ECON 252 EXAM 1 QUESTIONS - PURDUE UNIVERSITY
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. - Answer -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. - Answer -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. - Answer -C.
both microeconomics and macroeconomics.
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 - Answer -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. -
Answer -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.) - Answer -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.
Amount spent on iTunes + Amount spent at Redbox = $1.
D.
Amount spent on iTunes + Amount spent at Redbox = $20. - Answer -D.
Amount spent on iTunes + Amount spent at Redbox = $20.
Your budget constraint for entertainment illustrates the concept of (equilibrium,
decreasing benefits,trade-offs), since as you increase your purchases of one item, you
(move closer and closer to equilibrium, must decrease your purchases of the other item,
become worse off), since your purchases are not balanced
. - Answer -trade-offs, must decrease your purchases of the other item
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your
possible options from the one you value the most to the one that you value the least in
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. - Answer -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. - Answer -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. - Answer -C.
both microeconomics and macroeconomics.
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 - Answer -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. -
Answer -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.) - Answer -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.
Amount spent on iTunes + Amount spent at Redbox = $1.
D.
Amount spent on iTunes + Amount spent at Redbox = $20. - Answer -D.
Amount spent on iTunes + Amount spent at Redbox = $20.
Your budget constraint for entertainment illustrates the concept of (equilibrium,
decreasing benefits,trade-offs), since as you increase your purchases of one item, you
(move closer and closer to equilibrium, must decrease your purchases of the other item,
become worse off), since your purchases are not balanced
. - Answer -trade-offs, must decrease your purchases of the other item
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your
possible options from the one you value the most to the one that you value the least in
