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d.
There is no relationship between variables X and Y.
118. A theory is
a.
built on the major factors or variables that the theorist believes explain some event.
b.
a simplified abstract representation of the real world.
c.
used to understand the real world.
d.
a and b
e.
a, b, and c
119. Ceteris paribus means
a.
one variable too many.
b.
the correct relationship specified.
c.
assuming economic motives.
d.
all other things held constant or nothing else changes.
120. Which of the following statements uses the term ceteris paribus correctly?
a.
In economics, there are numerous theories, ceteris paribus.
b.
New York City is a major American city, ceteris paribus.
c.
The price of pineapples is low in Hawaii, ceteris paribus.
d.
The more ice cream you eat, the more weight you will gain, ceteris paribus.
e.
none of the above
121. If an economist says "the higher the price of oranges, the fewer oranges individuals will buy, ceteris paribus," this
means that
a.
individuals don't like high-priced oranges.
b.
as the price of oranges rises, individuals' preferences change and they no longer like oranges as much as they
once did.
c.
as the price of oranges rises, individuals' preferences do not change, nor does anything else, but individuals
buy fewer oranges in response to the higher price of oranges.
d.
the higher the price of oranges, the fewer oranges individuals will buy, assuming that people have economic
motives.
122. The purpose of the ceteris paribus assumption is to allow economists to
a.
determine the relationship among several variables.
b.
determine the impact of several variables on another variable.
c.
isolate the impact of one variable on several variables.
d.
isolate the relationship between two variables.
123. The condition often used in economics to isolate the relationship between two variables is
a.
causation.
b.
abstraction.
c.
ceteris paribus.
d.
efficiency.
124. A three-word synonym for the term ceteris paribus is
a.
"nothing else changes."
b.
"in my opinion."
c.
"it is proved."
d.
"under this assumption."
125. Which statement uses the term ceteris paribus correctly?
a.
If you exercise regularly, you will be healthier, ceteris paribus.
b.
Blue is to green, ceteris paribus, as red is to purple.
c.
Most people consider Sunday to be the first day of the week, ceteris paribus.
d.
Interest rates usually rise in October, ceteris paribus.
e.
a and d
Exhibit 1-4
Units of
Good
Health
Marginal
Benefits ($)
Marginal Costs
($)
1
10
2
2
9
3
3
8
4
4
7
5
5
6
6
6
5
7
126. Refer to Exhibit 1-4. If the student whose marginal benefits and costs of good health are noted in this table, how
many units of good health should the student obtain in order to maximize her net benefits of good health?
a.
2 units
b.
3 units
c.
4 units
d.
5 units
e.
6 units
127. Economists use the ceteris paribus assumption primarily in order to
a.
make their analyses easier for them to conduct.
b.
designate what they believe is the correct relationship between two variables.
c.
explain why people sometimes consume more of a good when its price rises.
d.
explain why those things that come first do not necessarily cause those things that come later.
e.
designate the difference between normative and positive economics.
128. A theory is an abstract representation of reality. This means a theory
a.
is descriptive of the way the world is.
b.
is an unrealistic representation of reality.
c.
omits certain factors when trying to explain something.
d.
is usually expressed in professional jargon.
e.
none of the above
129. Efficiency is consistent with
a.
maximizing net benefits.
b.
equating marginal benefits and marginal costs.
c.
maximizing total benefits.
d.
minimizing total costs.
e.
a and b
130. Elite colleges and universities use standardized test scores (such as SAT and ACT scores) and high school grades as
a.
a means to raise student utility.
b.
a means to turn a university education from a "good" to a "bad."
c.
rationing devices.
d.
none of the above
131. Which of the following is not one of the four broad categories of resources?
a.
labor
b.
money
c.
capital
d.
entrepreneurship
e.
land
132. The coordinates of point A are 400 units of X and 40 units of Y. The coordinates of point B are 480 units of X and 60
units of Y. With X on the horizontal axis and Y on the vertical axis, the slope of the line between points A and B is
a.
+ 0.25
b.
+ 4.00
c.
+ 0.33
d.
- 4.00
e.
- 0.25
133. The coordinates of point A are 30 units of X and 70 units of Y. The coordinates of point B are 28 units of X and 76
units of Y. With X on the horizontal axis and Y on the vertical axis, the slope of the line between points A and B is
a.
+ 3.00
b.
+ 0.67
c.
+ 0.33
d.
- 3.00
e.
- 0.33
134. Something that motivates or encourages people to take an action is referred to as a(n)
a.
utility.
b.
abstract.
c.
market.
d.
incentive.
135. The branch of economics that studies the decisions made by individuals and firms is called macroeconomics.
a.
True
b.
False
136. Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues
involving small businesses.
a.
True
b.
False
137. The effect of a decrease in interest rates upon economic growth is an example of positive economics.
a.
True
b.
False
138. Economists use the word utility to describe the satisfaction one receives from a good.
a.
True
b.
False
139. If variable X rises as a result of variable Y falling, then X and Y have an inverse relationship.
a.
True
b.
False
140. In the textbook, economics is defined as the science of scarcity.
a.
True
b.
False
141. In economics, capital is defined as a financial asset such as stocks and bonds.
a.
True
b.
False
142. A rationing device is a method used to resolve who gets what of available goods and resources.
a.
True
b.
False
143. When a person is making a decision at the margin he or she is comparing the additional benefit of that activity to the
additional cost of the proposed action.
a.
True
b.
False
144. Economists use the terms resource and input as synonyms.
a.
True
b.
False
145. To an economist, the terms factor and resource are synonyms.
a.
True
b.
False
146. According to economists, money is a resource.
a.
True
b.
False
147. The higher the opportunity cost of doing something, the more likely it will be done.
a.
True
b.
False
148. Price is the only rationing device that can be used in a modern economy.
a.
True
b.
False
149. The resource termed labor consists of the physical, but not the mental, talents that people contribute to the
production process.
a.
True
b.
False
150. The slope of a straight line is always equal to either 1.0 or -1.0.
a.
True
b.
False
151. Economists sometimes refer to the resource category land as natural resources.
a.
True
b.
False
152. Scarcity affects everyone, even billionaires.
a.
True
b.
False
153. If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going to the movies.
a.
True
b.
False
154. Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic fatalities.
a.
True
b.
False
155. The slope of a horizontal line is always equal to zero.
a.
True
b.
False
156. The slope of a (nonlinear) curve varies from one point to another.
a.
True
b.
False
157. Scarcity occurs in both wealthy societies and poor societies.
a.
True
b.
False
158. The higher the opportunity cost of making a new friend, the more likely one is to make a new friend, ceteris paribus.
a.
True
b.
False
159. Describe at least three of the key concepts in economics introduced in Chapter 1 of the textbook that define how an
economist views the world.
160. What is the difference between macroeconomics and microeconomics? Give an example of a question that a
macroeconomist might be interested in answering, then do the same for a microeconomist.
161. Describe the difference between positive and normative economics. Cite an example of each.
162. List and describe the four broad categories of resources. Cite an example of each to help support your answer.
163. Define the term rationing device and give an example of each of three possible rationing devices. Explain how
scarcity implies the need for a rationing device.
164. Explain what an economist means by the phrase “decisions made at the margin.” Cite an example to support your
answer.
165. Explain why the ceteris paribus assumption is essential when assessing an economic theory. Give an example to
help support your answer.
166. Define the term scarcity and discuss two of its consequences.
167. Explain what an economist means when he says, “You don’t find any $10 bills on the sidewalk.”
168. Explain how scarcity can exist in a relatively rich country such as the United States. Give examples to help support
your answer.
