Question 1

Which of the following is true?

Accepted Answer

A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
B)  Government policies usually improve upon both equality and efficiency.
C)  As long as the economic pie continually gets larger, no one will have to go hungry.
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.E) B) and D)
F) B) and C)

Question 2

England can benefit from trade

Accepted Answer

A)  only with nations that can produce goods England cannot produce.
B)  only with less developed nations.
C)  only with nations outside of Europe.
D)  with any nation.E) None of the above
F) B) and C)

Question 3

The term "productivity"

Accepted Answer

A)  means the same thing as "efficiency."
B)  is seldom used by economists, as its meaning is not precise.
C)  refers to the quantity of goods and services produced from each unit of labor input.
D)  refers to the variety of goods and services from which households can choose when they shop.E) A) and B)
F) A) and C)

Question 4

Economists use the term ______ to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Accepted Answer

The answer of Economists use the term ______ to refer...

Question 5

Which of the following is not an example of the opportunity cost of going to school?

Accepted Answer

A)  The money a student could have earned by working if he had not gone to college.
B)  The nap a student could have enjoyed if he had not attended class.
C)  The party a student could have enjoyed if he had not stayed in to study for his exam.
D)  The money a student spends on rent for his apartment while attending school.E) None of the above
F) B) and C)

Question 6

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Accepted Answer

A)  $0.
B)  $15.
C)  $305.
D)  $315.E) A) and D)
F) None of the above

Question 7

If an externality is present in a market, economic efficiency may be enhanced by

Accepted Answer

A)  government intervention.
B)  a decrease in foreign competition.
C)  fewer market participants.
D)  weaker property rights.E) B) and C)
F) A) and D)

Question 8

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Accepted Answer

A) True 
 B)False

Question 9

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Accepted Answer

A) True 
 B)False

Question 10

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Accepted Answer

A)  David Ricardo
B)  Thorstein Veblen
C)  John Maynard Keynes
D)  Adam SmithE) All of the above
F) C) and D)

Question 11

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following phrases best captures the notion of efficiency?

Accepted Answer

A)  absolute fairness
B)  equal distribution
C)  minimum waste
D)  equitable outcomeE) C) and D)
F) None of the above

Question 13

Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is

Accepted Answer

A)  the $50 she earns working.
B)  the $50 minus the enjoyment she would have received from going to the family gathering.
C)  the enjoyment she would have received had she gone to the family gathering
D)  nothing, since she wanted to work more than she wanted to attend the family gatheringE) A) and B)
F) A) and C)

Question 14

The term ______ refers to a small incremental adjustment to an existing plan of action.

Accepted Answer

The answer of The term ______ refers to a small...

Question 15

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Accepted Answer

A)  the unexpected repairs and the increase in the price of gas
B)  the unexpected increase for repairs, but not the increase in the price of gas
C)  the increase in the price of gas, but not the unexpected repairs
D)  neither the unexpected increase in the price of gas nor the unexpected repairsE) All of the above
F) None of the above

Question 16

Which of the following is not an example of scarcity?

Accepted Answer

A)  Only some people can afford to buy a BMW automobile.
B)  Every individual in society cannot attain the highest standard of living to which he or she might aspire.
C)  Miranda has more oranges in her orchard than she will ever use.
D)  Each member of a household cannot get everything he or she wants.E) A) and B)
F) B) and D)

Question 17

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)  Ted purchases a dilapidated house and cleans up the yard and exterior of the house.
B)  Tim purchases an iPhone and downloads new apps.
C)  Terri purchases a new SUV and drives it to work every day.
D)  Thomas purchases a suit and wears it on his interviews.E) A) and D)
F) A) and C)

Question 18

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)  resources are scarce.
B)  goods and services are not scarce.
C)  incomes fluctuate with business cycles.
D)  people, by nature, tend to disagree.E) All of the above
F) None of the above

Question 19

Which of these activities will most likely impose an external cost?

Accepted Answer

A)  Betty plants flowers in her garden.
B)  Bonnie gets a flu vaccine.
C)  Bridget drives her car after having too much alcohol to drink.
D)  Becky buys a new flat screen television.E) A) and D)
F) All of the above

Question 20

In the long run the primary effect of increasing the quantity of money is higher prices.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Which of the following is true?

Correct AnswerverifiedShow Answer

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Correct AnswerverifiedShow Answer

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Correct AnswerverifiedShow Answer

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Correct AnswerverifiedShow Answer

The overriding reason why households and societies face many decisions is that

Correct AnswerverifiedShow Answer

In the long run the primary effect of increasing the quantity of money is higher prices.

Correct AnswerverifiedShow Answer

England can benefit from trade

Correct AnswerverifiedShow Answer

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Correct AnswerverifiedShow Answer

Which of these activities will most likely result in an external benefit?

Correct AnswerverifiedShow Answer

Which of the following is not an example of scarcity?

Correct AnswerverifiedShow Answer

Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is

Correct AnswerverifiedShow Answer

Economists use the term ______ to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Correct AnswerverifiedShow Answer

Which of these activities will most likely impose an external cost?

Correct AnswerverifiedShow Answer

If an externality is present in a market, economic efficiency may be enhanced by

Correct AnswerverifiedShow Answer

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Correct AnswerverifiedShow Answer

The term "productivity"

Correct AnswerverifiedShow Answer

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct AnswerverifiedShow Answer

The term ______ refers to a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

Which of the following is not an example of the opportunity cost of going to school?

Correct AnswerverifiedShow Answer

Which of the following phrases best captures the notion of efficiency?

Correct AnswerverifiedShow Answer

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The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.

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