13) Recall the application. One factor which was responsible for roughly one-fifth of hybrid vehicle

13)
Recall the application. One factor which was responsible for roughly one-fifth
of hybrid vehicles purchased in 2007 was a federal subsidy of up to $3,400 per
hybrid vehicle. The increase in sales
due to this subsidy is an example of which element of the economic way of
thinking?
A)
responding to incentives
B)
thinking at the margin
C)
isolating variables
D)
using assumptions to simplify

Topic: Application 1, Incentives to Buy Hybrid
Vehicles

14)
Recall the application. One factor which was responsible for roughly one-third
of hybrid vehicles purchased in 2007 was an increase in the price of
gasoline. The increase in sales due to
higher gasoline prices describe the economic concept of
A)
using assumptions to simplify.
B)
ceteris paribus.
C)
marginal thinking.
D)
rational self interest.

Topic: Application 1, Incentives to Buy Hybrid
Vehicles

15)
Recall the application. The average cost of abating one ton of CO2 emissions
through the hybrid subsidy is $177, but a switch from coal to natural gas in
power plants would reduce CO2 emissions at less than one-third the cost of the
hybrid subsidy. The increase in cost associated with the reduction of one ton
of CO2 emissions (assuming that each unit of CO2 emissions is measured in tons)
describes the economic concept of
A)
using assumptions to simplify.
B)
ceteris paribus.
C)
marginal thinking.
D)
rational self interest.

Topic: Application 1, Incentives to Buy Hybrid
Vehicles

Recall the Application about unwanted commercial
e-mail, or spam, to answer the following question(s).

16)
Recall the application. The economic approach to spam is to
A)
establish a price for commercial e-mail.
B)
ignore the spam issue because it has no economic implications.
C)
have it legislated on the local level since it is a microeconomic issue.
D)
ban all e-mail from international servers.

Diff:
2
Topic: Application 2, The Economic Solution To Spam

17)
Recall the application. The amount of e-mail spam would significantly decrease
if
A)
the cost of sending spam exceeded its profitability.
B)
states passed laws making spam illegal.
C)
e-mail filters were developed to separate spam from legitimate e-mail.
D)
more people responded to spam e-mails.

Diff:
2
Topic: Application 2, The Economic Solution To Spam

18)
Using assumptions to make things simpler and focus attention on what really
matters is like using a road map to plan a trip.

Topic: Use Assumptions to Simplify

19)
Ceteris paribus means “Let the buyer beware.”

Topic: Isolate Variables – Ceteris Paribus

20)
Ceteris paribus is the same as rise / run.

Topic: Isolate Variables – Ceteris Paribus

21)
A small, one-unit change in value is called a marginal change.

Topic: Think at the Margin

22)
A key assumption of most economic analysis is that people act rationally,
meaning they respond to incentives.

Topic: Rational People Respond to Incentives

23)
A key assumption of most economic analysis is that people are altruistic,
meaning that they act in their own self-interest.

Topic: Rational People Respond to Incentives

24)
Economists assume that individuals make informed decisions and act in their own
self-interest.

Topic: Rational People Respond to Incentives

25)
The congestion tax implemented in London reduced traffic volume and cut travel
time for cars and buses in half.

Topic: Example: London Addresses its Congestion
Problem
Skill: Fact

26)
To determine an appropriate congestion tax, an economist has to assume that
people respond to incentives.

Topic: Example: London Addresses its Congestion
Problem

Recall the Application about unwanted commercial
e-mail, or spam, to answer the following question(s).

27)
Recall the application. One idea to reduce the volume of e-mail spam is to
charge the sender for each commercial e-mail sent.

Topic: Application 2, The Economic Solution To Spam
Skill: Fact

28)
What is meant by the term “marginal change”?
marginal change is a small, one unit change in
value.

Topic: Think at the Margin

1.4 Preview of Coming Attractions:
Macroeconomics

1)
Macroeconomics is best described as the study of
A)
very large issues.
B)
the choices made by individual households, firms, and governments.
C)
the nation’s economy as a whole.
D)
the relationship between inflation and wage inequality.

Topic: Preview of Coming Attractions: Macroeconomics

Learning
Outcome: Macro-1

2)
Which of the following is a macroeconomic question?
A)
Should we have a constitutional amendment requiring the government to implement
a national consumption tax to replace the current income tax?
B)
Why did a leading computer manufacturer establish call centers in India?
C)
Why does a pharmaceutical manufacturer try to lower its production costs?
D)
Should the government put a tax on alcohol in an attempt to assist in the
funding of support groups like Alcoholics Anonymous?

Diff:
2
Topic: Preview of Coming Attractions: Macroeconomics

Learning
Outcome: Macro-1
3)
Which of the following is NOT a macroeconomic question?
A)
Should we have a constitutional amendment requiring the federal government to
balance the budget each year?
B)
Should restaurants be required to list the number of calories for each product
on their menus?
C)
How does a fiscal stimulus package affect gross domestic product?
D)
Should Congress enact tougher immigration laws to reduce unemployment?

Diff:
2
Topic: Preview of Coming Attractions: Macroeconomics

Learning
Outcome: Macro-1

4)
We can use macroeconomic analysis to
A)
learn how to balance a checkbook.
B)
study the choices made by households.
C)
understand marginal changes in the macroeconomy.
D)
understand why economies grow.

Diff:
2
Topic: Using Macroeconomics to Understand Why
Economies Grow

 

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