ECON 252 - EXAM 1 (CH. 1-6) QUESTIONS &
ANSWERS
The principle that "people face tradeoffs" applies to
- societies
- Families
- individuals
- all of the above - Answer -all of the above
The "invisible hand" works to promote general well-being in the economy - - - primarily
through
- government intervention
- altruism
- people's pursuit of self-interest
- the political process - Answer -people's pursuit of self-interest
Rational people make decisions at the margin by
- comparing marginal costs and marginal benefits
- behaving in a random fashion
- thinking in black-and-white terms
- following marginal traditions - Answer -comparing marginal costs and marginal
benefits
Which is the most accurate statement about trade?
- Trading for a good can make a nation better off only if the nation cannot produce that
good itself.
- Trade can make every nation better off.
- Trade makes some nations better off and others worse off.
- Trade helps rich nations and hurts poor nations. - Answer -Trade can make every
nation better off
The opportunity cost of an item is
- what you give up to get that item
- the dollar value of the item
- usually less than the dollar value of the item
- the number of hours needed to earn money to buy the item - Answer -what you give
up to get that item
Economists are particularly adept at understanding that people respond to
- laws
- incentives
- rewards more than punishments
- punishments more than rewards - Answer -incentives
, The property of society getting the most it can from its scarce resources is - -- called
- equality
- externality
- productivity
- efficiency - Answer -efficiency
Which of the following is a principle concerning how people interact?
- All of the above are correct.
- Rational people think at the margin.
- People respond to incentives.
- Markets are usually a good way to organize economic activity. - Answer -Markets are
usually a good way to organize economic activity.
A marginal change is a
- change that involves little, if anything, that is important
- change for the worse, and so it is usually a short-term change.
- small, incremental adjustment.
- large, significant adjustment. - Answer -small, incremental adjustment.
In the broadest sense, economics is the study of
- how society manages its scarce resources.
- the interaction of business and government.
- production methods.
- how households decide who performs which tasks. - Answer -how society manages
its scarce resources.
The circular-flow diagram
- is an economic model.
- represents the flows of inputs, outputs, and dollars.
- All of the above are correct.
- incorporates two types of decision makers: households and firms. - Answer -All of the
above are correct.
An economic outcome is said to be efficient if the economy is
- using all of the scarce resources it has available.
- able to produce more than what is currently being produced without additional
resources.
- conserving on resources, rather than using all available resources.
- getting all it can get from the scarce resources it has available. - Answer -getting all it
can get from the scarce resources it has available.
Normative statements are
- not usually made by economists.
- claims about how variables in the economy normally behave
- pessimistic interpretations of the economy
ANSWERS
The principle that "people face tradeoffs" applies to
- societies
- Families
- individuals
- all of the above - Answer -all of the above
The "invisible hand" works to promote general well-being in the economy - - - primarily
through
- government intervention
- altruism
- people's pursuit of self-interest
- the political process - Answer -people's pursuit of self-interest
Rational people make decisions at the margin by
- comparing marginal costs and marginal benefits
- behaving in a random fashion
- thinking in black-and-white terms
- following marginal traditions - Answer -comparing marginal costs and marginal
benefits
Which is the most accurate statement about trade?
- Trading for a good can make a nation better off only if the nation cannot produce that
good itself.
- Trade can make every nation better off.
- Trade makes some nations better off and others worse off.
- Trade helps rich nations and hurts poor nations. - Answer -Trade can make every
nation better off
The opportunity cost of an item is
- what you give up to get that item
- the dollar value of the item
- usually less than the dollar value of the item
- the number of hours needed to earn money to buy the item - Answer -what you give
up to get that item
Economists are particularly adept at understanding that people respond to
- laws
- incentives
- rewards more than punishments
- punishments more than rewards - Answer -incentives
, The property of society getting the most it can from its scarce resources is - -- called
- equality
- externality
- productivity
- efficiency - Answer -efficiency
Which of the following is a principle concerning how people interact?
- All of the above are correct.
- Rational people think at the margin.
- People respond to incentives.
- Markets are usually a good way to organize economic activity. - Answer -Markets are
usually a good way to organize economic activity.
A marginal change is a
- change that involves little, if anything, that is important
- change for the worse, and so it is usually a short-term change.
- small, incremental adjustment.
- large, significant adjustment. - Answer -small, incremental adjustment.
In the broadest sense, economics is the study of
- how society manages its scarce resources.
- the interaction of business and government.
- production methods.
- how households decide who performs which tasks. - Answer -how society manages
its scarce resources.
The circular-flow diagram
- is an economic model.
- represents the flows of inputs, outputs, and dollars.
- All of the above are correct.
- incorporates two types of decision makers: households and firms. - Answer -All of the
above are correct.
An economic outcome is said to be efficient if the economy is
- using all of the scarce resources it has available.
- able to produce more than what is currently being produced without additional
resources.
- conserving on resources, rather than using all available resources.
- getting all it can get from the scarce resources it has available. - Answer -getting all it
can get from the scarce resources it has available.
Normative statements are
- not usually made by economists.
- claims about how variables in the economy normally behave
- pessimistic interpretations of the economy
