Principles of Macroeconomics Chapter 1 Exam

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Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster)
Chapter 1
The Scope and Method of Economics

1.1
Why Study Economics?

1
Multiple Choice

1)
Which of the following is NOT listed in the book as a reason to study economics? A)
to learn a way of thinking
B)
to understand society and global affairs
C)
to be an informed voter
D)
to learn how to make lots of money
Answer:
D
Diff: 1
Topic:
Why Study Economics?
Skill:
Fact

2)
Among the fundamental concepts in economics are
A)
opportunity cost.
B)
marginalism.
C)
efficient markets.
D)
all of the above
Answer:
D
Diff: 1
Topic:
Why Study Economics?
Skill:
Fact

3)
Which of the following is the best definition of economics?
A)
the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided B)
the study of how consumers spend their income
C)
the study of how business firms decide what inputs to hire and what outputs to produce D)
the study of how the federal government allocates tax dollars Answer:
A
Diff: 2
Topic:
Why Study Economics?
Skill:
Definition

4)
The rise of the modern factory system in England during the late eighteenth and early nineteenth centuries is known as the A)
Great Migration.
B)
Industrial Revolution.
C)
Wealth of Nations.
D)
Dark Ages.
Answer:
B
Diff: 1
Topic:
Why Study Economics?
Skill:
Fact

5)
Which of the following statements is NOT correct?
A)
Economics is a behavioral science.
B)
In large measure, economics is the study of how people make choices. C)
If poverty was eliminated there would be no reason to study economics. D)
Economic analysis can be used to explain how both individuals and societies make decisions. Answer:
C
Diff: 1
Topic:
Why Study Economics?
Skill:
Fact

6)
The study of economics
A)
is a very narrow endeavor.
B)
is a way of analyzing decision-making processes caused by scarcity. C)
is concerned with proving that capitalism is better than socialism. D)
focuses on how a business should function.
Answer:
B
Diff: 2
Topic:
Why Study Economics?
Skill:
Definition

7)
Sunk costs are
A)
costs that cannot be avoided, because they have already been incurred. B)
the costs of what we give up when we make a choice or a decision. C)
the additional costs of producing an additional unit of a product. D)
the additional costs of consuming an additional unit of a product. Answer:
A
Diff: 2
Topic:
Why Study Economics?
Skill:
Definition

8)
Suppose that you purchased a ticket to a jazz festival for $100 a month ago. Last week someone invited you to a hockey game on the same night as the jazz festival. You would much rather go to the hockey game than the jazz festival. You have tried unsuccessfully to sell the jazz festival ticket. Which of the following statements regarding this situation is correct? A)

The $100 you paid for the jazz festival ticket is relevant to the decision, as this represents the opportunity cost of attending the hockey game. B)
You should base your decision on whether or not the hockey game will provide you with more than $100 in satisfaction. C)
The $100 you paid for the jazz festival ticket should be irrelevant in your decision making, because it is a sunk cost. D)
The $100 jazz festival ticket should be irrelevant in your decision making, because it represents the marginal cost of attending the hockey game. Answer:
C
Diff: 2...
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