202 -- EXAM IA - FALL 2010
1. Economics 202 is a course in microeconomics, i.e., it is the study of decision making undertaken by individuals
(or households) and by firms.
2. In the circular flow diagram of a market economy, the money flow labeled “income” is connected to the market
where the _____ question is primarily answered.
b. For Whom?
e. both b and d.
3. Economic analysis assumes that people choose among alternatives consistent with the goal of improving their
This is known as:
a. the assumption of increasing costs
d. assumption of demand
b. the doctrine of economic greed
e. the assumption of ceteris paribus.
c. the assumption of rational self-interest
4. Which of the following is a positive statement:
a. workers with families should be paid at least the minimum wage.
b. the rate of inflation in 2009 was too high.
c. marginal tax rates should be increased for individuals with the highest incomes.
d. a rise in the price of gasoline will cause a reduction in the quantity demanded.
e. none of the above, a - d are all normative statements.
5. The primary consideration for determining the usefulness of an economic model or theory is:
a. how realistic its assumptions are
d. does it offer useable predictions for the real world.
b. how accurately it describes the way people think
e. all of the above.
c. how consistent is it with the basic human trait of greed.
6. Oil deposits in Alaska, technology, cement trucks and checking account balances are examples of
___, ___, ___, ___, respectively
a. land, labor, capital, not a resource
b. capital, capital, capital, capital
c. land, capital, capital, capital
d. land, labor, capital, capital
e. none above.
7. In the circular flow diagram of a market economy, we must be looking at the Resource Market if:
a. consumers are demanders and producers are suppliers
b. consumers are suppliers and producers are suppliers.
c. consumers are demanders and producers are demanders
d. consumers are suppliers and producers are demanders.
8. The fact that all resources are not equally adaptable or efficient in the production of all goods:
a. is the reason production possibility curves are bowed-out and not of straight lines.
b. is the source of the law of increasing relative costs
c. is the source of the law of demand
d. is the source of the economic problem?