1.Which of the following statements is correct?
(a) Theory and hypothesis are interchangeable terms for the same thing.
(b) A hypothesis may result from a tested and confirmed theory.
(c) A theory may result from a tested and confirmed hypothesis.
(d) A hypothesis is a theory whose formulation relies on mathematics.
2.Economists use models in order to
(a) experiment with alternative circumstances.
(b) make educated guesses about real life events.
(c) predict outcomes under various hypothetical conditions.
(d) All of the above are correct.
3.Empirical economists
(a) reason inductively to develop economic models.
(b) impose ceteris paribus conditions to conduct controlled experiments.
(c) collect and use data to test economic theories.
(d) reason deductively to develop economic theories.
4.Which of the following statements is incorrect?
(a) Economists use the phrase “ceteris paribus” to express the assumption, “everything affects everything else.”
(b) The scientific method used by economists involves: reducing the complexity of reality to manageable proportions, formulating a hypothesis that explains reality, and testing the hypothesis.
(c) A hypothesis is a logical conclusion based on a theoretical model.
(d) Prediction is a conclusion deduced from a model before the conclusion is observed.
5.Which of the following lists the steps to building a model in the correct order?
(a) Create simplifying assumptions; identify the problem; test the model using data.
(b) Identify the problem; develop a model; collect data and test the model.
(c) Collect data; identify the problem; develop simplifying assumptions.
(d) Identify the problem; test the model; generate data.
6.If you calculate the slope of a line that shows an inverse relationship between two variables, the resulting number will be
(a) between 1 and – 1.
(b) zero.
(c) positive.
(d) negative.
7.Most economists believe that the appropriate methodology of economics is to test a theory by:
(a) its ability to predict accurately.
(b) whether the predictions follow logically from the assumptions.
(c) the internal consistency of its assumptions.
(d) All of the above are correct.
Use the following table to answer question 8.
Price of bread $3.00 $2.50 $2.00 $1.50 $1.00
Quantity supplied of bread 16 12 10 8 6
Quantity demanded of bread 6 8 10 11 12
8.Which of the following statements is incorrect?
(a) There is an indirect relationship between the price of bread and the quantity supplied of bread.
(b) The law of demand is proven by the relationship between the price of bread and the quantity demanded of bread.
(c) The equilibrium occurs at P = $2.00.
(d) Graphically, the supply curve for bread will slope upward.
Use the following table to answer questions and 10. The number of hot dogs sold by 12 randomly selected hot dogs vendors in Central Park on July 4 is as follows:
1 2 3 4 5 6 7 8 9 10 11 12
142 97 105 76 90 83 123 115 92 94 73 104
9.The mean of the sample data is:
(a) 123.
(b) 99.5.
(c) 83.
(d) None of the above.
10.Which of the following statements is incorrect?
(a) The mode of the sample data is 123.
(b) The mean of the sample data is 83.
(c) The median of the sample data is 115.
(d) All of the above are incorrect
11. Studying how the management of US Steel, a large steel-producing company, decides how many tons of steel to produce and the price to charge for its steel would be considered
(a)descriptive economics.
(b)empirical economics.
(c)microeconomics.
(d)macroeconomics.
12.Studying how Bob’s firm decides to produce one more unit of output is an example of
(a)descriptive economics.
(b)industrial organization.
(c)macroeconomics.
(d)microeconomics.
13.______ focuses on the prices of individual goods and services and ______ focuses on the rate of inflation.
(a)Microeconomics; macroeconomics
(b)Macroeconomics; microeconomics
(c)Microeconomics; microeconomics
(d)Macroeconomics; macroeconomics
14.Suppose you must decide whether to spend your last study hour of the day studying either economics or history. You are dealing with the concept of
(a)absolute advantage.
(b)comparative advantage.
(c)opportunity cost.
(d)Specialization and exchange
15. In the command economy of the former Soviet Union:
(a)economic decisions were decentralized.
(b)the means of production were owned by the state.
(c)economic incentives were lacking or grossly distorted.
(d)b and c are correct.
(e)All of the above are correct.
16.When economic decisions are made partly by government and partly by market forces, the system is called a:
(a) subterranean economy.
(b) mixed economy.
(c) market economy.
(d) command economy.
17.In a market economy, the decisions regarding allocation of resources is made by
(a) automatic forces of supply and demand.
(b) authorities in Washington D.C.
(c) planners in state capitals.
(d) committees from a variety of economic interest groups.
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