TEST BANK
Test Bank for ECON MICRO, 7th Edition
TO
PS
O
LU
TI
O
N
S
Page 1
, William A.: Econ Micro
Chapter 01
Indicate whether the statement is true or false.
1. Resources consist of labor and natural resources.
True
False
ANSWER: False
2. The ceteris paribus assumption is the other-things-constant assumption.
True
TO
False
ANSWER: True
3. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
True
PS
False
ANSWER: False
4. Resources are used only in the production of goods, not services.
True
O
False
ANSWER: False
LU
5. "There should be less discrimination against women" is an example of a positive economic statement.
True
False
ANSWER: False
TI
6. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
True
O
False
ANSWER: False
N
7. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
S
True
False
ANSWER: False
Page 2
,Name: Class: Date:
Chapter 01 ECON Micro7e
8. A marginal adjustment refers only to a minor change.
a. True
b. False
ANSWER: False
9. Rational self-interest is equivalent to pure selfishness.
True
TO
False
ANSWER: False
10. "An increase in the price of cheese causes consumers to purchase more cheese" is an example of a positive
economic statement.
PS
True
False
ANSWER: True
11. Labor and capital are exchanged in the resource market.
O
True
False
LU
ANSWER: True
12. Labor is the physical and mental effort used to produce goods and services.
True
False
TI
ANSWER: True
13. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
O
True
False
N
ANSWER: False
14. A good economic theory brings clarity to chaos.
True
S
False
ANSWER: True
15. The ceteris paribus assumption is a behavioral assumption.
True
False
ANSWER: False
Page 3
, Name: Class: Date:
Chapter 01 ECON Micro7e
16. It is always rational to acquire more information before making a decision.
a. True
b. False
ANSWER: True
17. Most economists consider a theory a good one if it predicts well.
True
TO
False
ANSWER: True
18. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
PS
True
False
ANSWER: False
19. Economics is as much an art as it is a science.
O
True
False
LU
ANSWER: True
20. Economic choice results from scarcity.
True
False
TI
ANSWER: True
21. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
O
True
False
N
ANSWER: True
22. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
True
S
False
ANSWER: True
23. Profit is the payment made for land resources.
True
False
ANSWER: False
Page 3
Test Bank for ECON MICRO, 7th Edition
TO
PS
O
LU
TI
O
N
S
Page 1
, William A.: Econ Micro
Chapter 01
Indicate whether the statement is true or false.
1. Resources consist of labor and natural resources.
True
False
ANSWER: False
2. The ceteris paribus assumption is the other-things-constant assumption.
True
TO
False
ANSWER: True
3. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
True
PS
False
ANSWER: False
4. Resources are used only in the production of goods, not services.
True
O
False
ANSWER: False
LU
5. "There should be less discrimination against women" is an example of a positive economic statement.
True
False
ANSWER: False
TI
6. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
True
O
False
ANSWER: False
N
7. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
S
True
False
ANSWER: False
Page 2
,Name: Class: Date:
Chapter 01 ECON Micro7e
8. A marginal adjustment refers only to a minor change.
a. True
b. False
ANSWER: False
9. Rational self-interest is equivalent to pure selfishness.
True
TO
False
ANSWER: False
10. "An increase in the price of cheese causes consumers to purchase more cheese" is an example of a positive
economic statement.
PS
True
False
ANSWER: True
11. Labor and capital are exchanged in the resource market.
O
True
False
LU
ANSWER: True
12. Labor is the physical and mental effort used to produce goods and services.
True
False
TI
ANSWER: True
13. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
O
True
False
N
ANSWER: False
14. A good economic theory brings clarity to chaos.
True
S
False
ANSWER: True
15. The ceteris paribus assumption is a behavioral assumption.
True
False
ANSWER: False
Page 3
, Name: Class: Date:
Chapter 01 ECON Micro7e
16. It is always rational to acquire more information before making a decision.
a. True
b. False
ANSWER: True
17. Most economists consider a theory a good one if it predicts well.
True
TO
False
ANSWER: True
18. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
PS
True
False
ANSWER: False
19. Economics is as much an art as it is a science.
O
True
False
LU
ANSWER: True
20. Economic choice results from scarcity.
True
False
TI
ANSWER: True
21. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
O
True
False
N
ANSWER: True
22. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
True
S
False
ANSWER: True
23. Profit is the payment made for land resources.
True
False
ANSWER: False
Page 3
