Test Bank For Microeconomics Student Value Edition 8th Edition by Robert Pindyck

Microeconomics, 8e (Pindyck/Rubinfeld)

Chapter 1 Preliminaries

1.1 The Themes of Microeconomics

1) Microeconomics is the branch of economics that deals with which of the following topics?

1. A) The behavior of individual consumers
2. B) Unemployment and interest rates
3. C) The behavior of individual firms and investors
4. D) B and C
5. E) A and C

Answer: E

Diff: 1

Section: 1.1

2) A Rolling Stones song goes: “You can’t always get what you want.” This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?

1. A) Consumers must make the best purchasing decisions they can, given their limited incomes.
2. B) Workers do not have as much leisure as they would like, given their wages and working conditions.
3. C) Workers in planned economies, such as North Korea, do not have much choice over jobs.
4. D) Firms in market economies have limited financial resources.

Answer: A

Diff: 1

Section: 1.1

3) Economics is about the allocation of scarce resources. Which of the following is NOT an example of economic scarcity?

1. A) If Steve goes to see a movie on Saturday, he will not be able to afford buying ice cream.
2. B) If Jenny studies for her economics quiz this evening, she will not have time to walk her dog.
3. C) If General Motors increases its production of SUVs this year, it will have to spend more on advertising.
4. D) If Barnes and Noble bookstore increases the number of titles it carries, it will have to reallocate shelf space to accommodate the new titles.

Answer: C

Diff: 2

Section: 1.1

4) A valid and useful theory of gold prices:

1. A) helps to predict the movements of gold prices over time.
2. B) may be founded on simplifying assumptions.
3. C) need not exactly predict every change in gold prices.
4. D) all of the above
5. E) none of the above

Answer: D

Diff: 1

Section: 1.1

5) Use the following two statements to answer this question:

1. Economic theories are developed to explain observed phenomena by deducing from a set of basic rules and assumptions.
2. Economic theories use value judgments to determine which people ought to pay more taxes.
3. A) Both I and II are true.
4. B) I is true, and II is false.
5. C) I is false, and II is true.
6. D) Both I and II are false.

Answer: B

Diff: 1

Section: 1.1

6) Which of the following is a positive statement?

1. A) The President of the United States ought to be elected by a direct vote of the American people rather than the Electoral College.
2. B) A fundamental assumption of the economic theory of consumer behavior is that consumers always prefer having more of any good to having less of it.
3. C) Because many adults cannot afford to go to college, tax credits for tuition should be introduced.
4. D) all of the above
5. E) none of the above

Answer: B

Diff: 1

Section: 1.1

7) Which of the following is a normative statement?

1. A) The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S.
2. B) State governments should not subsidize corporations by training welfare recipients.
3. C) Presidential candidates should not be given funds from the federal government to run campaigns.
4. D) The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries.
5. E) all of the above

Answer: E

Diff: 1

Section: 1.1

8) Which of the following is a positive statement?

1. A) Intermediate microeconomics should be required of all economics majors in order to build a solid foundation in economic theory.
2. B) The minimum wage should not be increased because this action would increase unemployment.
3. C) Smoking should be restricted on all airline flights.
4. D) All automobile passengers should be required to wear seatbelts in order to protect them against injury.
5. E) none of the above

Answer: E

Diff: 1

Section: 1.1

9) Which of the following is a positive statement?

1. A) When the price of a good goes up, consumers buy less of it.
2. B) When the price of a good goes up, firms produce more of it.
3. C) When the Federal government sells bonds, interest rates rise and private business investment is reduced.
4. D) all of the above
5. E) none of the above

Answer: D

Diff: 1

Section: 1.1

10) Which of the following statements is false? An economic analysis of carbon taxes can:

1. A) calculate the increase in costs faced by coal-using industries.
2. B) predict the effect on unemployment in West Virginia coal mining communities.
3. C) compare the likely reductions in medical expenditures on diseases caused by smog.
4. D) present a trade-off of the costs and benefits of different levels of carbon taxes.
5. E) conclude that such taxes should be imposed to benefit future generations.

Answer: E

Diff: 1

Section: 1.1