Econ201PracticeTest1

Econ201PracticeTest1 - Econ 201 Practice Test 1 Professor...

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Unformatted text preview: Econ 201 Practice Test 1 Professor V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Scarcity can best be defined as a situation in which: A) there are no buyers willing to purchase what sellers have produced. B) there are not enough goods to satisfy all of the buyers' demand. C) resources are limited in quantity and can be used in different ways. D) there is more than enough money to satisfy consumers' wants. 2) Adam Smith used the metaphor of the invisible hand to explain how: A) markets mismatch buyers and sellers. B) the butcher and the baker are benevolent. C) people acting in their own self-interest promote the interest of society as a whole. D) the production possibilities frontier illustrates efficient outcomes. 3) Positive economics: A) is the focus of most modern economic reasoning. B) concerns the forces that affect economic activity. C) predicts the consequences of alternative actions. D) All of the above are correct. 4) Normative economics: A) is the focus of most modern economic reasoning. B) answers the question "What ought to be?" C) predicts the consequences of alternative actions. D) All of the above are correct. 5) Which of the following is an example of a normative question? A) How will an increase in the price of gasoline affect taxi drivers? B) What fraction of an income-tax cut will be spent on consumer goods? C) Should the government provide free prescription drugs to senior citizens? D) How will an increase in the minimum wage affect teenaged workers? 6) Economists use assumptions to: A) make things simpler. B) focus on what really matters. C) simplify decision-making. D) all of the above 7) The Latin phrase ceteris paribus means that when a relationship between two variables is being studied: A) both are treated as unpredictable. B) neither of those two variables is allowed to change. C) all other variables are held fixed. D) we recognize that some factors are unknown. 8) A small change in a relevant variable is: A) an average change. B) a ceteris paribus change. C) an efficient change. D) a marginal change. 1 9) Which of the following is an example of a marginal question? A) How much will my chances of a job improve if I raise my GPA from a C to a C+? B) What is the average cost of a college education? C) How many students borrow money in order to attend college? D) What is the average income of a college graduate? 10) Figure 1.6 illustrates the relationship between the price of pizza and the number of pizzas a person chooses to consume. On this figure, the price of pizza is: A) negatively related to the number of pizzas consumed. B) positively related to the number of pizzas consumed....
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Econ201PracticeTest1 - Econ 201 Practice Test 1 Professor...

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