According to the textbook, economics is a:

Select one:

a.

social science.

b.

study of business decisions, not social decisions.

c.

part of operations and management science.

d.

part of humanities.

A/an _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

Select one:

a.

free good

b.

scarce good

c.

economic good

d.

monetary good

Water is considered a scarce good rather than a free good because:

Select one:

a.

it has alternative uses.

b.

it does not have alternative uses.

c.

scarce goods are less expensive than free goods.

d.

free goods are more expensive than scarce goods.

The Case in Point on the oil extraction suggests that one reason oil may become more costly is that:

Select one:

a.

we will have to give up more and more valuable alternatives to extract oil.

b.

speculation is likely to drive up oil prices.

c.

oil producers are likely to become more greedy in the future.

d.

actually, the Case suggests that oil extraction is likely to become less costly and the future.

The opportunity cost of something is:

Select one:

a.

greater during periods of rising prices.

b.

equal to the money cost.

c.

less during periods of falling prices.

d.

what is given up to acquire it.

The BEST example of making a choice at the margin is:

Select one:

a.

buying a new car.

b.

quitting your job.

c.

a coffee drinker drinking another cup of coffee.

d.

attending college.

The study of a single firm and how it determines prices would fall under:

Select one:

a.

macroeconomics.

b.

microeconomics.

c.

the study of inflation.

d.

normative economics.

Each of the following statements about the use of models in the study of economics is true EXCEPT:

Select one:

a.

models fit the observed facts exactly.

b.

models are sometimes revised in light of new research findings.

c.

models are easier to manipulate than the reality they represent.

d.

models contain the essential features of the economic behavior being studied.

Suppose you observe that the sun sets every evening after the six o'clock business report. If you conclude that the six o'clock business report makes the sun set, you are guilty of the fallacy of:

Select one:

a.

division.

b.

composition.

c.

false cause.

d.

science.

An example of a normative statement is:

Select one:

a.

The rate of unemployment is 4 percent.

b.

A high rate of economic growth creates more jobs for the country.

c.

The federal government spends half of its budget on national defense.

d.

Everyone in the country needs to be covered by national health insurance.