ECO 2013 Exam 1 FSU (Midterm) UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
The Latin phrase "ceteris paribus" means that other potential causes are assumed to remain constant
Which of the following is a positive economic statement? b. a reduction in the payroll tax will reduce the unemployment rate
a. corporations should be prohibited from laying off
workers during a recession.
b. a reduction in the payroll tax will reduce the
unemployment rate.
c. the current unemployment rate is too high.
d. reducing unemployment should be the highest priority
of the federal government.
Which one of the following states a central element of a. Incentives matter--human choice is influenced in predictable ways by changes
the economic way of thinking? in personal costs and benefits.
a. Incentives matter--human choice is influenced in
predictable ways by changes in personal costs and
benefits.
b. Scarce goods are priceless.
c. When deciding how to allocate time, the concept of
opportunity cost is meaningless.
d. The realism of the assumptions is the best test of an
economic theory.
"There's no such thing as a free lunch" means the use of resources to meet one need means that those resources can no longer
be used to meet another need
OR
opportunity costs are incurred when resources are used to produce goods and
services
,Jacob and Mason go to a diner that sells burritos for $5 $1
and tacos for $3. They agree to split the lunch bill evenly.
Mason chooses a taco. The marginal cost to Jacob of
ordering a burrito instead of a taco is
Positive economics... d. postulates a relationship that is potentially refutable and then seeks to
a. is of no use to policy makers because it reflects the determine whether the stated relationship is correct.
value judgments of the researcher.
b. is the scientific study of "what ought to be" among
economic relationships.
c. uses value judgments to determine which policy
alternatives should be chosen.
d. postulates a relationship that is potentially refutable
and then seeks to determine whether the stated
relationship is correct.
Economic analysis assumes that... a. changes in the personal benefits and costs associated with a choice will exert a
predictable influence on human behavior.
a. changes in the personal benefits and costs associated
with a choice will exert a predictable influence on human
behavior.
b. people are basically humanitarian, and their actions
are, therefore, impossible to predict.
c. individuals act only out of selfish motives.
d. although individuals are at times selfish and at times
unselfish, only their selfish actions may be predicted.
Which of the following was a key belief of Adam Smith? a. he believed that individuals pursuing their own interests would direct economic
a. he believed that individuals pursuing their own interests activity in the most advantageous way.
would direct economic activity in the most advantageous
way.
b. he felt that human goodness would provide adequate
goods and services to everyone.
c. he lectured about the importance of gold and silver in
providing a stable monetary system.
d. he stressed that limited exchange and command
economies would prevent the exploitation of the poor.
Economics is primarily the study of... the choices we must make among alternatives because of scarcity.
The consequences of an economic change that are not secondary effects
immediately identifiable but are felt only with the passage
of time are known in economics as
What do economists mean when they state that a good is The amount of the good that people would like exceeds the supply freely
scarce? available from nature
The basic difference between macroeconomics and microeconomics is concerned with individual markets and the behavior of people
microeconomics is that and firms, while macroeconomics is concerned with aggregate markets and the
entire economy
OR
macroeconomics is concerned with the forest (aggregate markets), while
microeconomics is concerned with the individual trees (subcomponents).
, When the Noles football team is winning by a lot of association is not causation
points after halftime, they often play their second and
third team players. One of the coaches notices that when
the third team plays that the Noles wins by a bigger
margin than when just the first team plays. He
recommends that the third team see more playing time as
a result. What is wrong with his way of thinking?
Liam wants to buy some milk and a box of cereal. If Liam $1
buys 4 gallons of milk at $3.00 per gallon, the box of
cereal costs $2.00. If he buys 5 gallons of milk, the box of
cereal is free. For Liam, the marginal cost of buying a fifth
gallon of milk is
The economic way of thinking stresses that _______ matter incentives: when an option becomes less costly, people will be more likely to
choose it
Which one of the following is a positive economic c. An increase in the minimum wage will reduce employment
statement?
a. Social justice will be served by increasing the minimum
wage.
b. Thoughtful people oppose an increase in the minimum
wage.
c. An increase in the minimum wage will reduce
employment
While waiting in line to buy two tacos at 75 cents each, 20 cents
and a medium drink for 80 cents, Emma notices that the
restaurant has a value meal containing three tacos and a
medium drink all for $2.50. For Emma, the marginal cost
of purchasing the third taco would be
Economic choice and competitive behavior are the result scarcity
of
Which of the following sayings best reflects the concept c. "Time is money."
of opportunity cost?
"You can't teach an old dog new tricks."
b. "I have a baker's dozen."
c. "Time is money."
d. "There's no business like show business."
Three basic decisions must be made by all economies. what will be produced, how goods will be produced, and for whom goods will be
What are they? produced
On any production possibilities curve, a shift from right to unemployment
left only linearly could indicate
ANSWERS
The Latin phrase "ceteris paribus" means that other potential causes are assumed to remain constant
Which of the following is a positive economic statement? b. a reduction in the payroll tax will reduce the unemployment rate
a. corporations should be prohibited from laying off
workers during a recession.
b. a reduction in the payroll tax will reduce the
unemployment rate.
c. the current unemployment rate is too high.
d. reducing unemployment should be the highest priority
of the federal government.
Which one of the following states a central element of a. Incentives matter--human choice is influenced in predictable ways by changes
the economic way of thinking? in personal costs and benefits.
a. Incentives matter--human choice is influenced in
predictable ways by changes in personal costs and
benefits.
b. Scarce goods are priceless.
c. When deciding how to allocate time, the concept of
opportunity cost is meaningless.
d. The realism of the assumptions is the best test of an
economic theory.
"There's no such thing as a free lunch" means the use of resources to meet one need means that those resources can no longer
be used to meet another need
OR
opportunity costs are incurred when resources are used to produce goods and
services
,Jacob and Mason go to a diner that sells burritos for $5 $1
and tacos for $3. They agree to split the lunch bill evenly.
Mason chooses a taco. The marginal cost to Jacob of
ordering a burrito instead of a taco is
Positive economics... d. postulates a relationship that is potentially refutable and then seeks to
a. is of no use to policy makers because it reflects the determine whether the stated relationship is correct.
value judgments of the researcher.
b. is the scientific study of "what ought to be" among
economic relationships.
c. uses value judgments to determine which policy
alternatives should be chosen.
d. postulates a relationship that is potentially refutable
and then seeks to determine whether the stated
relationship is correct.
Economic analysis assumes that... a. changes in the personal benefits and costs associated with a choice will exert a
predictable influence on human behavior.
a. changes in the personal benefits and costs associated
with a choice will exert a predictable influence on human
behavior.
b. people are basically humanitarian, and their actions
are, therefore, impossible to predict.
c. individuals act only out of selfish motives.
d. although individuals are at times selfish and at times
unselfish, only their selfish actions may be predicted.
Which of the following was a key belief of Adam Smith? a. he believed that individuals pursuing their own interests would direct economic
a. he believed that individuals pursuing their own interests activity in the most advantageous way.
would direct economic activity in the most advantageous
way.
b. he felt that human goodness would provide adequate
goods and services to everyone.
c. he lectured about the importance of gold and silver in
providing a stable monetary system.
d. he stressed that limited exchange and command
economies would prevent the exploitation of the poor.
Economics is primarily the study of... the choices we must make among alternatives because of scarcity.
The consequences of an economic change that are not secondary effects
immediately identifiable but are felt only with the passage
of time are known in economics as
What do economists mean when they state that a good is The amount of the good that people would like exceeds the supply freely
scarce? available from nature
The basic difference between macroeconomics and microeconomics is concerned with individual markets and the behavior of people
microeconomics is that and firms, while macroeconomics is concerned with aggregate markets and the
entire economy
OR
macroeconomics is concerned with the forest (aggregate markets), while
microeconomics is concerned with the individual trees (subcomponents).
, When the Noles football team is winning by a lot of association is not causation
points after halftime, they often play their second and
third team players. One of the coaches notices that when
the third team plays that the Noles wins by a bigger
margin than when just the first team plays. He
recommends that the third team see more playing time as
a result. What is wrong with his way of thinking?
Liam wants to buy some milk and a box of cereal. If Liam $1
buys 4 gallons of milk at $3.00 per gallon, the box of
cereal costs $2.00. If he buys 5 gallons of milk, the box of
cereal is free. For Liam, the marginal cost of buying a fifth
gallon of milk is
The economic way of thinking stresses that _______ matter incentives: when an option becomes less costly, people will be more likely to
choose it
Which one of the following is a positive economic c. An increase in the minimum wage will reduce employment
statement?
a. Social justice will be served by increasing the minimum
wage.
b. Thoughtful people oppose an increase in the minimum
wage.
c. An increase in the minimum wage will reduce
employment
While waiting in line to buy two tacos at 75 cents each, 20 cents
and a medium drink for 80 cents, Emma notices that the
restaurant has a value meal containing three tacos and a
medium drink all for $2.50. For Emma, the marginal cost
of purchasing the third taco would be
Economic choice and competitive behavior are the result scarcity
of
Which of the following sayings best reflects the concept c. "Time is money."
of opportunity cost?
"You can't teach an old dog new tricks."
b. "I have a baker's dozen."
c. "Time is money."
d. "There's no business like show business."
Three basic decisions must be made by all economies. what will be produced, how goods will be produced, and for whom goods will be
What are they? produced
On any production possibilities curve, a shift from right to unemployment
left only linearly could indicate
