Question 1

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the minimum price that would induce this company to produce the 601st heart rate monitor?

Accepted Answer

Question 2

Alana decides to spend 2 hours working overtime rather than going shopping with her friends. She earns $11 per hour for overtime work. Her opportunity cost of working is

Accepted Answer

A)  the $22 she earns working.
B)  the $22 minus the enjoyment she would have received from going shopping.
C)  the enjoyment she would have received had she gone shopping.
D)  nothing, since she would have received less than $22 worth of enjoyment from going shopping.E) A) and B)
F) A) and C)

Question 3

Economics is the study of how society allocates its unlimited resources.

Accepted Answer

A) True 
 B)False

Question 4

A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost.

Accepted Answer

A) True 
 B)False

Question 5

Fundamentally, economics deals with

Accepted Answer

A)  scarcity.
B)  money.
C)  poverty.
D)  banking.E) B) and D)
F) B) and C)

Question 6

For a number of years country A had inflation of 3 percent but for the last five years has had inflation of 6 percent. Country B had inflation of 4 percent for many years, but very recently inflation unexpectedly rose to 9 percent. Other things the same, in which of the countries would the higher inflation rate be more likely to reduce unemployment?

Accepted Answer

A)  both country A and country B
B)  neither country A nor country B
C)  country A but not country B
D)  country B but not country AE) All of the above
F) A) and B)

Question 7

Aiden and Zaria charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, six people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have six or five cars parked on their lawn does not affect their costs. From this information it follows that

Accepted Answer

A)  they should leave the price at $10.
B)  it does not matter if they charge $10 or $15.
C)  they would do better charging $15 than $10.
D)  they should raise the price even more.E) C) and D)
F) B) and C)

Question 8

In a centrally-planned economy, economic activity is guided by ______.

Accepted Answer

The answer of In a centrally-planned economy, economic activity is...

Question 9

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 10

The term used to describe a situation in which markets do not allocate resources efficiently is

Accepted Answer

A)  economic meltdown.
B)  market failure.
C)  equilibrium.
D)  the effect of the invisible hand.E) B) and C)
F) A) and D)

Question 11

A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Accepted Answer

A)  Yes, because cutting hair is profitable.
B)  No, because he may not be able to sell more services.
C)  It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.
D)  It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients.E) None of the above
F) C) and D)

Question 12

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Accepted Answer

Whatever must be given up to obtain some...

Question 13

Economists use the term ______ to refer to fluctuations in economic activity, such as employment and production.

Accepted Answer

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

Question 14

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Accepted Answer

A)  There is no such thing as a free lunch.
B)  People buy more when prices are high than when prices are low.
C)  No matter how much people earn, they tend to spend more than they earn.
D)  Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.E) A) and B)
F) B) and C)

Question 16

Central planning refers to

Accepted Answer

A)  markets guiding economic activity.Today many countries that had this system have abandoned it.
B)  markets guiding economic activity.Today many countries that did not have this system have implemented it.
C)  government guiding economic activity.Today many countries that had this system have abandoned it.
D)  government guiding economic activity.Today many countries that did not have this system have implemented it.E) A) and D)
F) A) and B)

Question 17

People are willing to pay more for a diamond than for a bottle of water because

Accepted Answer

A)  the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
B)  the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
C)  producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
D)  water prices are held artificially low by governments, since water is necessary for life.E) A) and C)
F) A) and D)

Question 18

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Accepted Answer

A)  4 percent per year
B)  5 percent per year
C)  7 percent per year
D)  8 percent per yearE) A) and D)
F) C) and D)

Question 19

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Accepted Answer

A) True 
 B)False

Question 20

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Exam 1: Ten Principles of Economics

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost.

Correct Answer
verified

Alana decides to spend 2 hours working overtime rather than going shopping with her friends. She earns $11 per hour for overtime work. Her opportunity cost of working is

Correct Answer
verified

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

Correct Answer
verified

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Correct Answer
verified

Fundamentally, economics deals with

Correct Answer
verified

A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct Answer
verified

Correct Answer
verified

The term used to describe a situation in which markets do not allocate resources efficiently is

Correct Answer
verified

People are willing to pay more for a diamond than for a bottle of water because

Correct Answer
verified

Central planning refers to

Correct Answer
verified

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Correct Answer
verified

Economics is the study of how society allocates its unlimited resources.

Correct Answer
verified

Economists use the term ______ to refer to fluctuations in economic activity, such as employment and production.

Correct Answer
verified

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Correct Answer
verified
Whatever must be given up to obtain some...
View Answer

In a centrally-planned economy, economic activity is guided by ______.

Correct Answer
verified

Correct Answer
verified

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Correct Answer
verified

Correct Answer
verified

Trade with any nation can be mutually beneficial.

Correct Answer
verified

Exam 1: Ten Principles of Economics

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow Answer

A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost.

Correct AnswerverifiedShow Answer

Alana decides to spend 2 hours working overtime rather than going shopping with her friends. She earns $11 per hour for overtime work. Her opportunity cost of working is

Correct AnswerverifiedShow Answer

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

Correct AnswerverifiedShow Answer

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Correct AnswerverifiedShow Answer

Fundamentally, economics deals with

Correct AnswerverifiedShow Answer

A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term used to describe a situation in which markets do not allocate resources efficiently is

Correct AnswerverifiedShow Answer

People are willing to pay more for a diamond than for a bottle of water because

Correct AnswerverifiedShow Answer

Central planning refers to

Correct AnswerverifiedShow Answer

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Correct AnswerverifiedShow Answer

Economics is the study of how society allocates its unlimited resources.

Correct AnswerverifiedShow Answer

Economists use the term ______ to refer to fluctuations in economic activity, such as employment and production.

Correct AnswerverifiedShow Answer

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Correct AnswerverifiedWhatever must be given up to obtain some...View AnswerShow Answer

In a centrally-planned economy, economic activity is guided by ______.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Trade with any nation can be mutually beneficial.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Whatever must be given up to obtain some...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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