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1. A theory is:


1. an assumption


2. an “if-then” proposition


3. a hypothesis


4. a validated hypothesis


2. A hypothesis is tested by:


1. the realism of its assumption(s)


2. the lack of realism of its assumption(s)


3. its ability to predict accurately an outcome that follows logically from the assumption(s)


4. none of the above


3. The meaning of the word “economic” is most closely associated with the word:


1. free


2. scarce


3. unlimited


4. unrestricted


4. In a free-enterprise economy, the problems of what, how, and for whom are solved by:


1. a planning committee


2. the elected representatives of the people


3. the price mechanism


4. none of the above


5. Microeconomic theory studies how a free-enterprise economy determines:


1. the price of goods


2. the price of services


3. the price of economic resources


4. all of the above


6. A market:


1. necessarily refers to a meeting place between buyers and sellers


2. does not necessarily refer to a meeting place between buyers and sellers


3. extends over the entire nation


4. extends over a city


7. A function refers to:


1. the demand for a commodity


2. the supply of a commodity


3. the demand and supply of a commodity, service, or resource


4. the relationship between one dependent variable and one or more independent variables


8. The market equilibrium for a commodity is determined by:


1. the market demand for the commodity


2. the market supply of the commodity


3. the balancing of the forces of demand and supply for the commodity


4. any of the above


9. Which of the following is incorrect?


1. Microeconomics is concerned primarily with the problem of what, how, and for whom to produce.


2. Microeconomics is concerned primarily with the economic behavior of individual decision-making units when at equilibrium.


3. Microeconomics is concerned primarily with the time path and process by which one equilibrium position evolves into another.


4. Microeconomics is concerned primarily with comparative statics rather than dynamics.


10. Which of the following statements is most closely associated with general equilibrium analysis?


1. Everything depends on everything else.


2. Ceteris paribus.


3. The equilibrium price of a good or service depends on the balancing of the forces of demand and supply for that good or service.


4. The equilibrium price of a factor depends on the balancing of the forces of demand and supply for that factor.


11. Which aspect of taxation involves normative economics?


1. the incidence of (i.e., who actually pays for) the tax


2. the effect of the tax on incentives to work


3. the “fairness” of the tax


4. all of the above


12. Microeconomics deals primarily with:


1. comparative statics, general equilibrium, and positive economics


2. comparative statics, partial equilibrium, and normative economics


3. dynamics, partial equilibrium, and positive economics


4. comparative statics, partial equilibrium, and positive economics