Exam 1: What Is Economics

A) an indication of a positive assumption
B) an efficient assumption
C) useful in disguising the valid conclusions
D) a simplifying assumption
E) a critical assumption

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A) the value of the next best alternative that must be sacrificed
B) an issue in normative economic theory
C) the expense for the resources used plus the firm's profit
D) the out-of-pocket cost
E) the option to pay a reduced fee for the action

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A) theories about improving people's self-esteem
B) practical ways of improving people's self-esteem by making money
C) opinions that affirm economists' theories
D) statements about the way things ought to be
E) statements of fact

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A) how the economy actually works
B) how a change in government budgets affects the price level
C) how prices are determined in specific markets
D) value judgments
E) the historical growth of an economy

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A) be an accurate description of reality
B) yield better understanding of important relationships
C) use simplifying assumptions to make positive economic statements
D) use basic principles of economics to derive fundamental assumptions about human behavior
E) predict real-world occurrences with complete accuracy

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A) normative issues
B) positive issues
C) the mathematical calculations in an economic model
D) whether microeconomics or macroeconomics is more important
E) whether economic theory is useful in explaining the behavior of actors in the economy

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A) land
B) labor
C) human capital
D) physical capital
E) entrepreneurship

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A) $55
B) $55 plus the value of the higher exam grade he could earn by studying for 5 hours
C) $85 plus the value of the higher exam grade he could earn by studying for 5 hours
D) $85 minus the value of the higher exam grade he could earn by studying for 5 hours
E) $55 minus the value of the higher exam grade he could earn by studying for 5 hours

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A) positive statement
B) normative statement
C) morally ambiguous philosophical position
D) affront to the American dream
E) value judgment

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A) determining the impact of government spending on the actual level of total employment
B) determining the best level of immigration into the country
C) determining whether too many luxury goods are being produced
D) determining whether the government should reduce poverty
E) determining whether the government should alter income taxes in order to increase total employment

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A) governments should decide what should be produced
B) the government must decide how to allocate available resources
C) some members of each society must live in poverty
D) every society must choose among competing uses of available resources
E) resource availability exceeds the possible uses for available resources

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A) affects the important conclusions of an economic model
B) increases the level of detail in an economic model
C) makes an economic model a more concrete representation of reality
D) eliminates unnecessary details from an economic model
E) limits the validity of an economic model's conclusions

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A) competition among firms
B) scarcity of resources
C) inflation
D) changes in the money supply
E) conflict between positive and normative economic statements

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A) goods
B) services
C) natural resources
D) output
E) choices

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A) the role of government in the economy
B) a scarcity of land,labor,and machinery to produce goods and services
C) the federal budget deficit
D) an unequal distribution of income
E) low living standards

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