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Multiple Choice Questions Chapter 1 What is Economics

Economic Principles- Microeconomics (University of Manchester)

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Chapter 1: Multiple Choice Questions

1) _______
1)
An incentive
A) could be either a reward or a penalty.
B) could be a reward but could not be a penalty.
C) could be a penalty but could not be a reward.
D) is the opposite of a trade off.

2) The most fundamental economic problem is 2) _______

A) scarcity.
B) health.
C) security.
D) the fact the United States buys more goods from foreigners than
we sell to foreigners.

3) Economics is best defined as the study of how people, businesses, 3) _______

governments, and societies
A) use their infinite resources.
B) choose abundance over scarcity.
C) make choices to cope with scarcity.
D) attain wealth.

4) Economists point out that scarcity confronts 4) _______

A) both the poor and the rich. B) the rich but not the poor.
C) neither the poor nor the rich. D) the poor but not the rich.

5) Scarcity requires that people must 5) _______

A) trade. B) cooperate.
C) make choices. D) compete.

6) As an economic concept, scarcity applies to 6) _______

A) money but not time. B) time but not money.
C) both money and time. D) neither time nor money.

7) Economics is the study of 7) _______

A) the choices we make because of scarcity.
B) affluence in a morally bankrupt world.
C) the distribution of surplus goods to those in need.
D) ways to reduce wants to eliminate the problem of scarcity.

8) Which of the following is a macroeconomic topic? 8) _______

A) The reasons for the rise in average prices.
B) Whether the army should buy more tanks or more rockets.
C) The reasons for a rise in the price of orange juice.
D) Why plumbers earn more than janitors.

9) Which of the following is a microeconomic topic? 9) _______

A) The reasons why Kathy buys less orange juice.
B) The reasons why total employment decreases.
C) The reasons for a decline in average prices.
D) The effect of the government budget deficit on inflation.

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10) Microeconomics focuses on all of the following EXCEPT the 10) ______
A) purchasing decisions that an individual consumer makes.
B) effect of increasing the money supply on inflation.
C) effect on cigarette sales of an increase in the tax on cigarettes.
D) hiring decisions made by a business.

11) In broad terms the difference between microeconomics and 11) ______
macroeconomics is that
A) they use different sets of tools and ideas.
B) microeconomics studies the effects of government taxes on the
national unemployment rate.
C) macroeconomics studies the effects of government regulation and
taxes on the price of individual goods and services whereas
microeconomics does not.
D) microeconomics studies decisions of individual people and firms
and macroeconomics studies the entire national economy.

12) Studying the determination of prices in individual markets is primarily 12) ______
a concern of
A) negative economics. B) positive economics.
C) microeconomics. D) macroeconomics.

13) The analysis of the behaviour of individual decision making units is the 13) ______
definition of
A) positive economics. B) microeconomics.
C) macroeconomics. D) normative economics.

14) Which of the following is a microeconomics topic? 14) ______

A) How a trade agreement between the United States and Mexico
affects both nations' unemployment rates.
B) How rent ceilings impact the supply of apartments.
C) Comparing inflation rates across countries.
D) How a tax rate increase changes total production.

15) Which of the following is a macroeconomic issue? 15) ______

A) The cause of a decline in the price of peanut butter.
B) How a rise in the price of sugar affects the market for sodas.
C) How government budget deficits affect interest rates.
D) What determines the amount a firm will produce.

16) Which of the following is a macroeconomic issue? 16) ______

A) The effect on the inflation rate of an increase in the quantity of
money.
B) The hiring decisions that a business makes.
C) The effect an increase in the tax on cigarettes has on cigarette sales.
D) The purchasing decisions that an individual consumer makes.

17) Macroeconomic topics include 17) ______

A) total, nationwide employment.
B) the impact of government regulation of markets.
C) studying what factors influence the price and quantity of
automobiles.

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D) studying the determination of wages and production costs in the

software industry.

18) Macroeconomics is the branch of economics that studies 18) ______

A) prices of individual goods.
B) the economy as a whole.
C) the way individual markets work.
D) important, as opposed to trivial, issues.

19) When an economy produces more houses and fewer typewriters, it is 19) ______
answering the ________ question.
A) "what" B) "how"
C) "for whom" D) "where"

20) When firms in an economy start producing more computers and fewer 20) ______
televisions, they are answering the ________ question.
A) "what" B) "why"
C) "when" D) "for whom"

21) Producers decide to produce more compact cars and fewer SUVs as the 21) ______
price of gasoline rises. Producers are answering the ________ question.
A) "how" B) "what"
C) "why" D) "how many"

22) The question "Should movies or compact discs be produced?" is an 22) ______
example of the
A) "where" question. B) "how" question.
C) "what" question. D) "for whom" question.

23) When China builds a dam using few machines and a great deal of 23) ______
labour, it is answering the ________ question.
A) "where" B) "how"
C) "what" D) "for whom"

24) When a textile company keeps track of its inventory using a computer 24) ______
and its competitor uses a spreadsheet and pencil, they are both
answering the ________ question.
A) "why" B) "for whom"
C) "how" D) "what"

25) Human capital is 25) ______

A) machinery that meets or exceeds safety standards for use by
humans.
B) all capital owned by individuals, but not by corporations or
governments.
C) all capital owned by individuals or corporations, but not by
governments.
D) the skill and knowledge of workers.

26) Entrepreneurs do all of the following EXCEPT 26) ______

A) bear risk from business decisions.
B) own all the other resources.

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C) organize labour, land, and capital.

D) come up with new ideas about what and how to produce.

27) To answer the "for whom" question, we study 27) ______

A) technological change. B) income differences.
C) business cycles. D) the global economy.

28) The fact that people with higher incomes get to consume more goods 28) ______
and services addresses the ________ question.
A) "when" B) "where"
C) "for whom" D) "how"

29) Which of the following is NOT a factor of production? 29) ______

A) The wages paid to workers.
B) The water used to cool a nuclear power plant.
C) The management skill of a small business owner.
D) The effort of farmers raising cattle.

30) Which of the following is NOT a factor of production? 30) ______

A) The time worked by elementary school teachers.
B) A share of stock issued by a firm.
C) A tractor used by a wheat farmer.
D) A new computer used by a small business owner.

31) An autoworker is considered ________ and earns ________. 31) ______

A) entrepreneurship; wages B) labour; wages
C) labour; rent D) capital; rent

32) Overtime worked by a retail clerk is considered ________ and earns 32) ______
________.
A) labour; profit B) labour; wages
C) entrepreneurship; profit D) human capital; interest

33) When a university decides to add to the library instead of adding to 33) ______
classrooms, it faces the
A) "for whom" trade off. B) macroeconomic question.
C) "how" trade off. D) "what" trade off.

34) When a farmer decides to increase the amount of acreage devoted to 34) ______
wheat and grow fewer acres of soybeans, the farmer is facing the
A) microeconomic question. B) "how" trade off.
C) "for whom" trade off. D) "what" trade off.

35) When a photographer decides to use a digital camera to take shots 35) ______
instead of using a film camera, the photographer is facing the
A) "what" trade off. B) "how" trade off.
C) microeconomic question. D) "for whom" trade off.

36) The "how" trade off occurs when 36) ______

A) we answer the macroeconomic question.
B) a farm uses machinery to pick oranges instead of employing
migrant workers.

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C) a firm decides to produce refrigerators instead of dishwashers.

D) the government increases income taxes paid by the rich.

37) When the government decides to provide tax relief for small businesses 37) ______
while placing higher taxes on large corporations, it is facing the
A) macroeconomic question. B) "what" trade off.
C) "for whom" trade off. D) "how" trade off.

38) Because we face scarcity, every choice involves 38) ______

A) the question "what."
B) money.
C) giving up something for nothing.
D) an opportunity cost

39) The term used to emphasize that making choices in the face of scarcity 39) ______
involves a cost is
A) substitution cost. B) utility cost.
C) accounting cost. D) opportunity cost.

40) The loss of the highest valued alternative defines the concept of 40) ______
A) scarcity. B) entrepreneurship.
C) opportunity cost. D) marginal benefit.

41) Opportunity cost means the 41) ______

A) accounting cost minus the marginal benefit.
B) monetary costs of an activity.
C) highest valued alternative forgone.
D) accounting cost minus the marginal cost.

42) The opportunity cost of any action is 42) ______

A) all the possible alternatives forgone.
B) the monetary cost but not the time required.
C) the highest valued alternative forgone.
D) the time required but not the monetary cost.

43) The opportunity cost of something you decide to get is 43) ______
A) the highest valued alternative you give up to get it.
B) all the possible alternatives that you give up to get it.
C) the amount of money you pay to get it.
D) the lowest valued alternative you give up to get it.

44) The ultimate cost of any choice is 44) ______

A) what someone else would be willing to pay.
B) the highest valued alternative forgone.
C) the pounds expended.
D) the after tax cost.

45) During the summer you have made the decision to attend summer 45) ______
school, which prevents you from working at your usual summer job in
which you normally earn £6,000 for the summer. Your tuition cost is
£3,000 and books and supplies cost £1,300. The opportunity cost of
attending summer school is

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A) £4,300. B) £6,000. C) £10,300. D) £3,000.

46) On Saturday morning, you rank your choices for activities in the 46) ______
following order: go to the library, work out at the gym, have breakfast
with friends, and sleep late. You go to the library. Your opportunity cost
is
A) working out at the gym.
B) zero because you do not have to pay money to use the library.
C) working out at the gym, having breakfast with friends, and
sleeping late.
D) not clear because not enough information is given.

47) You decide to take a vacation and the trip costs you £2,000. While you 47) ______
are on vacation, you do not report to work where you could have
earned £750. The opportunity cost of the vacation is
A) £2,000. B) £750. C) £1,250 D) £2,750.

48) When an action is chosen, the highest valued alternative NOT chosen is 48) ______
called the
A) implicit cost. B) opportunity cost.
C) explicit cost. D) accounting cost.

49) The term "opportunity cost" points out that 49) ______
A) there may be such a thing as a free lunch.
B) any decision regarding the use of a resource involves a costly
choice.
C) not all individuals will make the most of life's opportunities
because some will fail to achieve their goals.
D) executives do not always recognize opportunities for profit as
quickly as they should.

50) During the next hour John can play basketball, watch television, or read 50) ______
a book. The opportunity cost of reading a book
A) is how much the book cost when it was purchased.
B) equals how much John enjoys the book.
C) is the value of playing basketball and the value of watching
television.
D) is the value of playing basketball if John prefers that to watching
television.

51) Misty has the option of purchasing one of three products: Brand A, 51) ______
Brand B, or Brand C. Each costs ten pounds. If she decides that Brand A
meets her needs best, then the opportunity cost of this decision is
A) Brand A.
B) Brand B plus Brand C.
C) twenty pounds.
D) Brand B or Brand C, depending on which is considered the
highest value alternative forgone.

52) Which of the following is NOT an example of an opportunity cost? 52) ______
A) Because Mary is now being paid a higher wage, she can afford to
buy a new car even though she is moving into a bigger apartment.

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B) By choosing to attend college, Jean was not able to continue

working as an electrician; as a result, she gave up more than
£45,000 in earnings while she was in college.
C) By spending Thursday night studying for an economics exam, a
student was unable to complete a homework assignment for
calculus class.
D) Because David used all of his vacation time to paint his house, he
was unable to visit the Caribbean last year.

53) From 8 to 11 p.m., Sam can either dine with friends, attend the cinema, 53) ______
or go to the symphony. Suppose that Sam decides to attend the cinema
and thinks to herself that if she did not go to the cinema she would go to
the symphony. Then the opportunity cost of attending the cinema is
A) going to the symphony.
B) dining with her friends.
C) going to the symphony and dining with her friends.
D) three hours of time.

54) When the government chooses to use resources to build a dam, these 54) ______
sources are no longer available to build a highway. This choice
illustrates the concept of
A) a fallacy of composition. B) opportunity cost.
C) a market mechanism. D) macroeconomics.

55) Marginal benefit is the benefit 55) ______

A) that arises from an increase in an activity.
B) that arises from the secondary effects of an activity.
C) that your activity provides to someone else.
D) of an activity that exceeds its cost.

56) The benefit that arises from an increase in an activity is called 56) ______
A) the marginal cost. B) opportunity cost.
C) the marginal benefit. D) an incentive.

57) Marginal cost is the cost 57) ______

A) of an activity that exceeds its benefit.
B) that your activity imposes on someone else.
C) that arises from the secondary effects of an activity.
D) that arises from an increase in an activity.

58) Laura is a manager for HP. When Laura must decide whether to 58) ______
produce a few additional printers, she is choosing at the margin when
she compares
A) the extra revenue from selling a few additional printers to the extra
costs of producing the printers.
B) the extra revenue from selling a few additional printers to the
average cost of producing the additional printers.
C) the total revenue from sales of printers to the total cost of
producing all the printers.
D) HP's printers to printers from competing companies, such as
Lexmark.

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59) In economics, positive statements are about 59) ______

A) macroeconomics, not microeconomics.
B) microeconomics, not macroeconomics.
C) the way things are.
D) the way things ought to be.

60) A positive statement is 60) ______

A) the result of a model's normative assumptions.
B) valid only in the context of a model with simple assumptions.
C) about what ought to be.
D) about what is.

61) A positive statement is 61) ______

A) about what is.
B) always true.
C) one that does not use the ceteris paribus clause.
D) about what ought to be.

62) A positive statement 62) ______

A) is an affirming statement that is strongly worded.
B) cannot be tested by checking it against the facts.
C) is a statement of what is.
D) is a statement of what ought to be.

63) Which of the following are true regarding "positive" statements? 63) ______
I. They describe what "ought to be."
II. They describe what is believed about how the world appears.
III. They can be tested as to their truthfulness.
A) II and III. B) I and III.
C) I and II. D) I, II and III.

64) Positive and normative statements differ in that 64) ______

A) normative statements depict "what is" and positive statements
depict "what ought to be."
B) normative statements never use the word "should"
C) normative statements can be tested, whereas positive statements
cannot be tested.
D) positive statements can be tested, whereas normative statements
cannot be tested.

65) Which of the following is an example of a positive statement? 65) ______

A) Business firms ought to contribute more to charities.
B) Households are the primary source of saving.
C) The foreign sector should be more tightly controlled.
D) Government should not redistribute income.

66) Which of the following is an example of a positive statement? 66) ______

A) We should cut back on our use of carbon based fuels such as coal
and oil.
B) The Bank of England ought to cut the interest rate.
C) Every American should have equal access to health care.
D) Increasing the minimum wage results in more unemployment.

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67) Which of the following is a positive statement? 67) ______

A) Taxes should be lower because then people get to keep more of
what they earn, so they will work more.
B) My economics class should last for two terms because it is my
favourite class.
C) Given their negative impact on productivity, the government
should eliminate labour unions.
D) A 10 percent increase in income leads to a 4 percent increase in the
consumption of beef.

68) When Al makes the statement, "The cost of living has increased 10 68) ______
percent over the past 10 years," he is
A) facing the standard of living trade off.
B) making a positive statement.
C) testing an economic model.
D) making a normative statement.

69) Which of the following is a positive statement? 69) ______

A) An increase in gas prices leads people to carpool more.
B) Increased prison sentences are the best way to reduce the crime
rate.
C) State lotteries are good methods to use for raising revenues.
D) Inflation is a more serious problem than is deflation.

70) The statement "Managers with a college education earn £18 an hour 70) ______
while ski instructors who did not complete college earn £10" is
A) an ethical statement. B) a normative statement.
C) a political statement. D) a positive statement.

71) The statement "An increase in the price of gasoline will lead to a 71) ______
decrease in the amount purchased" is
A) a normative statement. B) a political statement.
C) a scientific statement. D) a positive statement.

72) Which of the following is a positive statement? 72) ______

A) The best level of taxation is zero percent because then people get to
keep everything they earn.
B) My economics class should last for two terms because it is my
favourite class.
C) The government must lower the price of a pizza so that more
students can afford to buy it.
D) An increase in tuition will cause fewer students to apply to college.

73) Which of the following is a positive statement? 73) ______

A) Low rents will restrict the supply of housing.
B) Owners of housing ought to be free to charge whatever rent they
want.
C) Housing costs too much.
D) Low rents are good because they make housing more affordable.

74) The statement "The unemployment rate for teens is higher than that for adu lts" is

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74) ______
A) a political statement. B) an ethical statement.
C) a normative statement. D) a positive statement.

75) The statement "Prices rise more in countries with rapid growth in the 75) ______
money supply" is
A) a positive statement. B) an ethical statement.
C) a political statement. D) a normative statement.

76) Statements about what ought to be are called 76) ______

A) assumptions. B) normative statements.
C) implications. D) positive statements.

77) Normative statements are statements about 77) ______

A) what is. B) quantities.
C) prices. D) what ought to be.

78) A normative statement is 78) ______

A) one that does not use the ceteris paribus clause.
B) about what ought to be.
C) always true.
D) about what is.

79) In economics, normative statements are about 79) ______

A) the way things ought to be.
B) the way things are.
C) marginal costs, not marginal benefits.
D) marginal benefits, not marginal costs.

80) Which of the following is a normative statement? 80) ______

A) You should eat less candy.
B) Candy bars are more expensive than newspapers.
C) Popcorn and candy are sold in cinemas.
D) The price of candy bars is £1 each.

81) Which of the following is a normative statement? 81) ______

A) Forty percent of the public believes that the unemployment rate is
too high.
B) The unemployment rate is too high.
C) The unemployment rate rose last month.
D) All of the above.

82) "The government should act to reduce poverty levels." 82) ______
A) This statement is a positive statement.
B) This statement is a normative statement.
C) This statement is an example of the fallacy of composition.
D) This statement is an example of the post hoc fallacy.

83) When Susan makes the statement, "The government should spend less 83) ______
money to take care of parks," she is
A) making a positive statement.
B) making a normative statement.

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C) facing the standard of living trade off.

D) testing an economic model.

84) "All children should have health insurance" is a 84) ______

A) post hoc fallacy. B) fallacy of composition.
C) positive statement. D) normative statement.

85) "The rich should pay higher income tax rates than the poor" is an 85) ______
example of a
A) positive statement. B) theoretical statement.
C) normative statement. D) descriptive statement.

86) Which of the following is a normative statement? 86) ______

A) Studying more hours leads to an increase in your GPA.
B) Taking extra vitamin C prevents catching a cold.
C) An increase in tax rates means people work fewer hours.
D) Countries should require all motorcycle riders to wear helmets to
reduce the number of riders killed.

87) Which of the following is a normative statement? 87) ______

A) Owners of housing are free to charge whatever rent they want.
B) Low rents are good because they make housing more affordable.
C) Low rents will restrict the supply of housing.
D) Housing costs are rising.

88) Which of the following is an example of a normative statement? 88) ______

A) Government spending rose in the 1990s.
B) Households should save more.
C) The business sector is the primary source of jobs.
D) Household consumption is the largest component of spending.

89) Which of the following is a normative statement? 89) ______

A) Next year's inflation rate will be under 4 percent.
B) The current butter surplus is the result of government policies.
C) The government's cuts in welfare spending impose an unfair
hardship on the poor.
D) Consumers will buy more gasoline over the Christmas holiday
even if the price of gas is 10 cents higher than it was during the
Thanksgiving holiday.

90) Suppose that an economist tells you that people in the United Kingdom 90) ______
do not save enough out of their incomes. This is an example of ________
statement.
A) a ceteris paribus B) an autonomous
C) a positive D) a normative

91) The task of economic science is to discover ________ that are consistent 91) ______
with ________.
A) positive statements; what we observe
B) ways to make money; the law
C) normative statements; positive statements
D) positive statements; normative statements

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92) Economic models 92) ______

A) simplify reality.
B) include all relevant facts.
C) always use graphs.
D) are essentially different from those used in other sciences.

93) Economic models 93) ______

A) make only assumptions that have been proven.
B) do not address questions about the economy.
C) rely on simplification.
D) are better if they include most of the detail of the real economy.

94) An economic theory is 94) ______

A) a generalization that summarizes what we understand about
economic choices.
B) usually more complex than the real world.
C) always a mathematical, or nonverbal, model.
D) a positive statement that cannot use the ceteris paribus clause.

95) Three steps that economists take to discover how the economic world 95) ______
works are
A) observation and measurement; model building; and, testing
models.
B) data mining; data testing; and, drawing conclusions.
C) model building; speculation; and, revision.
D) speculation; observation and measurement; and, drawing
conclusions.

96) The birth of economics as an intellectual discipline can be dated fairly 96) ______
precisely in the eighteenth century with
A) the introduction of paper currency.
B) the development of the factory system.
C) the opening of the London stock exchange.
D) the publication of the book, The Wealth of Nations.

97) Allowing only one factor to vary at any given time, keeping all other 97) ______
factors constant, is using the technique of
A) ceteris paribus. B) post hoc.
C) compensation. D) composition.

98) Holding all variables except one constant and assessing the impact of 98) ______
the one variable which has changed is an example of using
A) normative economic analysis.
B) the ceteris paribus assumption.
C) a flawed economic model.
D) an untestable proposition.

99) Ceteris paribus is the Latin expression 99) ______

A) that means "about the way the economic world ought to be."
B) for the (false) statement that what is true of the parts is true of the
whole or what is true of the whole is true of the parts.

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C) that means "other things being equal."

D) for the error of reasoning that a first event causes a second event
because the first event occurred before the second event.

100) The term "ceteris paribus" means 100) _____

A) value free and testable.
B) the study of scarcity and choice.
C) all other things remaining constant or equal.
D) using market mechanisms.

101) When economists study the effects of unemployment insurance on the 101) _____
unemployment rate by comparing the United States with Canada, they
assume that other conditions in the two economies do not differ
significantly. This procedure is an example of
A) applying the ceteris paribus principle.
B) falling prey to the post composition fallacy.
C) the post hoc fallacy.
D) the fallacy of composition.

102) The fallacy of composition is evident in which of the following 102) _____
statements?
A) "Spectators crowd a stadium before a game, so the spectators
caused the game to be played."
B) "Because one student can walk through the class room door, all 30
students in the class can simultaneously walk through the door."
C) "X and Y go together, therefore X has caused Y."
D) "What is bad for the Joneses is bad for the Smiths."

103) The fallacy of composition is the false belief that 103) _____
A) the ceteris paribus condition does not apply.
B) because event A occurred after event B, event A caused event B.
C) what is true for the parts is also true for the whole.
D) because event A occurred before event B, event A caused event B.

104) The fallacy of composition is the (false) statement that 104) _____
A) theories bridge models and the real world.
B) what is true of the parts is true of the whole.
C) models can be positive without being normative.
D) experiments can be designed to analyze human behaviour.

105) The fallacy of composition is the 105) _____

A) claim that the timing of two events has nothing to do with which
event caused the other.
B) assertion that what is true for the parts of the whole must be true
for the whole.
C) use of ceteris paribus in order to study the impact of one factor.
D) claim that one event caused another because the first event came
first.

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106) A farmer grazes two cows on one acre of land. To increase total milk 106) _____
yield, he purchases two more cows and allows all four cows to graze on
his land. Unfortunately the cows overgraze on his land and the food
supply to the cows is reduced, which causes the total milk yield of the
four cows to fall below that achieved when only two cows were grazed.
The farmer has fallen prey to
A) the ceteris paribus normative fallacy.
B) the fallacy of composition.
C) the marginal benefit/marginal cost fallacy.
D) the post hoc fallacy.

107) Because total income in the United Kingdom has increased over time, 107) _____
everyone's total income has increased as well. This incorrect argument is
an example of
A) the fallacy of composition. B) voluntary exchange.
C) the post hoc fallacy. D) opportunity cost.

108) The fallacy of composition is 108) _____

A) the (false) statement that what is true of the parts is true of the
whole or what is true of the whole is true of the parts.
B) the error of reasoning that a first event causes a second event
because the first event occurred before the second event.
C) a statement about the way the economic world ought to be.
D) an expression that means "other things being equal."

109) "Hunting limits on deer help ensure a constant population. Therefore, if 109) _____
I only hunt to my limit, there will be sufficient deer for all." This
statement is an example of a possible
A) fallacy of composition. B) normative statement.
C) ceteris paribus fallacy. D) post hoc fallacy.

110) To better see a football game, one spectator stands. Assuming that if 110) _____
everyone stands, everyone gets a good view of the game is an example
of the
A) opportunity cost fallacy. B) post hoc fallacy.
C) fallacy of truth. D) fallacy of composition.

111) The post hoc fallacy is the error of reasoning 111) _____
A) from predictions to theories.
B) from timing to cause and effect.
C) from cause and effect to models.
D) from models to predictions.

112) You are not surprised that it has started to rain. After all, a hour ago you 112) _____
just finished washing your car. Your reasoning is an example of
A) the post hoc fallacy.
B) the ceteris paribus assumption.
C) the fallacy of composition.
D) the distinction between positive and normative statements.

113) The post hoc, ergo propter hoc fallacy is 113) _____
A) the error of reasoning that a first event causes a second event

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because the first event occurred before the second event.

B) the (false) statement that what is true of the parts is true of the
whole or what is true of the whole is true of the parts.
C) an expression that means "other things being equal."
D) a statement about the way the economic world ought to be.

114) A rooster crows and then the sun rises. The rooster thinks that the sun 114) _____
rises because he crows. And he is very proud of it. The rooster falls prey
to
A) marginal thinking. B) the post hoc fallacy.
C) the fallacy of composition. D) his self interest.

115) "Every time I go to a football game, my team wins." This statement is an 115) _____
example of
A) post hoc fallacy.
B) fallacy of composition.
C) ceteris paribus fallacy.
D) a normative economic statement.

116) An economic expansion follows a stock market boom. A cautious 116) _____
economist would not claim that the stock market caused the expansion
because the economist wants to avoid
A) the fallacy of composition, which states that what is true of the
parts is true of the whole.
B) the post hoc fallacy, which is an error in reasoning from timing to
cause and effect.
C) the post hoc fallacy, which states that what is true of the parts is
true of the whole.
D) the fallacy of composition, which is an error in reasoning from
timing to cause and effect.

117) Most economists agree that 117) _____

A) rent ceilings cut the availability of housing.
B) import restrictions have bigger costs than benefits.
C) wage and price controls do not help control inflation.
D) All of the above answers are correct.

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