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1 Test Bank for Microeconomics Theory and Applications, 13e Edgar Browning, Mark Zupan
Chapter Number: 1
Question Type: Multiple Choice
- Which of the following is generally considered to be a microeconomic question?
- The relationship between the money supply and nominal GDP
- The responsiveness of aggregate demand to change in government expenditure
- The relationship between productivity of workers and wages received by them
- The relationship between inflation and unemployment
Answer: C
Difficulty Level: Medium
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory.
2. Microeconomics is also known as price theory because:
- everything has a price.
- prices have important effects on individual and firm decisions.
- prices are the only determinant of economic outcomes.
- prices change constantly.
Answer: B
Difficulty Level: Easy
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory.
- Which of the following is generally considered a microeconomic question?
- The relationship between the money supply and nominal GDP
- The relationship between the unemployment and inflation
- The impact of a tax cut on public saving
- The effect of anti-discrimination laws on employers’ hiring practices
Answer: D
Difficulty Level: Easy
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory. 1 / 4
2
- Which of the following economic decisions is not a part of the study of microeconomics?
- A consumer's decision regarding how much of a good to purchase
- A worker's decision concerning which job to take
- A business firm's decision regarding how many machines to purchased.
- The government's decision regarding the use of monetary or fiscal policy to control increasing
prices
Answer: D
Difficulty Level: Medium
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory.
5. Macroeconomics deals primarily with:
- aggregate economic factors.
- the behavior of rational consumers.
- the role of politics in economics.
- a society’s economic and cultural environment.
Answer: A
Difficulty Level: Easy
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory.
- Which of the following best describes the difference between micro and macroeconomics?
- Macroeconomics deals with bigger, more important issues, while microeconomics deals with
- Macroeconomics studies the actions of large firms while microeconomics studies the behavior
- Macroeconomics is the study of aggregate factors while microeconomics is the study of
- Macroeconomics studies long-run behavior (one-year or more) while microeconomics studies
the smaller, less significant details.
of small firms and individuals.
individuals and individual firms.
short-run or immediate behavior.
Answer: C
Difficulty Level: Easy
Section Reference: The Scope of Microeconomic Theory
Learning Objective: Convey the scope of microeconomic theory. 2 / 4
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7. Theory A is considered to be better than Theory B if:
- the assumptions of B are more realistic than the assumptions of A.
- A takes into consideration more facts than B.
- A predicts or explains a certain phenomenon better than B.
- A uses more mathematics than B.
Answer: C
Difficulty Level: Medium
Section Reference: The Nature and Role of Theory
Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.
- Consider the following theory: the more one practices for the SAT test, the higher the person
will score. This theory:
- is complete and very useful for high school students.
- is incomplete because it leaves out many other factors that will influence SAT scores.
- is not useful since it is hard to measure practice time.
- is useful because more practice will guarantee higher SAT scores.
Answer: B
Difficulty Level: Medium
Section Reference: The Nature and Role of Theory
Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.
9. The test of a theory is whether:
- its assumptions are realistic.
- it predicts the outcomes well.
- it explains the observed data perfectly.
- it incorporates every relevant factor bearing on the analysis.
Answer: B
Difficulty Level: Easy
Section Reference: The Nature and Role of Theory
Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes. 3 / 4
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10. In judging the value of a theory, the most important criteria is:
- how realistic or valid the assumptions of the theory are as compared to real world
- how well the theory predicts that which it is designed to predict.
- how well the theory builds upon the theorists' experiences.
- how simple the theory is for the average people to understand.
circumstances.
Answer: B
Difficulty Level: Easy
Section Reference: The Nature and Role of Theory
Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.
11. Economic theory:
- can determine which public policy is the most desirable.
- tries to account for all possible influences.
- is a tool for understanding economic relationships.
- uses no assumptions in deriving results.
Answer: C
Difficulty Level: Easy
Section Reference: Positive versus Normative Analysis
Learning Objective: Distinguish between positive and normative analyses.
- Which of the following is true of positive analysis?
- It draws on accepted bodies of theory and evidence to ascertain the likely consequences of a
- It is always used to evaluate proposed policy changes in the most positive way.
- It is sufficient to determine whether a policy is desirable or undesirable.
- It claims that the impact of policies cannot be quantified.
policy or action.
Answer: A
Difficulty Level: Easy
Section Reference: Positive versus Normative Analysis
Learning Objective: Distinguish between positive and normative analyses.
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