chapter 1 quiz questions

Question 1

Which of the following would NOT be analyzed in microeconomics?
a) How to make the largest profit?

b) Whether to study or watch TV tonight
c) How an early freeze in California would affect the price of fruit?
d) Whether the federal budget should always be budgeted?

Answer 1

d) Whether the federal budget should always be balanced

Question 2

Study of how pat allocates her time between teaching classes and assisting undergraduate students is an example of what?

Answer 2

Microeconomics

Question 3

Some states have started giving tax credits to homeowners who install solar panels. This is an example of what?

Answer 3

Using the incentive principle to encourage homeowners to switch to solar energy

Question 4

The impact of government policies on building of new roads and highways would be studied in a field of what?

Answer 4

Macroeconomics

Question 5

Last year interest rates fell. The field of economics that would be most concern with this is What?

Answer 5

Macroeconomics

Question 6

Positive economic principle are those that what?

Answer 6

Predict how people WILL behave

Question 7

Normative principles are those that what?

Answer 7

Predict how people SHOULD behave.

Question 8

What distinguishes normative principle from positive principle?

Answer 8

Normative principles tell us how people should make economic decisions and positive principles tell us how people actually do make decisions.

Question 9

An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student in less than the marginal benefit of that student’s education. The writer’s reasoning is an application of:

Answer 9

Normative economics

Question 10

The incentive principle states that a person is more likely to do something if:

Answer 10

The benefits from doing it increase

Question 11

If the government wanted to use the incentive principle to discourage smoking it could what?

Answer 11

Increase taxes on cigarettes, effectively raising the price.

Question 12

According to the incentive principle people tend to do more of something when?

Answer 12

When the benefits are greater

Question 13

With ATMs, it is possible to retrieve cash from the bank at anytime. 100 years ago one could only get cash from the bank during business hours. The difference is due to what?

Answer 13

the cost of providing 24 hour service is much lower today

Question 14

The number of US householders with access to the Internet and those with broadband connections is growing rapidly. AS an economic naturalist one could predict that when a major purchase is being considered, families will what?

Answer 14

Collect more information before making the purchase because the cost of finding and acquiring it is lower

Question 15

Every time you go to the grocery store, you try to choose the shortest line But all the lines always seem to be the same. why?

Answer 15

Everyone else is trying to choose the shortest line too.

Question 16

Several years ago there were 2 systems for viewing movies at home: Sony’s BetaMax and VCR machines that played VHS tapes. Despite the higher quality of BetaMax video, VHS became the dominant format. Once the VHS tapes were the dominant format, BetaMax virtually disappeared from consumer markets. why?

Answer 16

Consumers gained more benefit by using the same system that others used, allowing them to share movies.

Question 17

Curly i]used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn’t cost him anything to visit. Is curly correct?

Answer 17

No because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe.

Question 18

Which of the following questions would not be answered in macroeconomics?
a) What caused the Great Depression?

b) At what rate does the US economy typically grow
c) Did the sharp increase in gasoline price alter SUV sales
d) How does government spending affect the economy

Answer 18

c) Did a sharp increase in gasoline price alter SUV sales

Question 19

A study that deals with the salaries of University professors would be considered what?

Answer 19

microeconomics

Question 20

The impact of government policies on the building of new roads and highways would be studied in the field of what?

Answer 20

macroeconomics

Question 21

The incentive principle is an example of what principle

Answer 21

A positive economic principle

Question 22

An editorial in the paper argues that students should only be allowed to attend school as long as the marginal cost of educating that student is less than the marginal benefit of that student’s education. The writer’s reasoning is an application of what?

Answer 22

Economic naturalism

Question 23

An economic naturalist is described as someone who:

Answer 23

applies economic insights to everyday life

Question 24

Cost-benefit Principle is an example of what type of principle?

Answer 24

Normative economic principle.