Exam 1 Fall 2010-KEY - Exam 1 Fall 2010 Key ECON 2010 1....

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1 Exam 1 Fall 2010 Key ECON 2010 1. Economics may best be defined as the: A. interaction between macro and micro considerations. B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. C. empirical testing of value judgments through the use of logic. D. use of policy to refute facts and hypotheses. 2. Microeconomics focuses on __________ while macroeconomics considers __________. A. The behavior of individuals; the behavior of institutions B. Financial reporting by individuals; financial reporting by large firms C. The choices made by individual participants in an economy; the economy's overall performance D. National markets; international markets 3. One thing that distinguishes normative principles from positive principles is that A. normative principles are pessimistic and positive principles are optimistic. B. normative principles reflect the social norms of the community, and positive principles reflect universal truths. C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions. D. normative principles tell us how people actually make economic decisions, and positive principles tell us how people should make decisions. 4. 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 is less than the marginal benefit of that student's education. The writer's reasoning is an application of A. positive economics. B. negative economics. C. normative economics. D. economic naturalism. 5. Production possibilities frontier models A. the choices we make in setting prices. B. the choices we make in setting output alternatives. C. the choices we make in setting wages. D. the choices we make in setting incomes.
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2 6. Using Figure 1.4 above we know the production of 4 units of soda and 2 units of pizza is A. possible, but there would be unemployed resources B. possible, but only if all resources were fully employed C. impossible because we have the resources but do not have the technology D. impossible because we have the technology but do not have the resources 7. The statement that Congress passed a tax bill and two months later a recession began, so the bill must have been poor policy is an example of A. the fallacy that correlation is the same as causation. B. the fallacy of composition. C. truth in an obvious form. D. both A) and B) 8. The budget line shows: A. the amount of product A that a consumer is willing to give up to obtain one more unit of product B. B. all possible combinations of two goods that can be purchased, given money income and the prices of the goods. C.
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Exam 1 Fall 2010-KEY - Exam 1 Fall 2010 Key ECON 2010 1....

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