Test Bank for ECON MICRO, 7th Edition by William A. McEachern, Veronika Dolar
Chapter 01 ECON Micro7e
Indicate whether the statement is true or false.
1. Resources consist of labor and natural resources.
a. True
b. False
ANSWER: False
2. The ceteris paribus assumption is the other-things-constant assumption.
a. True
b. False
ANSWER: True
3. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
a. True
b. False
ANSWER: False
4. Resources are used only in the production of goods, not services.
a. True
b. False
ANSWER: False
5. "There should be less discrimination against women" is an example of a positive economic statement.
a. True
b. False
ANSWER: False
6. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
a. True
b. False
ANSWER: False
7. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
a. True
b. False
ANSWER: False
Page 1
,Name: Class: Date:
Chapter 01 ECON Micro7e
8. A marginal adjustment refers only to a minor change.
a. True
b. False
ANSWER: False
9. Rational self-interest is equivalent to pure selfishness.
a. True
b. False
ANSWER: False
10. "An increase in the price of cheese causes consumers to purchase more cheese" is an example of a positive
economic statement.
a. True
b. False
ANSWER: True
11. Labor and capital are exchanged in the resource market.
a. True
b. False
ANSWER: True
12. Labor is the physical and mental effort used to produce goods and services.
a. True
b. False
ANSWER: True
13. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
a. True
b. False
ANSWER: False
14. A good economic theory brings clarity to chaos.
a. True
b. False
ANSWER: True
15. The ceteris paribus assumption is a behavioral assumption.
a. True
b. False
ANSWER: False
Page 2
,Name: Class: Date:
Chapter 01 ECON Micro7e
16. It is always rational to acquire more information before making a decision.
a. True
b. False
ANSWER: True
17. Most economists consider a theory a good one if it predicts well.
a. True
b. False
ANSWER: True
18. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
a. True
b. False
ANSWER: False
19. Economics is as much an art as it is a science.
a. True
b. False
ANSWER: True
20. Economic choice results from scarcity.
a. True
b. False
ANSWER: True
21. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
a. True
b. False
ANSWER: True
22. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
a. True
b. False
ANSWER: True
23. Profit is the payment made for land resources.
a. True
b. False
ANSWER: False
Page 3
, Name: Class: Date:
Chapter 01 ECON Micro7e
24. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
ANSWER: False
25. Aleksi is thinking about buying a new condo. Rational self-interest demands that she do exhaustive research to
acquire every bit of information possible about her potential options.
a. True
b. False
ANSWER: True
26. Economic decision makers will continue to acquire information only as long as the expected additional benefit
exceeds the expected additional cost of the information.
a. True
b. False
ANSWER: True
27. Economists often focus on average behavior because it is easier to predict.
a. True
b. False
ANSWER: True
28. Discussions about the housing market in New York City is a microeconomics topic.
a. True
b. False
ANSWER: True
29. The association-is-causation fallacy is the error of assuming that what is true for one member of a group must
be true for the group.
a. True
b. False
ANSWER: False
30. Economic theory allows economists to predict the behavior of a specific person or firm.
a. True
b. False
ANSWER: False
Page 4
Chapter 01 ECON Micro7e
Indicate whether the statement is true or false.
1. Resources consist of labor and natural resources.
a. True
b. False
ANSWER: False
2. The ceteris paribus assumption is the other-things-constant assumption.
a. True
b. False
ANSWER: True
3. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
a. True
b. False
ANSWER: False
4. Resources are used only in the production of goods, not services.
a. True
b. False
ANSWER: False
5. "There should be less discrimination against women" is an example of a positive economic statement.
a. True
b. False
ANSWER: False
6. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
a. True
b. False
ANSWER: False
7. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
a. True
b. False
ANSWER: False
Page 1
,Name: Class: Date:
Chapter 01 ECON Micro7e
8. A marginal adjustment refers only to a minor change.
a. True
b. False
ANSWER: False
9. Rational self-interest is equivalent to pure selfishness.
a. True
b. False
ANSWER: False
10. "An increase in the price of cheese causes consumers to purchase more cheese" is an example of a positive
economic statement.
a. True
b. False
ANSWER: True
11. Labor and capital are exchanged in the resource market.
a. True
b. False
ANSWER: True
12. Labor is the physical and mental effort used to produce goods and services.
a. True
b. False
ANSWER: True
13. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
a. True
b. False
ANSWER: False
14. A good economic theory brings clarity to chaos.
a. True
b. False
ANSWER: True
15. The ceteris paribus assumption is a behavioral assumption.
a. True
b. False
ANSWER: False
Page 2
,Name: Class: Date:
Chapter 01 ECON Micro7e
16. It is always rational to acquire more information before making a decision.
a. True
b. False
ANSWER: True
17. Most economists consider a theory a good one if it predicts well.
a. True
b. False
ANSWER: True
18. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
a. True
b. False
ANSWER: False
19. Economics is as much an art as it is a science.
a. True
b. False
ANSWER: True
20. Economic choice results from scarcity.
a. True
b. False
ANSWER: True
21. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
a. True
b. False
ANSWER: True
22. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
a. True
b. False
ANSWER: True
23. Profit is the payment made for land resources.
a. True
b. False
ANSWER: False
Page 3
, Name: Class: Date:
Chapter 01 ECON Micro7e
24. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
ANSWER: False
25. Aleksi is thinking about buying a new condo. Rational self-interest demands that she do exhaustive research to
acquire every bit of information possible about her potential options.
a. True
b. False
ANSWER: True
26. Economic decision makers will continue to acquire information only as long as the expected additional benefit
exceeds the expected additional cost of the information.
a. True
b. False
ANSWER: True
27. Economists often focus on average behavior because it is easier to predict.
a. True
b. False
ANSWER: True
28. Discussions about the housing market in New York City is a microeconomics topic.
a. True
b. False
ANSWER: True
29. The association-is-causation fallacy is the error of assuming that what is true for one member of a group must
be true for the group.
a. True
b. False
ANSWER: False
30. Economic theory allows economists to predict the behavior of a specific person or firm.
a. True
b. False
ANSWER: False
Page 4
