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Exam 1: Economics and Life

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Question 1

Multiple Choice

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When the unemployment rate rises, college enrollment increases as workers seek to expand training. This is an example of:

A) correlation and causation.
B) a negative correlation.
C) normative economics.
D) macroeconomics.

E) All of the above
F) B) and D)

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Question 2

Multiple Choice

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Trade-offs:

A) are associated with every decision.
B) do not exist if we receive something for free.
C) always result in market failure.
D) can be avoided through economic planning.

E) B) and D)
F) All of the above

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A

Question 3

Multiple Choice

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Thomas Malthus's model made the mistake of failing to consider:

A normative statement is generally based upon:

Households are vital to the circular flow model in which two ways?

The broad field of _____ would most likely study how all consumers respond to a hike in cigarette taxes.

Which of the following is an example of a normative statement?

Which of the following statements about an economic model is true?

Who makes decisions about how to allocate resources?

When two variables have been observed to have a tendency to occur at the same time, we can say there is ______ but not necessarily ______.

A journal reports that students who attend private schools have higher test scores. Which of the following is an example of an omitted variable that could explain this correlation?I. Parents' education levelII. Socio-economic statusIII. Private school tuition

After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. The marginal cost of an additional plate of food is:

A journal reports that both minivan sales and birth rates are on the rise. If you were to conclude that minivans cause people to have children you would be making the mistake of:

A news article reports that students who take SAT preparation courses tend to have higher test scores. Which of the following describes an omitted variable that could explain this correlation?I. Parents with more education are more likely to enroll their children in SAT preparation courses.II. SAT preparation courses improve students' test-taking abilities.III. Students who are more motivated to attend college are more likely to enroll in SAT preparation courses.

When toilet paper sales increase, quarterly economic growth rates tend to rise. This is an example of:

You have paid all expenses to travel to your favorite beach for a vacation. You made these payments early in order to receive a discount, and all payments are nonrefundable. Unfortunately, the weatherman is now predicting that a hurricane will hit the area during your vacation dates. As you decide whether or not to take the trip, you should not consider the:

The idea of efficiency is used to address which of the following questions?

A macroeconomist would study how:

Alan could apply the principles of economic decision making when deciding:how to spend his paycheck.who to marry.what to have for dinner after a long day at work.

Suppose that a policymaker is considering offering free college tuition to all low-to-moderate income families in your state. There are currently 1,000 students attending college who would meet the income qualifications to receive free tuition, and tuition is $10,000 per year. Which of the following statements is most likely to be true?