Test Bank for Economics, 9th edition by Glenn Hubbard and Anthony O'Brien, ISBN: 9780138300036, All 28 Chapters Covered, Verified Latest Edition | Complete Guide.

Test Bank for Economics, 9th edition by Glenn Hubbard
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Economics Digital Update, 9e (Hubbard) yl yl yl yl All Chapters yl yl



Chapter 1 Economics: Foundations and Models
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1.1 Three Key Economic Ideas yl yl yl
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24/7 Customer Support
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1) Apple assembles most iPhones in China and India because the lower wages earned by Chinese and
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Indian workers and their experience in electronics manufacturing reduce the costs of assembling
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iPhones. This is an example of Apple reacting to which of the three key economic ideas?
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A) People are rational. yl yl



B) People respond to economic incentives.
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C) Optimal decisions are made at the margin.
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D) Firms attempt to maximize revenues.
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Answer:
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Diff: 2 yl



Topic: Scarcity
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking
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Special Feature: Chapter Opener: Should Apple Manufacture the iPhone in the United States?
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2) In economics, choices must be made because we live in a world of
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A) unemployment.
B) scarcity.
C) greed.
D) unlimited resources. yl



Answer:
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Diff: 1 yl



Topic: Scarcity
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*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking
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3) Which of the following statements about scarcity is true?
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A) Scarcity refers to the situation in which unlimited wants exceed limited resources.
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B) Scarcity is not a problem for the wealthy.
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C) Scarcity is only a problem when a country has too large a population.
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D) Scarcity only arises when there is a wide disparity in income
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distribution. Answer:
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Diff: 1 yl



Topic: Scarcity
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*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking
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1

,4) The basic economic problem of yl has always existed and will continue to exist.
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A) scarcity
B) efficiency
C) inflation
D) recession
Answer: A
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Diff: 1
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Topic: Scarcity y l y l



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




5) By definition, economics is the study of
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A) how to make money in the stock market. yl yl yl yl yl yl yl



B) how to make money in a market economy.yl yl yl yl yl yl yl



C) the choices people make to attain their goals, given their scarce resources.
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D) supply and demand. yl yl



Answer:
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Diff: 1 yl



Topic: Scarcity y l y l



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




6) An economic is a simplified version of some aspect of economic life used to analyze
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an economic issue.
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A) market
B) trade-off
C) variable
D) model
Answer:
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y D Diff: 1
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Topic: Economic Models y l y l yl



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




2

,7) Where do economic agents such as individuals, firms, and nations interact with each other?
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A) in public locations monitored by the government
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B) in any arena that brings together buyers and sellers
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C) in any physical location where people can physically get together for selling goods, such as
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shopping malls
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D) in any location where transactions can be monitored by consumer groups and taxed by
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the government
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Answer: B y l



Diff: 1
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Topic: Markets y l y l



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




8) In economics, the term
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the arrangement by which they come together to trade.
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A) collective
B) cooperative
C) market
D) trade-off
Answer: C
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Diff: 1
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Topic: Markets y l y l



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




9) Economists assume that individuals yl yl yl



A) behave in unpredictable ways. yl yl yl



B) will never take actions to help others.
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C) prefer to live in a society that values fairness above all else.
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D) are rational and respond to incentives.
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Answer:
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Diff: 1 yl



Topic: People Are Rational y l y l yl yl



*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




3

, 10) Economists assume that rational behavior is useful in explaining choices people make
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A) because irrational people do not make economic choices.
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B) even though people may not behave rationally all the time.
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C) because individuals act rationally all the time in all circumstances.
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D) even though people rarely, if ever, behave in a rational
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manner. Answer:
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Diff: 2 yl



Topic: People Are Rational
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*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




11) Economists assume that rational people do all of the following except yl yl yl yl yl yl yl yl yl yl



A) use all available information as they act to achieve their goals.
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B) undertake activities that benefit others and hurt themselves.
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C) weigh the benefits and costs of all possible alternative actions.
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D) respond to economic incentives. yl yl yl



Answer:
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Diff: 2 yl



Topic: People Are Rational
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*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
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economist
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AACSB: Analytical thinking y l y l yl




12) Economics does not study correct or incorrect behaviors but rather it assumes that economic
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agents behave , meaning they make the best decisions given their knowledge of the costs and
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benefits.
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A) equitably
B) rationally
C) emotionally
D) selfishly
Answer: B
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Diff: 2
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Topic: People Are Rational
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*: Recurring
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Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like
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an economist
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AACSB: Analytical thinking y l y l yl




4