Question 1

The basic principles of economics suggest that

Accepted Answer

A)   markets are seldom, if ever, a good way to organize economic activity.
B)   government should become involved in markets when trade between countries is involved.
C)   government should become involved in markets when those markets fail to produce efficient or fair outcomes.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 2

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 3

President Gerald Ford referred to inflation as

Accepted Answer

A)   a blight on our nation's economy.
B)   a necessary evil to combat high unemployment.
C)   public enemy number one.
D)   a fly in the ointment.E) None of the above
F) All of the above

Question 4

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Accepted Answer

A)   increase efficiency and increase equality.
B)   increase efficiency but decrease equality.
C)   decrease efficiency but increase equality.
D)   decrease efficiency and decrease equality.E) C) and D)
F) B) and D)

Question 5

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A)   Melissa needs to pay her rent and her electric bill.
B)   Kevin must choose between buying a new flat screen television and buying his textbooks for this semester.
C)   Robert must decide between studying for his psychology exam and working at his part-time job.
D)   Lisa can spend her money on a new smart phone or on a weekend trip.E) C) and D)
F) B) and D)

Question 6

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so...

Question 7

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Accepted Answer

A)   Polish firms are faced with stricter government regulations than Romanian firms.
B)   total income is divided among fewer workers in Poland since it has a smaller labor force than Romania.
C)   Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops.
D)   productivity in Poland is higher than in Romania.E) None of the above
F) A) and B)

Question 8

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the minimum price the company will charge for the 701th calculator?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 9

The marginal benefit Susie gets from purchasing a third pair of gloves is

Accepted Answer

A)   the same as the total benefit she gets from purchasing three pairs of gloves.
B)   more than the marginal cost of purchasing the third pair of gloves.
C)   the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves.
D)   the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.E) A) and B)
F) None of the above

Question 10

When a single person or small group)  has the ability to influence market prices, there is

Accepted Answer

A)   competition.
B)   market power.
C)   an externality.
D)   a lack of property rights.E) A) and B)
F) A) and C)

Question 11

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Accepted Answer

A)   a market failure caused by an externality.
B)   a market failure caused by market power.
C)   a market failure caused by equality.
D)   There is no market failure in this case.E) A) and D)
F) A) and B)

Question 12

Something that induces a person to act is called

Accepted Answer

A)   a trade-off.
B)   a policy.
C)   an incentive.
D)   an opportunity cost.E) A) and D)
F) A) and C)

Question 13

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 14

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) B) and D)
F) All of the above

Question 15

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 16

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) None of the above
F) A) and B)

Question 17

Government policies designed to equalize the distribution of economic well-being include i)  the welfare system
Ii)  unemployment insurance
Iii)  progressive income tax

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and ii)  only
D)   i) , ii) , and iii) E) A) and B)
F) B) and D)

Question 18

Low rates of inflation are generally associated with

Accepted Answer

A)   low rates of government spending.
B)   small or nonexistent government budget deficits.
C)   low rates of productivity growth.
D)   low rates of growth of the quantity of money.E) A) and D)
F) None of the above

Question 19

To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change.

Accepted Answer

A) True 
 B)False

Question 20

A rational decision maker takes an action only if the

Accepted Answer

A)   marginal benefit is less than the marginal cost.
B)   marginal benefit is greater than the marginal cost.
C)   average benefit is greater than the average cost.
D)   marginal benefit is greater than both the average cost and the marginal cost.E) A) and B)
F) A) and C)

Exam 1: Ten Principles of Economics

When a single person or small group) has the ability to influence market prices, there is

Correct Answer
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Correct Answer
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The term "productivity"

Correct Answer
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How does the study of economics depend upon the phenomenon of scarcity?

Correct Answer
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Because economics is the study of how so...
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The business cycle refers to fluctuations in economic activity such as employment and production.

Correct Answer
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A rational decision maker takes an action only if the

Correct Answer
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The basic principles of economics suggest that

Correct Answer
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Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Correct Answer
verified

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 Answer
verified

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Correct Answer
verified

To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change.

Correct Answer
verified

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

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

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct Answer
verified

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct Answer
verified

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct Answer
verified

Something that induces a person to act is called

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
verified

President Gerald Ford referred to inflation as

Correct Answer
verified

Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

Correct Answer
verified

Exam 1: Ten Principles of Economics

When a single person or small group) has the ability to influence market prices, there is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term "productivity"

Correct AnswerverifiedShow Answer

How does the study of economics depend upon the phenomenon of scarcity?

Correct AnswerverifiedBecause economics is the study of how so...View AnswerShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

A rational decision maker takes an action only if the

Correct AnswerverifiedShow Answer

The basic principles of economics suggest that

Correct AnswerverifiedShow Answer

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

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

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Correct AnswerverifiedShow Answer

To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change.

Correct AnswerverifiedShow Answer

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

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

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct AnswerverifiedShow Answer

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct AnswerverifiedShow Answer

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct AnswerverifiedShow Answer

Something that induces a person to act is called

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

President Gerald Ford referred to inflation as

Correct AnswerverifiedShow Answer

Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

Correct AnswerverifiedShow Answer

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Because economics is the study of how so...
View Answer

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