Econ 101 - Microeconomics » Fall 2019 » Quiz 1

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Question #1
Economic forces:
A.   are not related to scarcity
B.   are not related to rationing
C.   give rise to scarcity
D.   are a reaction to scarcity
Question #2
Countries such as Brazil, India and Moldova – well known sources of donors- have banned buying and selling organs. This legal action comes at the risk of driving the trade underground. What idea from Chapter 1 of the text does this story best illustrate?
A.   Legal and social forces can eliminate economic forces
B.   Economic forces always operate despite legal forces
C.   The invisible hand is not always invisible
D.   Marginal revenue should be equal to marginal cost
Question #3
A policy rule that concludes that a particular course of action is preferable is known as a(n):
A.   theorem
B.   policy
C.   insight
D.   precept
Question #4
An economic model
A.   is also abstract that it cannot be applied to real-world events
B.   can be used only to understand free markets
C.   applies economic theory to understand real-world events
D.   is an action to influence the course of economic events
Question #5
The invisible hand theorem relates mostly to
A.   microeconomics
B.   supra-economics
C.   normative economics
D.   macroecnomics
Question #6
The marginal cost of consuming another unit of good:
A.   must equal the marginal benefit or the unit will not be consumed
B.   must exceed the marginal benefit or the unit will not be consumed
C.   equals the total cost of consuming all prior units
D.   equals the increase in total cost when another unit is consumed
Question #7
New Jersey raises its minimum while neighboring Pennsylvania does not. Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages. This is an example of:
A.   an economic principle
B.   The economic decision rule
C.   a natural experiment
D.   simulation economics
Question #8
The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to Mary and Mary uses economic reasoning, she:
A.   cannot gain by buying another T-shirt
B.   will sell the T-shirts she has to others who are willing to pay $10
C.   will buy another T-shirt this month
D.   will not buy a T-shirt this month
Question #9
Marginal analysis suggests that you will engage in more of an activity if the:
A.   total benefit of the activity is less than the total cost
B.   total benefit from the activity exceeds the total cost
C.   Additional benefit from the activity exceeds the additional cost
D.   additional cost of the activity exceeds the additional benefit
Question #10
Which statement best summarizes the invisible hand theorem?
A.   Social, political, and economic forces act against people’s selfish desires to promote the common good.
B.   Government policies direct people’s selfish desires (tempered by social and economic forces) to the common good.
C.   Cultural norms direct people’s selfish desires (tempered by political and economic forces) to the common good.
D.   Markets direct people’s selfish desires (tempered by political and social forces) to the common good
Question #11
Which of the following is the best example of a positive question?
A.   Should the governmet reduce inflation?
B.   How should the government deal with the next recession?
C.   How are price and quantity demanded related?
D.   Should government allow two large companies to merge?
Question #12
A precept is:
A.   a set of equations that define a model
B.   a proposition that is logically true based on the assumptions of a model
C.   a policy rule that concludes that a particular course of action is preferable
D.   the application of models combined with judgment
Question #13
The study of inflation is a topic in:
A.   normative economics
B.   classical economics
C.   microeconomics
D.   macroeconomics
Question #14
Political forces:
A.   Affect the price mechanism through scarcity
B.   do not affect the price mechanism
C.   affect the price mechanism through cultural norms
D.   affect the price mechanism through the legal system
Question #15
Normative economics seeks to:
A.   determine how government policies affect the economy.
B.   objectively explain economic problems such as inflation and unemployment
C.   determine the most appropriate economic goals for a society

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