Question 1

Which of the following is the best definition of economics?

Accepted Answer

A)   It studies human behaviour when scarcity exists and choices must be made. 
B)   It provides the only reasonable explanation of how people make decisions. 
C)   It can accurately explain all human behaviour because it is based on the assumption of rationality. 
D)   It is the only social science that can explain the existence and behaviour of public institutions.E) All of the above
F) None of the above

Question 2

What occurs when people's wants are unlimited but resources are scarce?

Accepted Answer

A)   Only rich people get everything they want. 
B)   People must make choices. 
C)   More services are available than goods. 
D)   More goods are available than services.E) C) and D)
F) B) and D)

Question 3

Which set of broad categories are resources divided into?

Accepted Answer

A)   people, money, time, and machines 
B)   saving, spending, investment, and capital 
C)   human, technological, environmental, and government 
D)   natural resources, labour, capital, and entrepreneurial abilityE) A) and D)
F) None of the above

Question 4

In economics, what does the term "marginal" usually refer to?

Accepted Answer

A)   a small change in an economic variable 
B)   a low-quality product or resource 
C)   an unimportant and irrelevant economic variable 
D)   a footnote or minor pointE) C) and D)
F) B) and C)

Question 5

What are resources such as land and labour used for?

Accepted Answer

A)   to produce goods and services 
B)   to consume goods and services 
C)   to help facilitate exchange 
D)   to provide for an improved financial systemE) B) and D)
F) C) and D)

Question 6

Why is it more difficult to use theory and observation in economics than in other sciences such as physics?

Accepted Answer

A)   because it is difficult to evaluate an economic experiment 
B)   because is difficult to devise an economic experiment 
C)   because is difficult to perform an experiment in an actual economic system 
D)   because is difficult to collect sufficient dataE) A) and D)
F) All of the above

Question 7

Which of the following assumptions would be made by a behavioural economist?

Accepted Answer

A)   those that make economic models more complex than if these assumptions were removed 
B)   those that pertain only to consumers 
C)   those that are ways to test a hypothesis 
D)   those which describe how individuals are expected to conduct themselvesE) A) and B)
F) A) and D)

Question 8

Alicia makes the statement that every time she eats chocolate, it gives her acne.What is Alicia committing by ignoring the possibility that there may be another factor that causes her to eat chocolate and which also causes her acne?

Accepted Answer

A)   the fallacy of composition 
B)   the fallacy that association is causation 
C)   the fallacy of segmentation 
D)   the mistake of ignoring secondary effectsE) A) and C)
F) A) and B)

Question 9

What does the assumption of rational self-interest mean?

Accepted Answer

A)   that economic decision makers have no concern for the welfare of others 
B)   that economic decision makers consider the welfare of others to be more important than their own happiness 
C)   that economic decision makers know with certainty which choice will have the best result 
D)   that economic decision makers make reasonable decisions based on their expectations of resultsE) C) and D)
F) A) and D)

Question 10

What do economists aim to achieve when they use the other-things-constant assumption?

Accepted Answer

A)   to make useful predictions 
B)   to focus on the role of incentives 
C)   to focus only on consumers' decisions, and NOT on those of firms 
D)   to ignore reality, where things are constantly changingE) All of the above
F) C) and D)

Question 11

Which of the following would be a topic studied in the field of macroeconomics?

Accepted Answer

A)   the amazing recent growth of the Chinese economy 
B)   the movement of Canadian manufacturing firms to China 
C)   the differences in wages between men and women in Canada 
D)   the effect of rent controls on the housing market in TorontoE) C) and D)
F) B) and C)

Question 12

Which of the following are NOT economic decision makers?

Accepted Answer

A)   governments 
B)   consumers 
C)   businesses 
D)   machinesE) A) and D)
F) B) and D)

Question 13

Which of the following is an example of human capital?

Accepted Answer

A)   dump trucks 
B)   a college education 
C)   rent 
D)   moneyE) C) and D)
F) A) and B)

Question 14

Which of the following is an example of physical capital?

Accepted Answer

A)   rent 
B)   bulldozers 
C)   a college education 
D)   carpentry skillE) A) and B)
F) A) and C)

Question 15

Why do economists use economic theories?

Accepted Answer

A)   because theories have realistic assumptions 
B)   because theories contains as much detail as possible 
C)   because theories cannot be proven false 
D)   because theories predict wellE) None of the above
F) All of the above

Question 16

Which of the following lists the steps of the scientific process in the correct order?

Accepted Answer

A)   define variables; state assumptions; form a hypothesis; test 
B)   state assumptions; define variables; form a hypothesis; test 
C)   identify variables; state assumptions; test; form a hypothesis 
D)   identify variables; form "other-things-equal" assumptions; form behavioural assumptions; testE) None of the above
F) C) and D)

Question 17

What is macroeconomics the study of?

Accepted Answer

A)   the behaviour of large firms in the marketplace 
B)   the economic behaviour of individual decision makers 
C)   the behaviour of the economy as a whole 
D)   how to use the fewest natural resources to produce goods and servicesE) A) and C)
F) None of the above

Question 18

What is analyzed in macroeconomics?

Accepted Answer

A)   the overall performance of the economy as a whole 
B)   arrangements through which specific products are exchanged 
C)   influences on the decision making of particular households 
D)   the factors that affect the decisions of individual firmsE) A) and B)
F) C) and D)

Question 19

What is the meaning of unlimited wants?

Accepted Answer

A)   that people always desire more of at least one good 
B)   that each person has an unlimited desire for every good 
C)   that selfish people are NOT concerned about other people 
D)   that people buy goods without regard to what they can affordE) A) and B)
F) A) and C)

Question 20

What is a macroeconomist's main professional objective?

Accepted Answer

A)   to become wealthy 
B)   to control the government's decision-making processes 
C)   to understand how the overall economy works 
D)   to make a study of stock pricesE) None of the above
F) A) and B)

Exam 1: The Art and Science of Economic Analysis

Which set of broad categories are resources divided into?

Correct AnswerverifiedShow Answer

What is analyzed in macroeconomics?

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Which of the following is an example of physical capital?

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Which of the following are NOT economic decision makers?

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What do economists aim to achieve when they use the other-things-constant assumption?

Correct AnswerverifiedShow Answer

What are resources such as land and labour used for?

Correct AnswerverifiedShow Answer

Alicia makes the statement that every time she eats chocolate, it gives her acne.What is Alicia committing by ignoring the possibility that there may be another factor that causes her to eat chocolate and which also causes her acne?

Correct AnswerverifiedShow Answer

Which of the following assumptions would be made by a behavioural economist?

Correct AnswerverifiedShow Answer

What is the meaning of unlimited wants?

Correct AnswerverifiedShow Answer

Which of the following lists the steps of the scientific process in the correct order?

Correct AnswerverifiedShow Answer

Which of the following is an example of human capital?

Correct AnswerverifiedShow Answer

Which of the following is the best definition of economics?

Correct AnswerverifiedShow Answer

What is macroeconomics the study of?

Correct AnswerverifiedShow Answer

Why is it more difficult to use theory and observation in economics than in other sciences such as physics?

Correct AnswerverifiedShow Answer

In economics, what does the term "marginal" usually refer to?

Correct AnswerverifiedShow Answer

What is a macroeconomist's main professional objective?

Correct AnswerverifiedShow Answer

Why do economists use economic theories?

Correct AnswerverifiedShow Answer

What occurs when people's wants are unlimited but resources are scarce?

Correct AnswerverifiedShow Answer

Which of the following would be a topic studied in the field of macroeconomics?

Correct AnswerverifiedShow Answer

What does the assumption of rational self-interest mean?

Correct AnswerverifiedShow Answer

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