Principles of Economics, 9th Edition Test Bank

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Principles of Microeconomics, 9e-Test Item File 2 (Case/Fair/Oster)Chapter 1The Scope and Method of Economics1.1Why Study Economics?1Multiple Choice1) The reasons to study economics include which of the following?A) to be an informed voterB) to understand society and global affairsC) to learn a way of thinkingD) all of the aboveAnswer: DDiff: 1Topic: Why Study Economics?Skill: Fact2) Marginalism isA) the best alternative that we forego when making a decision.B) the study of how societies choose to use scarce resources.C) a market situation in which profit opportunities are eliminated almost instantaneously.D) the process of analyzing the additional costs or benefits arising from a decision.Answer: DDiff: 1Topic: Why Study Economics?Skill: Definition3) Economics is best defined as the study ofA) financial decision-making.B) how consumers make purchasing decisions.C) choices made by people faced with scarcity.D) inflation, unemployment, and economic growth.Answer: CDiff: 2Topic: Why Study Economics?Skill: Definition4) The Industrial Revolution refers to the rise of the modern factory system induringthe late eighteenth and early nineteenth centuries.A) the United StatesB) EnglandC) FranceD) GermanyAnswer: BDiff: 1Topic: Why Study Economics?Skill: Fact

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5)Whichofthefollowingstatementsis correct?A)Economicsisanatural science.B)In large measure,economicsisthe studyof how people make choices.C)Ifpovertywaseliminatedthere wouldbeno reasonto studyeconomics.D)Economicanalysiscan beusedto explain howsocieties,but not individuals, makedecisions.Answer:BDiff:1Topic:Why Study Economics?Skill:Fact6)Economicsisthe studyofA)howto investin thestockmarket.B)how societyuseslimitedresources.C)the roleofmoneyinmarkets.D)how government officials decidewhich goods andservicesareproduced.Answer:BDiff:2Topic:Why Study Economics?Skill:Definition7)Coststhatcannot be avoided,becausetheyhavealready been incurredare knownasA)differentialcosts.B)marginalcosts.C)opportunitycosts.D)sunk costs.Answer:DDiff:2Topic:Why Study Economics?Skill:Definition8)Supposethattwo weeksago you purchasedaticketto thesymphonyfor$40.Last weeksomeoneinvitedyouto gocampingonthesame nightasthesymphonyconcert. Youwouldmuchrather go campingthan goto thesymphony.Youhavetriedunsuccessfullyto sell thesymphonyconcert ticket.Whichofthefollowingstatements regardingthis situationiscorrect?A)The$40 symphonyticketshouldbeirrelevant inyourdecisionmaking,becauseitrepresentsthemarginal cost of goingcamping.B)The$40 you paidforthe symphonyticket should beirrelevant inyourdecisionmaking,becauseitisasunkcost.C)The$40 you paidforthe symphonyticket is relevantto the decision,asthisrepresentsthe opportunitycost of goingcamping.D)Youshouldbaseyourdecisiononwhetherornotgoingcamping willprovideyouwithmore than$40 insatisfaction.Answer:BDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking

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9)Youhave decidedthat you wanttoattend a renaissancefairasKingHenryVIII. Youestimatethatit willcost$80toassembleyourcostume.Afterspending$80 onthe costume,yourealizethat the additionalpiecesyouneedwillcost you$20more.Themarginalcost ofcompletingthe costumeisA)$20.B)$60.C)$80.D)$100.Answer:ADiff:2Topic:Why Study Economics?Skill:AnalyticAACSB:Analytic Skills10)Theconcept ofopportunity costcan beappliedto theanalysisofdecision-makingprocesses.A)only economy-wideB)onlyglobalC)only-small-scaleD)anyAnswer:DDiff:2Topic:Why StudyEconomics?Skill:ConceptualAACSB:Reflective Thinking11)Thatwhichwe forgo,orgive up,whenwemakeachoiceora decisionisknownasA)equity.B)causation.C)correlation.D)opportunitycost.Answer:DDiff:2Topic:Why Study Economics?Skill:Definition12)Scarce resourcesgiveriseto the conceptofA)efficientmarkets.B)opportunitycosts.C)laissez-faire.D)positiveeconomics.Answer:BDiff:1Topic:Why Study Economics?Skill:Fact

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13)Whichofthefollowingisan opportunitycostofattendingcollege?A)the cost of yourapartmentordormB)the incomeyoucouldhaveearnedif youdidn'tattend collegeC)the cost ofthe foodthat youconsumewhileyou areattendingcollegeD)the educationyou gainfromattendingcollege.Answer:BDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking14)Ifyourtuition is$2,000thissemester,yourbookscost$400,you can onlywork10ratherthan40hours perweekduring the15weeks youaretakingclassesandyoumake$12perhour,andyourroomandboardis$4,000thissemester,then youropportunitycost ofattendingcollege this semesterisA)$2,400.B)$2,760.C)$7,800.D)$11,800.Answer:CDiff:3Topic:Why Study Economics?Skill:AnalyticAACSB:Analytic Skills15)Ifyourtuition is$20,000thissemester,your bookscost$2,000, youcan onlywork10 ratherthan40hours perweekduring the15weeks youaretakingclassesandyoumake$15perhour,andyourroomandboardis$8,000thissemester,then youropportunity cost ofattendingcollege this semesterisA)$22,000.B)$22,150.C)$28,750.D)$36,750.Answer:CDiff:3Topic:Why Study Economics?Skill:AnalyticAACSB:Analytic Skills

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16)Ifyouowna condo andyoudecidetoleaseitto yourcousinA)thereis no opportunitycost ofleasingthe condo becauseyou ownit.B)thereisanopportunitycost ofleasingthe condo becauseyou could have chosento livein it.C)there is no opportunitycost ofleasingthe condo becauseyoucollect rent fromyourcousin.D)the only costrelevantto thisdecisionisthe price you paidforthecondo.Answer:BDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking17)YouownTheWeddingCrasheronDVD.TheopportunitycostofwatchingthisDVD forthefourthtimeA)iszero,since youownit.B)isone-fourththe cost ofthe DVD,asthisisthefourthtimeyouhavewatchedit.C)isthevalueofthealternativeuseof thetimeyou spendwatchingthe DVD.D)mustbe thesameastheopportunitycost ofwatchingit the firsttime.Answer:CDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking18)Opportunitycost isA)what wegiveupto getsomething else.B)marginalcostdividedbysunkcost.C)the sameasreal cost.D)alloftheaboveAnswer:ADiff:1Topic:Why Study Economics?Skill:Definition19)Sunk costsA)are costswhich havebeenincurred.B)are costswhich cannot beavoided buthaveyetto beincurred.C)the sumofallmarginalcosts.D)the sumofall opportunitycosts.Answer:ADiff:1Topic:Why Study Economics?Skill:Definition

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20)Ifyoucan download10 ringtonesforyourcell phonefor$10oryoucoulddownload11 ringtonesforyourcellphonefor$10.50,thenthemarginal cost of theeleventh ringtone isA)$0.50.B)$10.00.C)$10.50.D)$20.50.Answer:ADiff:2Topic:Why Study Economics?Skill:AnalyticAACSB:Analytic Skills21)Ifyoueatata Lasvegas casinothat charges$12 foritsallyou caneat buffet,thenthemarginalcostof yourthird tripto the buffetisA)zero.B)$4.C)$12.D)$36.Answer:ADiff:2Topic:Why Study Economics?Skill:AnalyticAACSB:Analytic Skills22)An efficientmarketisamarketA)that deals inunlimitedresources.B)in whichlong-term profitsareguaranteed.C)in whichprofitopportunitiesareeliminatedalmost instantaneously.D)in whichthereareno opportunitycosts.Answer:CDiff:2Topic:Why Study Economics?Skill:Definition23)Ifinformation is more costlyandlesseasilyavailable, then usuallythisA)makesmarketsmoreefficient.B)makesmarketslessefficient.C)decreases profitopportunities.D)decreases theopportunitycost of acquiringmoreinformation.Answer:BDiff:3Topic:WhyStudy Economics?Skill:ConceptualAACSB:Reflective Thinking

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24)Thecommonwayofexpressingtheefficient marketconcept isA)"the only truemarket is aprofitablemarket."B)"there'snosuch thingas a free lunch."C)"onlywithoutgovernmentinterferencecanamarketsurvive."D)"onceanefficient market,alwaysanefficient market."Answer:BDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking25)Relatedto theEconomicsinPracticeonp.6:An example of a sunkcostto Appleinitsproductionof the iPodisA)the$73 costofthe Toshibaharddrive.B)the cost ofconception anddesign of theiPod.C)the$80value-addedreceived byApple.D)the cost ofall ofthe451componentsneededto producetheiPod.Answer:BDiff:2Topic:Why Study Economics?: EconomicsinPracticeSkill:ConceptualAACSB:Reflective Thinking26)Relatedto theEconomicsinPracticeonp.6:TheopportunitycosttoAppleofhavingits30-gigabytevideo iPod assembledinChina isA)the lowwagespaidto Chineseworkers.B)the$4 perunit costof assemblyinChina.C)having theiPod assembledin the nextbestavailablelocation.D)the value-addedreceivedbyApple.Answer:CDiff:2Topic:Why Study Economics?: EconomicsinPracticeSkill:ConceptualAACSB:Reflective Thinking2True/False1)Resourcesarelimitedinboth wealthyandpoorsocieties.Answer:TRUEDiff:1Topic:Why Study Economics?Skill:Fact2)Thevalueofthe bestalternativeforegone is thesunkcost ofmakinga decision.Answer:FALSEDiff:1Topic:Why Study Economics?Skill:Fact

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3)Opportunitycostsarise because resources arelimited.Answer:TRUEDiff:1Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking4)Sunkcostsaffect marginal decisionmaking.Answer:FALSEDiff:2Topic:Why Study Economics?Skill:ConceptualAACSB:Reflective Thinking5)Sunk costsarethose thatcannot berecaptured.Answer:TRUEDiff:1Topic:Why Study Economics?Skill:Fact1.2TheScope of Economics1MultipleChoice1)Microeconomicsisbestdescribedas thestudyofA)the choices madebyindividualhouseholds, firms,andgovernments.B)inflation, unemployment,gross nationalproduct,andthe nation's economyasawhole.C)how marketsinteractin theaggregate economy.D)marginalchangesin the economy.Answer:ADiff:2Topic:TheScopeof EconomicsSkill:Definition2)Macroeconomics isbestdescribedasthe study ofA)verylargeissues.B)the choices madebyindividualhouseholds, firms,andgovernments.C)the nation'seconomyasa whole.D)the relationshipbetween inflationandwageinequality.Answer:CDiff:2Topic:TheScopeof EconomicsSkill:Definition

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3)Whichofthefollowingisa microeconomicsquestion?A)Isitsensiblefor a governmentto subsidizetobaccoproduction?B)Whydosomecountriesgrow fasterthanothers?C)ShouldCongressandthepresidenttakeactionto reduceglobal warming?D)Shouldthegovernmentattemptto influencethe interest ratetolower inflation?Answer:ADiff:2Topic:TheScopeof EconomicsSkill:ConceptualAACSB:Reflective Thinking4)Whichofthefollowingisa macroeconomicsquestion?A)Shouldwehaveaconstitutional amendmenttobalance the federal budget?B)Whydoesa firm decidetoenteraparticularmarket?C)Shouldthegovernment prevent the mergeroftwolargefirms?D)Shouldthegovernment put atax onalcoholinanattemptto reduce highwayfatalities?Answer:ADiff:1Topic:TheScopeof EconomicsSkill:ConceptualAACSB:Reflective Thinking5)WecanusemacroeconomicanalysistoA)learn howtobalanceacheckbook.B)studythechoicesmadebyhouseholds.C)understand marginalchangesin themacroeconomy.D)understand why economiesgrow.Answer:DDiff:1Topic:TheScopeof EconomicsSkill:Fact2True/False1)Therateofunemploymentisatopicof microeconomics.Answer:FALSEDiff:1Topic:TheScopeof EconomicsSkill:ConceptualAACSB:Reflective Thinking2)Therateof inflationisatopic of macroeconomics.Answer:TRUEDiff:2Topic:TheScopeof EconomicsSkill:ConceptualAACSB:Reflective Thinking

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1.3The Methodof Economics1MultipleChoice1)Whichofthefollowingisan exampleofanormativequestion?A)How willanincreaseinthepriceofdieselfuel affect truckdrivers?B)What fractionofanincome-tax rebatecheckwillbespent on consumer goods?C)Shouldthegovernment providefreeprescriptiondrugsto lower-incomecitizens?D)How willanincreaseintheminimumwageaffectmigrant workers?Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking2)Thecompilation ofdatathat describe phenomena andfactsisreferredtoasA)an economicmodel.B)Marxistideology.C)anormativestatement.D)descriptiveeconomics.Answer:DDiff:2Topic:TheMethod of EconomicsSkill:Definition3)Theamountofexercisethat onegetsisanimportantfactor in thedeterminationofhisgeneral stateofhealth.ThisisbestdescribedasA)apositivestatement.B)Marxistideology.C)anormativestatement.D)descriptiveeconomics.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking4)Opportunitycost isA)the additionalcostincurred fromtheconsumptionof onemoreunit ofoutput.B)the cost involved when choosingbetween alternatives.C)the cost ofproduction which cannot berecaptured.D)the totalcostincurredfrom the consumption of additionaloutput.Answer:BDiff:2Topic:TheMethod of EconomicsSkill:Definition

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5)Anapproachto economicsthatappliesstatisticaltechniquesanddatatoeconomicproblemsiscalledA)Ockham'srazor.B)laissez-faire economics.C)positiveeconomics.D)normative economics.Answer:CDiff:1Topic:TheMethod of EconomicsSkill:Fact6)NormativeeconomicsA)isthefocusof mostmoderneconomicreasoning.B)answersthequestion"What oughtto be?"C)predictstheconsequencesof alternativeactions.D)answersthequestion"What is?"Answer:BDiff:1Topic:TheMethod of EconomicsSkill:Fact7)Whichofthefollowingisa questionansweredwithnormativeeconomic reasoning?A)Ifthe collegeoffersfreeparking forstudents, willmorestudents driveto campus?B)Ifthe collegeprovided more financialaid assistance,wouldmore studentsbenefit?C)Ifthe collegeincreasedtuition,wouldclasssizedecline?D)Shouldthe collegecut tuitionto stimulateenrollment?Answer:DDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking8)Whichofthefollowingisa questionansweredwith positiveeconomic analysis?A)Shouldthe collegeoffers freeparking forstudents?B)Shouldthe collegeprovidemore financialaidassistance?C)Ifthe collegeincreasedtuition,willclasssizedecline?D)Shouldthe collegecut tuitionto stimulateenrollment?Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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9)Thereoccurrenceofcontagiousdiseases shouldbesignificantlylowerinatechnicallyadvancednationsuchasthe UnitedStates.Thisstatement isbestdescribedasA)anormativestatement.B)apositivestatement.C)adescriptiveeconomicsstatement.D)animplicationofanefficient market.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking10)Thereisgreatconcern overthe fact thatglobalwarmingiscausingpermanentdamageto theglobalenvironment.Astudyof the costsandbenefits ofpurchasingcarbonoffsetsto combatglobalwarmingisan example ofA)laboreconomics.B)normative economics.C)positiveeconomics.D)laissez-faireeconomics.Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking11)Thecompilation ofdatathat describe phenomena andfactsreferstoA)descriptiveeconomics.B)normativeeconomics.C)laissez-faire economics.D)collective economics.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:Definition12)An economistcollectingdataon the employment benefits andsalariesinthe chemicalengineeringindustryisanexampleofA)descriptiveeconomics.B)the fallacyofcomposition.C)the post hoc fallacy.D)ceterisparibus.Answer:ADiff:2Topic:TheMethod ofEconomicsSkill:ConceptualAACSB:Reflective Thinking

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RefertoScenario1.1 below toanswerthe questionsthatfollow.SCENARIO1.1: Ascientistwantstounderstand the relationship betweenautomobile emissionsandthelevel of globalwarming.Thescientist collects dataonthe volumeofautomobileemissionsandthe levelsofglobalwarmingovertime.Thescientist concludes that a1%increaseinautomobile emissionscausesa0.0003%increaseinaverageglobal temperatures. From this informationheconcludes that theautomobileemissionsareharmfultothe environment andshouldbe reducedtostop the increase inglobaltemperatures.13)RefertoScenario1.1.Thestatement that a1%increasein theautomobile emissionscausesa0.0003%increaseinaverageglobal temperatures isanexampleofA)positiveeconomics.B)descriptiveeconomics.C)normative economics.D)Marxist economics.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking14)RefertoScenario1.1.Thestatement,"automobile emissionsareharmfulto theenvironmentandshouldbereducedtostop the increaseinglobal temperatures,"isanexampleofA)positiveeconomics.B)descriptiveeconomics.C)normative economics.D)Marxist economics.Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking15)RefertoScenario1.1.Theprocessofcollectingdataonautomobileemissionsandglobalwarminglevelsisanexample ofA)lawandeconomics.B)economic history.C)econometrics.D)descriptiveeconomics.Answer:DDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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16)RefertoScenario1.1.Thestatement thatanincreaseinautomobileemissionscausesanincreaseinglobalwarmingisan exampleofA)an economictheory.B)descriptivereasoning.C)deductivereasoning.D)normative economics.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking17)RefertoScenario1.1.Agraph of the volumeofautomobile emissionson oneaxis andthelevel of averageglobaltemperaturesonthe otheraxis isanexample ofA)an economicmodel.B)an economictheory.C)avariable theory.D)inductive reasoning.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking18)Byinvoking the assumption ofceterisparibus,economistsA)considerthe impactofallrelevantfactors.B)holdallvariablesconstantwhen analyzinga model.C)isolatetheimpact ofonesinglevariablewhileholdingall othervariablesconstant.D)exclude irrelevant detailwhen analyzinga model.Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking19)Ockham'srazoris the principlethat statesA)supplycreatesits own demand.B)we mustforego somethingwhenmakinga decision.C)costswhichhavebeenincurredcannotbeavoided.D)irrelevantdetailshouldnotbeincludedin amodel.Answer:DDiff:2Topic:TheMethod of EconomicsSkill:Definition

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20)ThephraseceterisparibusmeansA)"scarcityisa fact oflife."B)"allelseequal."C)"thereis nosuch thingasa free lunch."D)"everythingaffects everythingelse."Answer:BDiff:2Topic:TheMethod of EconomicsSkill:Definition21)TheLatinphraseceterisparibusmeansthat whenarelationshipbetween two variablesisbeingstudiedA)both aretreatedasunpredictable.B)neitherof those two variablesisallowedto change.C)allothervariables are heldfixed.D)we recognizethat somefactorsareunknown.Answer:CDiff:2Topic:TheMethod of EconomicsSkill:Definition22)Isabel notedthat wheneversheworehergreencontactlenses,theChicago WhiteSox wouldwin that evening.Basedonthisobservation,she developedthe"green-eyes-for-White-Sox"theory of winning.Itis most likely truethat IsabelA)showed goodreasoning forthe reasonthe WhiteSoxwouldwin.B)committed theceterisparibuserror.C)committed thefallacyofcomposition.D)wastooquickto concludethat correlation impliescausation.Answer:DDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking23)Whenevera former governoris electedpresident,theunemployment ratedecreases;wheneveraformer congressmanis electedpresident, the inflationrateincreases.Thisstatement isan example ofA)fallacyofcomposition.B)post hoc,ergoprompterhocfallacy.C)ceterisparibusfallacy.D)fallacyof inductivereasoning.Answer:BDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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24)Theerroneousbelief thatwhatistruefora partisnecessarilytrueforthe wholeis referredtoastheA)fallacyofcomposition.B)post hoc,ergoprompterhocfallacy.C)ceterisparibusfallacy.D)fallacyof inductivereasoning.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:Definition25)Theunemployment ratewasfallingduringalloftheyearsthat Iwasa student,butas soonasIgraduated,theunemploymentratestartedtorise.Therefore, the job marketwaswaitinguntilIstarted lookingforemploymentto startto gobad. Thisstatement isan exampleofA)fallacyofcomposition.B)post hoc,ergoprompterhocfallacy.C)ceterisparibusfallacy.D)fallacyof inductivereasoning.Answer:BDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking26)Researchconductedin border statessuggeststhatspeaking asecondlanguageincreasestheprospectsforemployment.Therefore,weshouldrequireall citizensto speaka secondlanguage.ThisstatementisanexampleofA)fallacyofcomposition.B)ceterisparibusfallacy.C)fallacyof inductivereasoning.D)post hoc,ergoprompterhocfallacy.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking27)Salarycapsareimposedwhen leagueofficialsbelieve somefootballteamownersare takingadvantage of theirdeeppocketsandbuyingmorequalityplayersthan the otherownerscanaffordtobuy. Whichofthefollowing criteriaaretheyusingtoguidetheiractions?A)growth B)stability C)efficiency D)equityAnswer:DDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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28)Agovernmentpolicythat triesto minimizeinflationandunemployment can bestbedescribedastryingto achieve economicA)growth.B)stability.C)profitability.D)equity.Answer:BDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking29)Theconcept ofequitywouldexplainthe redistribution from therichto thepoorwhichisachievedfromataxsystem that requirestaxestoA)fall whenincomerises.B)risewhenincomerises.C)remainstablewhen income rises.D)beunrelatedtoincome.Answer:BDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking30)Youknowthat the schoolparking lotgetsverycongestedabout8:30 a.m.Toavoidthiscongestion,youstart arrivingatschoolat8:00 a.m. Howevermanyotherstudentsmake thesamedecision,andnowthe parking lot becomesverycongestedat8:00 a.m.ThisisanexampleoftheA)fallacyofcomposition.B)ceterisparibusfallacy.C)fallacyof division.D)post hoc,ergoprompterhocfallacy.Answer:ADiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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31)Youalwayshavemath problemstoworkinclass whenever you forgetto bringyourcalculatorto school.Concludingthat forgetting yourcalculatorcausesyourprofessortoassignmathproblems isan exampleoftheA)fallacyofcomposition.B)fallacyof inductivereasoning.C)ceterisparibusconditions.D)post hoc,ergoprompterhocfallacy.Answer:DDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking32)At a NASCARrace, youstandupto seebetter.Everyoneelse standsup,aswell.ThisisanexampleofA)the fallacyofcomposition.B)thepost hoc,ergoprompterhocfallacy.C)ceterisparibus.D)Ockham'srazor.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking33)Youhave observed that everytimeyouget anew tattoothe daybeforeyoutakean examyougetanA. Youthereforeconcludethatto getan Aonanexam,allyouhaveto doisget anew tattoo the daybefore.Youhave committed theA)fallacyof division.B)fallacyof inductivereasoning.C)post hoc,ergoprompterhocfallacy.D)fallacyofcomposition.Answer:CDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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34)Ifyouobserve that KellyClarkson wonAmerican Idol3yearsbefore CarrieUnderwoodwon,andyou concludethat KellyClarkson winningcausedCarrieUnderwoodto win3yearslater,youwould beguiltyofanerrorcalledtheA)fallacyof inductivereasoning.B)fallacyofceteris paribus.C)fallacyofcomposition.D)post hoc,ergoprompterhocfallacy.Answer:DDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking35)Twovariablesaresaidtobe correlatedifA)onevariablechangeswhenthe othervariablechanges.B)the first variable changeswhen the secondvariabledoesnot change.C)the first variable doesnotchangewhenthe secondvariablechanges.D)the variablessharenorelation witheachother.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:Definition36)Thebeliefthat what is trueforapartisnecessarilytrueforthe wholedescribestheA)fallacyofcomposition.B)post hoc,ergoprompterhocfallacy.C)fallacyof division.D)fallacyof inductivereasoning.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:Definition37)Empirical economicsrefersto theA)exclusionof irrelevantdatawhenanalyzinga model.B)collectionanduseofdatato testeconomic theories.C)modelofeconomicsusedpriorto theIndustrial Revolution.D)beliefthat whatistruefora partisnecessarilytrueforthe whole.Answer:BDiff:2Topic:TheMethod of EconomicsSkill:Definition

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38)Achangein economicoutput is potentiallyefficient if the valueofthe resultinggainsthevalueoftheresultinglosses.A)exceedsB)islessthanC)isequaltoD)isunrelatedtoAnswer:ADiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking39)An efficient economyisaneconomythatproduceswhatdemandanddoessoatthepossiblecost.A)consumers;highestB)consumers; leastC)the government;highestD)the government;leastAnswer:BDiff:2Topic:TheMethod of EconomicsSkill:Definition40)An efficientmarketischaracterized bythe factthat profit opportunitiesareA)guaranteedto everyone.B)eliminatedalmostinstantaneously.C)only providedto government-subsidizedproducers.D)availableonlyto the mostefficient producers.Answer:BDiff:1Topic:TheMethod of EconomicsSkill:Fact41)Thefour criteria thatarefrequentlyusedinjudgingthe outcomeofeconomicpolicyareefficiency,stability,economic growth, andA)equity.B)equality.C)profitability.D)resolution.Answer:ADiff:1Topic:TheMethod of EconomicsSkill:Fact

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42)Youhave noticedthat there isanincreasein thenumberof homelesspeopleinyourcityandat thesametime you observethat thereareanumberofvacantapartments.You believethatif landlords were requiredto rent theirapartmentsforlessthantheyarecurrently charging,the government couldreducethenumberofhomeless people .Thispolicyrecommendationwouldbemotivated byconcernsoverA)economic growth.B)stability.C)profitability.D)equity.Answer:DDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking43)Many economists arguethat items suchas foodandclothing shouldbeexempt fromsalestax becauselow-incomepeoplespenda greaterpercentageoftheirincomeonthese goodsthan dohigh-incomeindividuals.This argumentismotivated byconcernsoverA)economic stability.B)economic growth.C)equity.D)efficiency.Answer:CDiff:3Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking44)Thestatement"people shouldpolluteas littleaspossible"isan example of aA)positivestatement.B)normativestatement.C)factualstatement.D)non-judgmentalstatement.Answer:BDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking45)Thestatement"the unemployment rateis5.1%"isanexampleof aA)positivestatement.B)valuejudgement.C)normativestatement.D)non-verifiablestatement.Answer:ADiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking

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2True/False1)Positive economics questions"Whatoughtto be?"Normative economicspredictstheconsequencesof alternativeactions,answeringthequestions"What is?" or"What will be?"Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:Definition2)Normativeeconomicsquestions"Whatoughtto be?"Positiveeconomics predicts theconsequencesof alternativeactions,answeringthequestions"What is?" or"What will be?"Answer:TRUEDiff:2Topic:TheMethod of EconomicsSkill:Definition3)An efficient economyis onethat produceswhat the government demands anddoessoat theleast possiblecost.Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:Definition4)"Post hoc,ergo prompter hoc"literallytranslatedmeans,"allelseequal."Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:Definition5)Normativeeconomicsseeksto understandbehavior, but not makejudgments.Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking6)Stabilityimplies a steadyrateof economic growthregardlessofthe inflationrate.Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:ConceptualAACSB:Reflective Thinking7)Thecompilation ofdatatodescribe phenomena andfactsisknownas empirical economics.Answer:FALSEDiff:2Topic:TheMethod of EconomicsSkill:Definition

Principles of Economics, 9th Edition Test Bank - Page 24 preview image

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1.4Appendix:How to Read and UnderstandGraphs1MultipleChoiceRefertotheinformationprovidedinFigure1.1 below toanswerthe questionsthatfollow.Figure1.11)RefertoFigure1.1.Therelationship betweenthedailytemperatureandthenumberofgallons of icecreampurchaseddemonstratesA)aninfiniteslope.B)anegativeslope.C)apositiveslope.D)a zeroslope.Answer:CDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

Principles of Economics, 9th Edition Test Bank - Page 25 preview image

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RefertotheinformationprovidedinFigure1.2 below toanswerthe questionsthatfollow.Figure1.22)RefertoFigure1.2.Theslope ofthelinebetween PointsAandBisA)positiveandincreasing.B)positiveandconstant.C)negativeanddecreasing.D)negativeandconstant.Answer:BDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills3)RefertoFigure1.2.If theslope of a straight lineis-2.andifX(thevariableonthe horizontalaxis) decreases by8,thenY(the variableon the verticalaxis)willA)increaseby4.B)decrease by4.C)increaseby16.D)decrease by16.Answer:CDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

Principles of Economics, 9th Edition Test Bank - Page 26 preview image

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4)RefertoFigure1.2.Theslope ofthelinebetweenPointsAandBisA)0.25.B)4.C)-0.25.D)-4.Answer:ADiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic SkillsRefertotheinformationprovidedinFigure1.3 below toanswerthe questionsthatfollow.Figure1.35)RefertoFigure1.3.Theslope ofthelineisA)negative.B)increasingatadecreasingrate.C)decreasingatanincreasingrate.D)positiveAnswer:DDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills6)RefertoFigure1.3.Theslope ofthelinebetween PointsDandBisA)1.5.B)-0.67.C)-1.5.D)0.67.Answer:DDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

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7)RefertoFigure1.3.Theslope ofthelinebetween PointsAand BisA)1.5.B)-0.67.C)-1.5.D)0.67.Answer:DDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills8)RefertoFigure1.3.If a45degreelinewere alsographed, it wouldthelineshownon the graph.A)lieaboveB)liebelowC)crossD)indeterminantfrom this informationAnswer:ADiff:3Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills9)RefertoFigure1.3.AtPointC,whatisthe valueofY?A)2B)4C)6D)indeterminate fromthis informationAnswer:BDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills10)RefertoFigure1.3.AtPoint Atheslopeofthe lineis 0.67, soat Point C the slopewouldbeA)greaterthan0.67.B)less than0.67.C)equalto0.67.D)indeterminate fromthis information.Answer:CDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

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RefertotheinformationprovidedinFigure1.4 below toanswerthe questionsthatfollow.Figure1.411)RefertoFigure1.4.PanelAshowsacurve whichhas a slopethatisA)first positive, then zero,andthen negative.B)firstnegative, then zero,andthen positive.C)infinitethroughout.D)zero throughout.Answer:BDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

Principles of Economics, 9th Edition Test Bank - Page 29 preview image

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12)RefertoFigure1.4.PanelBshowsacurve whichhasa slopethatisA)first positiveandthennegative.B)first negativeand then positive.C)infinitethroughout.D)zero throughout.Answer:ADiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills13)RefertoFigure1.4.PanelCshowsacurve whichhas a slopethatisA)first positiveandthennegative.B)first negativeand then positive.C)infinitethroughout.D)zero throughout.Answer:DDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills14)RefertoFigure1.4.PanelDshowsacurve whichhas a slopethatisA)first positiveandthennegative.B)first negativeand then positive.C)infinitethroughout.D)zero throughout.Answer:CDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills15)RefertoFigure1.4.AtPoint E inpanelA,theslopeisA)infinite.B)zero.C)negative.D)indeterminate fromthis information.Answer:BDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

Principles of Economics, 9th Edition Test Bank - Page 30 preview image

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16)Theslopeof astraight lineA)isalwayspositive.B)must firstincreasethen decrease.C)isnot constant.D)isconstant.Answer:DDiff:1Topic:Appendix:How toReadandUnderstandGraphsSkill:Fact17)Theslopeof averticallineisA)negative.B)zero.C)continuallychanging.D)infinite.Answer:DDiff:1Topic:Appendix:How toRead andUnderstandGraphsSkill:Fact18)Iftheslopeof a straightlineis 5andifX(the variableon the horizontalaxis) increasesby4,then Y (thevariable on thevertical axis)willA)decrease by0.8.B)decrease by20.C)increaseby0.8.D)increaseby20.Answer:DDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills19)Iftheslopeof a straightlineis 6andifY(the variableon the vertical axis)decreasesby60,then X (thevariable on thehorizontal axis)A)increasesby10. B)decreases by10. C)increasesby600.D)decreases by600.Answer:BDiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

Principles of Economics, 9th Edition Test Bank - Page 31 preview image

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20)Theslopeof ahorizontallineisA)zero.B)infinite.C)continuallychanging.D)negative.Answer:ADiff:1Topic:Appendix:How toRead andUnderstandGraphsSkill:FactRefertotheinformationprovidedinFigure1.5 below toanswerthe questionsthatfollow.Figure1.521)RefertoFigure1.5.PanelAshowsacurve withaslopethat isA)positiveandincreasing.B)positiveanddecreasing.C)negativeandincreasing.D)negativeanddecreasing.Answer:ADiff:2Topic:Appendix:How toRead andUnderstandGraphsSkill:AnalyticAACSB:Analytic Skills

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