ECON 252 - PURDUE UNIVERSITY -
EXAM 1 & PRACTICE QUESTIONS
WITH ANSWERS 2025
The definition of economics states that it is the study of how _________.
A.
agents choose to allocate scarce resources and the impact of those choices on
society.
B.
money influences the economy in the short run and the long run.
C.
businesses make decisions and how those decisions impact other firms, the
government, and consumers.
D.
the government determines policies, businesses set prices, and consumers
choose how much to buy.
A.
agents choose to allocate scarce resources and the impact of those choices on
society.
Economics is divided into two broad fields of study: microeconomics and
macroeconomics.
Microeconomics studies _________, while macroeconomics studies _________.
A.
economy-wide phenomena; decisions made by the government.
B.
a small piece of the overall economy; the economy as a whole.
C.
issues relating to businesses; choices made by individuals and consumers.
D.
money; policy.
B.
a small piece of the overall economy; the economy as a whole.
Policy decisions made by the government are analyzed by _________.
A.
only macroeconomics.
B.
neither microeconomics nor macroeconomics.
,C.
both microeconomics and macroeconomics.
d.
only microeconomics.
C.
both microeconomics and macroeconomics.
A policy such as pollution regulations on steel plants would be studied under
(microeconomics, macroeconomics), since it deals with
(a small part of the overall economy, the economy as a whole).
microeconomics, a small part of the overall economy
Which of the following statements would not be considered a positive
statement?
A.
The growth rate of college tuition for 2013 minus 2014 was 2.9 percent.
B.
The highest annual unemployment rate in the last 10 years was 9.6 percent.
C.
Tuition at 4 minus year universities is too high and should be lowered.
D.
The U.S. automobile industry had its highest growth in 5 years in 2012.
C.
Tuition at 4 minus year universities is too high and should be lowered.
The statement that the U.S. government should increase carbon taxes to
reduce carbon emissions that cause global warming is ___________.
A.
a positive statement, since most studies have found that global warming does
exist and most economists do believe that carbon taxes are an effective way to
control emissions.
B.
a normative statement, since it describes what ought to be done and is
therefore not possible to confirm with data.
C.
a normative statement, since it is an incorrect statement. Most economists
believe that carbon taxes should be lowered to control emissions.
D.
neither a positive nor a normative statement, since it discusses the broad topic
of global warming instead of a specific issue within the country.
B.
a normative statement, since it describes what ought to be done and is therefore not
possible to confirm with data
, The three principles of economics include optimization, equilibrium, and
empiricism.
A. no one would benefit from changing his or her behavior
B. economists use data to analyze what is happening in the world
C. people weigh costs and benefits when making a decision
optimization - C
equilibrium - A
empiricism - B
Suppose your New Year resolution is to get back in shape. You are
considering various ways of doing this: you can sign up for a gym
membership, walk to work, take the stairs instead of the elevator, or watch
your diet.
How would you evaluate these options and choose an optimal one?
A.
It makes the most sense to do the action that costs the least amount of money.
B.
Do a cost-benefit analysis to compare the alternatives.
C.
You should do the activity that gives you the greatest personal benefit,
regardless of the cost.
D.
You should choose an activity randomly to avoid regretting your decision
later.
B.
Do a cost-benefit analysis to compare the alternatives.
When making your decision about which activity to choose, you should
consider the monetary cost (but not,
as well as) the opportunity cost of the activities. The goal is to choose the
option that offers the greatest (net, overall benefit.)
as well as; net
Suppose that you allocate $20 each week for your entertainment budget. This
money is spent on two items: either renting movies for $1 each at Redbox or
downloading songs from iTunes at $1 each.
Given this information, which of the following would represent your budget
constraint for entertainment?
A.
Amount spent on iTunes minus Amount spent at Redbox = $20.
B.
Amount spent on iTunes minus Amount spent at Redbox minus $1 = $20.
C.
EXAM 1 & PRACTICE QUESTIONS
WITH ANSWERS 2025
The definition of economics states that it is the study of how _________.
A.
agents choose to allocate scarce resources and the impact of those choices on
society.
B.
money influences the economy in the short run and the long run.
C.
businesses make decisions and how those decisions impact other firms, the
government, and consumers.
D.
the government determines policies, businesses set prices, and consumers
choose how much to buy.
A.
agents choose to allocate scarce resources and the impact of those choices on
society.
Economics is divided into two broad fields of study: microeconomics and
macroeconomics.
Microeconomics studies _________, while macroeconomics studies _________.
A.
economy-wide phenomena; decisions made by the government.
B.
a small piece of the overall economy; the economy as a whole.
C.
issues relating to businesses; choices made by individuals and consumers.
D.
money; policy.
B.
a small piece of the overall economy; the economy as a whole.
Policy decisions made by the government are analyzed by _________.
A.
only macroeconomics.
B.
neither microeconomics nor macroeconomics.
,C.
both microeconomics and macroeconomics.
d.
only microeconomics.
C.
both microeconomics and macroeconomics.
A policy such as pollution regulations on steel plants would be studied under
(microeconomics, macroeconomics), since it deals with
(a small part of the overall economy, the economy as a whole).
microeconomics, a small part of the overall economy
Which of the following statements would not be considered a positive
statement?
A.
The growth rate of college tuition for 2013 minus 2014 was 2.9 percent.
B.
The highest annual unemployment rate in the last 10 years was 9.6 percent.
C.
Tuition at 4 minus year universities is too high and should be lowered.
D.
The U.S. automobile industry had its highest growth in 5 years in 2012.
C.
Tuition at 4 minus year universities is too high and should be lowered.
The statement that the U.S. government should increase carbon taxes to
reduce carbon emissions that cause global warming is ___________.
A.
a positive statement, since most studies have found that global warming does
exist and most economists do believe that carbon taxes are an effective way to
control emissions.
B.
a normative statement, since it describes what ought to be done and is
therefore not possible to confirm with data.
C.
a normative statement, since it is an incorrect statement. Most economists
believe that carbon taxes should be lowered to control emissions.
D.
neither a positive nor a normative statement, since it discusses the broad topic
of global warming instead of a specific issue within the country.
B.
a normative statement, since it describes what ought to be done and is therefore not
possible to confirm with data
, The three principles of economics include optimization, equilibrium, and
empiricism.
A. no one would benefit from changing his or her behavior
B. economists use data to analyze what is happening in the world
C. people weigh costs and benefits when making a decision
optimization - C
equilibrium - A
empiricism - B
Suppose your New Year resolution is to get back in shape. You are
considering various ways of doing this: you can sign up for a gym
membership, walk to work, take the stairs instead of the elevator, or watch
your diet.
How would you evaluate these options and choose an optimal one?
A.
It makes the most sense to do the action that costs the least amount of money.
B.
Do a cost-benefit analysis to compare the alternatives.
C.
You should do the activity that gives you the greatest personal benefit,
regardless of the cost.
D.
You should choose an activity randomly to avoid regretting your decision
later.
B.
Do a cost-benefit analysis to compare the alternatives.
When making your decision about which activity to choose, you should
consider the monetary cost (but not,
as well as) the opportunity cost of the activities. The goal is to choose the
option that offers the greatest (net, overall benefit.)
as well as; net
Suppose that you allocate $20 each week for your entertainment budget. This
money is spent on two items: either renting movies for $1 each at Redbox or
downloading songs from iTunes at $1 each.
Given this information, which of the following would represent your budget
constraint for entertainment?
A.
Amount spent on iTunes minus Amount spent at Redbox = $20.
B.
Amount spent on iTunes minus Amount spent at Redbox minus $1 = $20.
C.
