MOUNT SAINT VINCENT UNIVERSITY
HALIFAX, NOVA SCOTIA
ECON 1101 ASSIGNMENT #1
Multiple Choice Questions
Identify the choice that best completes the statement or answers the question.
1. When US President Harry Truman said that he wanted to find a one-armed economist
because his economic advisors always said, "On the one hand . . . and on the other
hand . . ." he recognized that the advice of economists is often equivocal. Why is their
advice often equivocal?
a. Economists are aware that tradeoffs are involved in most policy questions.
b. Economists cannot make up their minds on policy matters.
c. Economists are often unable to identify the critical questions involved in policy
issues.
d. Economists always disagree with each other on policy issues.
Possibility A Economics History
I 94 76
II 87 84
III 77 91
2. Refer to Table 1-1. A student has only a few hours to prepare for two different exams this
afternoon. The above table shows alternative possible exam scores with three alternative
uses of the student's time. The opportunity cost of scoring a 94 on the economics exam
rather than a 77 is:
a. 17 points on the history exam.
b. 8 points on the history exam.
c. 14 points on the history exam.
d. 15 points on the history exam.
3. If rain dancing is correlated with rain, does that necessarily mean rain dancing causes
rain?
a. No. This is an example of a failure to properly employ the ceteris paribus assumption.
b. No. Two variables may be correlated without one necessarily causing the other.
c. No. This is an example of the fallacy of composition.
d. If it rains after individuals have engaged in rain dancing then there is certainly
causation at work.
4. Michelle is an economist, and to her, a good economic theory can be thought of as a(n):
a. abstraction for the sake of argument.
b. abstraction from reality useful for explaining but not predicting behaviour (since
theories are too simplistic).
c. opinion that can be tested against economic data.
d. statement or relationship that is used to explain and predict human behaviour.
5. A hypothesis is:
a. a normative economic statement.
b. a model with no connection to the real world.
c. a testable proposition.
d. a statement that cannot be evaluated using real-world data.
6. Which of the following represents a normative statement?
a. People will buy less butter at $6.00 per kilogram than they will at $5.00 per
kilogram.
b. The study of economics is more important than the study of history.
c. The temperature outside is 32 degrees Celsius.
d. A decrease in price leads to an increase in quantity demanded.
7. Money is not considered to be an economic resource because:
a. money loses its value too easily due to inflation.
b. money is not directly used to produce goods and services.
c. money is an intangible good.
d. goods can still be produced and traded using a barter system.
