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ECO 202 FINAL EXAM:- Questions With Solutions
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ECO 202 FINAL EXAM:- Questions With Solutions
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ECO 202 FINAL EXAM:- Questions With SolutionsThe definition of economics states that it is the study of how
a. money influences the economy in the short run and the long run
b. businesses make decisions and how those decisions impact other firms, the
government, and consumers
c. the government determines policies, businesses set prices, and consumers
choose how much to buy
d. agents choose to allocate scarce resources and the impact of those choices
on society. Right Ans - d. agents choose to allocate scarce resources and the
impact of those choices on society.
The statement that the United States has a budget deficit that is in excess of
$15 trillion is a __________ (positive/ normative) statement since it describes
what people __________ (actually do/ ought to do). Right Ans - positive;
actually do
The statement that the United States has too many illegal immigrants is a
__________ (positive/ normative) statement since it describes what people
__________ (actually do/ ought to do). Right Ans - normative; ought to do
The ethical implications of a hotly debated government policy would best be
considered a
a. normative question, since it deals with an objective issue based on factual
evidence
b. positive question, since it deals with an objective issue based on factual
evidence
c. normative question, since it deals with a subjective issue based on personal
preferences
d. positive question, since it deals with a subjective issue based on personal
preferences. Right Ans - c. normative question, since it deals with a
subjective issue based on personal preferences
Economics is divided into two broad fields of study: microeconomics and
macroeconomics.
,Microeconomics studies __________, while macroeconomics studies__________.
a. issues relating to businesses; choices made by individuals and consumers
b. a small piece of the overall economy; the economy as a whole
c. economy-wide phenomena; decisions made by the government
d. money; policy Right Ans - b. a small piece of the overall economy; the
economy as a whole
Policy decisions made by the government are analyzed by __________
a. only macroeconomics
b. both microeconomics and macroeconomics
c. only microeconomics
d. neither microeconomics nor macroeconomics Right Ans - b. both
microeconomics and macroeconomics
A policy such as passing an economic stimulus to spur the economy would be
studied under __________ (microeconomics/ macroeconomics), since it deals
with _______________________________. Right Ans - macroeconomics; the
economy as a whole
The three principles of economics include optimization, equilibrium, and
empiricism.
Optimization describes a situation where
a. No one would benefit from changing his or her behavior
b. People weigh costs and benefits when making a decision
c. Economists use data to analyze what is happening in the world. Right
Ans - b. People weigh costs and benefits when making a decision
The three principles of economics include optimization, equilibrium, and
empiricism.
Equilibrium describes a situation where
a. No one would benefit from changing his or her behavior
b. People weigh costs and benefits when making a decision
c. Economists use data to analyze what is happening in the world. Right
Ans - a. No one would benefit from changing his or her behavior
The three principles of economics include optimization, equilibrium, and
empiricism.
,Empiricism describes a situation where
a. No one would benefit from changing his or her behavior
b. People weigh costs and benefits when making a decision
c. Economists use data to analyze what is happening in the world. Right
Ans - c. Economists use data to analyze what is happening in the world.
Economics, anthropology, psychology, sociology, and political science all study
human behavior.
Economics differs from these other social sciences because it also addresses
these three key concepts:
a. Empiricism, ideology, and social responsibility
b. Culture, optimization, and trade
c. Equilibrium, government actions, and incentives
d. Optimization, equilibrium, and empiricism Right Ans - d. Optimization,
equilibrium, and empiricism
Suppose your New Year resolution is to get back in shape. You are considering
various ways of doing this: you sing up for a gym membership, walk to work,
take the stairs instead of the elevator, or watch your diet.
How would you evaluate these options and choose and optimal one?
a. Do a cost-benefit analysis to compare the alternatives.
b. It makes the most sense to do the action that costs the least amount of
money
c. You should choose an activity randomly to avoid regretting your decision
later
d. You should do the activity that gives you the greatest personal benefit,
regardless of the cost. Right Ans - a. Do a cost-benefit analysis to compare
the alternatives.
Suppose your New Year resolution is to get back in shape. You are considering
various ways of doing this: you sing up for a gym membership, walk to work,
take the stairs instead of the elevator, or watch your diet.
When making your decision about which activity to choose, you should
consider the monetary cost __________ (as well as/ instead of) the opportunity
cost of the activities. The goal is to choose the option that offers the greatest
__________ (overall/ net) benefit. Right Ans - As well as; net
During the process of optimization economists believe that people are
considering __________
, a. What they would do it they had no money or time constraints of any kind.
b. The benefits of their choices for others more than the benefits to
themselves
c. The feasibility of a choice, given the information available at the time
d. Only the decisions that will result in the least cost to the individual. Right
Ans - c. The feasibility of a choice, given the information available at the time
The goal of optimization for an individual is to maximize ___________. Right
Ans - Overall well-being
Suppose that you allocate $20 each week for your entertainment budget. This
money is spent on two items: either renting movies for $1 each at Redbox or
downloading songs from iTunes at $1 each.
Given this information, which of the following would represent your budget
constraint for entertainment?
a. Amount spent on iTunes + Amount spent at Redbox = $20
b. Amount spent on iTunes + Amount spent at Redbox = $1
c. Amount spent on iTunes - Amount spent at Redbox = $20
d. Amount spent on iTune - Amount spent at Redbox - $1 = $20 Right Ans -
b. Amount spent on iTunes + Amount spent at Redbox = $1
Suppose that you allocate $20 each week for your entertainment budget. This
money is spent on two items: either renting movies for $1 each at Redbox or
downloading songs from iTunes at $1 each.
Your budget constraint for entertainment illustrates the concept of __________,
since as you increase your purchases of one item, you
______________________________________________. Right Ans - Trade-offs; must
decrease your purchases of the other item
The opportunity cost of an activity is a measure of _____________ when you do
that activity. Right Ans - What is given up
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank
your possible options from the one you value the most to the one that you
value the least in the following order: going to class, sleeping in late, going to
work early, getting lunch, going to the gym to exercise, and watching
television.
If you decide to go to class, then what do we know about the opportunity cost
of your decision?
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