons.
D)   All of these.E) None of the above
F) A) and B)

Question 3

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Accepted Answer

A)   marginal benefit.
B)   incentives.
C)   sunk cost.
D)   opportunity cost.E) A) and B)
F) A) and C)

Question 4

Households are vital to the circular flow model in what two ways?

Accepted Answer

A)   They supply factors of production and purchase goods and services.
B)   They export goods and services and import goods and services.
C)   They vote for political officers and pay taxes.
D)   They facilitate exchange between consumers and firms.E) B) and D)
F) A) and B)

Question 5

An incentive is:

Accepted Answer

A)   the marginal cost of engaging in a course of action.
B)   the marginal benefit of engaging in a course of action.
C)   something that causes people to behave in a certain way by changing trade-offs they face.
D)   rational behavior that involves thinking on the margin.E) B) and D)
F) All of the above C

Question 6

When making a decision, it is easier to identify and evaluate which of the following?

Accepted Answer

A)   Costs associated with the decision.
B)   Benefits associated with the decision.
C)   Costs and benefits are equally easy to identify and evaluate.
D)   Neither of these is often easy to identify and evaluate.E) A) and D)
F) None of the above

Question 7

The assumption of rational behavior:

Accepted Answer

A)   offers a perfect framework for how people actually behave.
B)   helps economists explain about how people behave in a way that will best achieve their goals.
C)   explains why people voluntarily engage in decisions for which costs exceed benefits.
D)   is best applied to psychology and should not be used in the science of economics.E) A) and C)
F) B) and D)

Question 8

Which of the following is one of the basic questions used by economists to break down problems?

Accepted Answer

A)   What are the wants and constraints of those involved?
B)   How will individuals feel about the change?
C)   Why has the market failed?
D)   Economists don't ask any of these questions.E) A) and B)
F) None of the above

Question 9

When toilet paper sales increase, quarterly economic growth tends to rise. This is an example of:

Accepted Answer

A)   two variables that are negatively correlated.
B)   the presence of ceteris paribus.
C)   correlation without causation.
D)   causation with no correlation.E) A) and D)
F) All of the above

Question 10

In the past, there was a strong correlation between ice cream consumption by children and polio cases for children. There was not a causal relationship due to:

Accepted Answer

A)   a common underlying omitted variable.
B)   reverse causality.
C)   accounting fraud practiced by Baskin Robbins.
D)   an infection present in cherries.E) A) and C)
F) A) and D)

Question 11

People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

Accepted Answer

A)   political statements and non-political statements.
B)   rational statements and irrational statements.
C)   macroeconomics and microeconomics.
D)   positive statements and normative statements.E) A) and B)
F) A) and C)

Question 12

Applying for a loan in five-person groups is an example of:

Accepted Answer

A)   family and friends lending.
B)   party of five lending.
C)   group responsibility.
D)   trade-off.E) B) and C)
F) A) and D) C

Question 13

A college student decides to spend the afternoon watching three movies rented from Red Box. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the 1st movie?

Accepted Answer

A)   $1
B)   $8
C)   $4
D)   $2E) B) and C)
F) A) and D)

Question 14

One of the most basic models of the economy is:

Accepted Answer

A)   real GDP per capita.
B)   the current population survey.
C)   consumer expenditure.
D)   the circular flow model.E) A) and D)
F) A) and B)

Question 15

Which of the following questions would a macroeconomist most likely try to answer?

Accepted Answer

A)   What stage of the business cycle is our economy currently in?
B)   Why do Broadway musicals and airlines have different price discrimination strategies?
C)   How much would marijuana consumption change if the market became legal?
D)   Should the 5-Hour Energy firm increase its distribution from national to international?E) B) and C)
F) A) and D)

Question 16

An economic model:

Accepted Answer

A)   exactly explains what happens in the real economy.
B)   discards unnecessary details to clearly demonstrate the central principles of the economic activity.
C)   approximates all facets of what happens in the real economy.
D)   does not make clear assumptions about the economic activity.E) B) and D)
F) None of the above

Question 17

Cameron can spend the afternoon playing golf, driving his boat, or cleaning his house. Although he enjoys golf, he sometimes becomes frustrated when playing. He decides to enjoy a more relaxing afternoon on his boat. Cameron never thought about cleaning the house but did give golf some serious consideration. Cameron's opportunity cost of taking his boat out was:

Accepted Answer

A)   a dirty house from deciding not to clean it.
B)   the enjoyment he would have gotten from playing golf.
C)   a dirty house and not playing golf.
D)   enjoying a relaxing day on the lake.E) B) and C)
F) A) and B) B

Question 18

If you generate a new idea that has not been implemented yet by anyone else, and the idea offers a more profitable use of some resource, it is likely an example of:

Accepted Answer

A)   innovation.
B)   market failure.
C)   intervention.
D)   a goal other than profit.E) A) and D)
F) B) and C)

Question 19

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

Question 20

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Accepted Answer

A)   is the amount of money spent on gas.
B)   is zero because the car is paid for.
C)   includes lost wages you could have earned instead of driving.
D)   the total expenses of the trip in the end.E) None of the above
F) B) and C)

Exam 1: Economics and Life

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

Correct Answer
verified

Your sister always brags about how savvy of a grocery shopper she is. She believes that she saves lots of money by paying with coupons and making her grocery purchases at multiple stores to get the lowest prices on all goods. She may overestimate her savings because:

Correct Answer
verified

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Correct Answer
verified

Households are vital to the circular flow model in what two ways?

Correct Answer
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An incentive is:

Correct Answer
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C

When making a decision, it is easier to identify and evaluate which of the following?

Correct Answer
verified

The assumption of rational behavior:

Correct Answer
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Which of the following is one of the basic questions used by economists to break down problems?

Correct Answer
verified

When toilet paper sales increase, quarterly economic growth tends to rise. This is an example of:

Correct Answer
verified

In the past, there was a strong correlation between ice cream consumption by children and polio cases for children. There was not a causal relationship due to:

Correct Answer
verified

People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

Correct Answer
verified

Applying for a loan in five-person groups is an example of:

Correct Answer
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C

Correct Answer
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One of the most basic models of the economy is:

Correct Answer
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Which of the following questions would a macroeconomist most likely try to answer?

Correct Answer
verified

An economic model:

Correct Answer
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Correct Answer
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B

If you generate a new idea that has not been implemented yet by anyone else, and the idea offers a more profitable use of some resource, it is likely an example of:

Correct Answer
verified

The Federal Drug Administration 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 Answer
verified

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Correct Answer
verified

Exam 1: Economics and Life

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

Correct AnswerverifiedShow Answer

Your sister always brags about how savvy of a grocery shopper she is. She believes that she saves lots of money by paying with coupons and making her grocery purchases at multiple stores to get the lowest prices on all goods. She may overestimate her savings because:

Correct AnswerverifiedShow Answer

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his:

Correct AnswerverifiedShow Answer

Households are vital to the circular flow model in what two ways?

Correct AnswerverifiedShow Answer

An incentive is:

Correct AnswerverifiedC

When making a decision, it is easier to identify and evaluate which of the following?

Correct AnswerverifiedShow Answer

The assumption of rational behavior:

Correct AnswerverifiedShow Answer

Which of the following is one of the basic questions used by economists to break down problems?

Correct AnswerverifiedShow Answer

When toilet paper sales increase, quarterly economic growth tends to rise. This is an example of:

Correct AnswerverifiedShow Answer

In the past, there was a strong correlation between ice cream consumption by children and polio cases for children. There was not a causal relationship due to:

Correct AnswerverifiedShow Answer

People frequently confuse facts with judgments that are based on beliefs. This means that people have trouble making the distinction between:

Correct AnswerverifiedShow Answer

Applying for a loan in five-person groups is an example of:

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

One of the most basic models of the economy is:

Correct AnswerverifiedShow Answer

Which of the following questions would a macroeconomist most likely try to answer?

Correct AnswerverifiedShow Answer

An economic model:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

If you generate a new idea that has not been implemented yet by anyone else, and the idea offers a more profitable use of some resource, it is likely an example of:

Correct AnswerverifiedShow Answer

The Federal Drug Administration 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

You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:

Correct AnswerverifiedShow Answer

Correct Answer
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C

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C

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B

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