Question 1

Sarah buys and sells real estate.Two weeks ago,she paid $140,000 for a house on Oak Street,intending to spend $20,000 on repairs sell the house for $175,000.Last week,the city government announced a plan to build a "halfway house" for convicted criminals on Oak Street.As a result of the city's announced plan,Sarah is weighing two alternatives: She can go ahead with the $20,000 in repairs and then sell the house for $135,000,or she can forgo the repairs and sell the house as it is for $120,000.Sarah should

Accepted Answer

A)  keep the house and live in it.
B)  go ahead with the $20,000 in repairs and sell the house for $135,000.
C)  forgo the repairs and sell the house as it is for $120,000.
D)  move the house from Oak Street to a more desirable location, irrespective of the cost of doing so.E) None of the above
F) B) and D)

Question 2

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 D)
F) A) and C)

Question 3

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)  enhance equity.
B)  reduce efficiency.
C)  reduce the reward for working hard.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 4

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 5

If education produces external benefits for society,which of the following might NOT be an appropriate policy for society to adopt regarding education?

Accepted Answer

A)  tax incentives for schooling
B)  mandatory minimum levels of education
C)  programs which promote the hiring of high school dropouts
D)  public subsidies of educationE) A) and D)
F) B) and D)

Question 6

A rational decisionmaker

Accepted Answer

A)  ignores marginal changes and focuses instead on "the big picture."
B)  ignores the likely effects of government policies when he or she makes choices.
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.E) B) and D)
F) C) and D)

Question 7

To raise productivity,policymakers could

Accepted Answer

A)  increase spending on education.
B)  provide tax credits to firms for capital improvements.
C)  fund research and development.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 8

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 9

Which is the most accurate statement about trade?

Accepted Answer

A)  Trade can make every nation better off.
B)  Trade makes some nations better off and others worse off.
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)  Trade helps rich nations and hurts poor nations.E) A) and C)
F) C) and D)

Question 10

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Accepted Answer

A)  cost of teaching increased.
B)  benefit of teaching increased.
C)  cost of teaching decreased.
D)  cost of a corporate job increased.E) A) and C)
F) B) and C)

Question 11

The opportunity cost of going to college is

Accepted Answer

A)  the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
B)  the value of the best opportunity a student gives up to attend college.
C)  zero for students who are fortunate enough to have all of their college expenses paid by someone else.
D)  zero, since a college education will allow a student to earn a larger income after graduation.E) A) and B)
F) A) and C)

Question 12

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Accepted Answer

A)  populations.
B)  productivity levels.
C)  locations.
D)  none of the above; economists are puzzled by differences in standards of living around the world.E) B) and D)
F) A) and B)

Question 13

The U.S.president who referred to inflation as "public enemy number one" was

Accepted Answer

A)  Richard Nixon.
B)  Gerald Ford.
C)  Jimmy Carter.
D)  Ronald Reagan.E) All of the above
F) C) and D)

Question 14

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 equitable outcomes.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 15

To say that "people respond to incentives" is to say that

Accepted Answer

A)  changes in costs (but not changes in benefits)  influence people's decisions and their behavior.
B)  changes in benefits (but not changes in costs)  influence people's decisions and their behavior.
C)  changes in benefits or changes in costs influence people's decisions and their behavior.
D)  tradeoffs can be eliminated by rational people who think at the margin.E) A) and C)
F) B) and C)

Question 16

Economics is the study of

Accepted Answer

A)  how society manages its scarce resources.
B)  the government's role in society.
C)  how a market system functions.
D)  how to increase production.E) A) and C)
F) None of the above

Question 17

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)  provide an equal distribution of goods and services to households.
B)  establish a significant role for government in the allocation of resources.
C)  solve the problem of scarcity.
D)  are more efficient.E) A) and B)
F) A) and C)

Question 18

With the understanding that people respond to incentives,outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The concept of working longer per year w...

Question 19

If a copper refinery does not bear the entire cost of the smoke it emits,it will

Accepted Answer

A)  not emit any smoke so as to avoid the entire cost of the smoke.
B)  emit lower levels of smoke.
C)  emit an acceptable level of smoke.
D)  emit too much smoke.E) C) and D)
F) All of the above

Question 20

The word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)  market.
B)  consumer.
C)  producer.
D)  economy.E) None of the above
F) B) and C)

Exam 1: Ten Principles of Economics

If education produces external benefits for society,which of the following might NOT be an appropriate policy for society to adopt regarding education?

Correct Answer
verified

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

Correct Answer
verified

If a copper refinery does not bear the entire cost of the smoke it emits,it will

Correct Answer
verified

With the understanding that people respond to incentives,outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct Answer
verified
The concept of working longer per year w...
View Answer

To say that "people respond to incentives" is to say that

Correct Answer
verified

Which is the most accurate statement about trade?

Correct Answer
verified

The basic principles of economics suggest that

Correct Answer
verified

A marginal change is a small incremental adjustment to an existing plan of action.

Correct Answer
verified

Correct Answer
verified

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct Answer
verified

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Correct Answer
verified

One advantage market economies have over centrally-planned economies is that market economies

Correct Answer
verified

The word that comes from the Greek word for "one who manages a household" is

Correct Answer
verified

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct Answer
verified

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Correct Answer
verified

To raise productivity,policymakers could

Correct Answer
verified

A rational decisionmaker

Correct Answer
verified

Economics is the study of

Correct Answer
verified

The opportunity cost of going to college is

Correct Answer
verified

The U.S.president who referred to inflation as "public enemy number one" was

Correct Answer
verified

Exam 1: Ten Principles of Economics

If education produces external benefits for society,which of the following might NOT be an appropriate policy for society to adopt regarding education?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a copper refinery does not bear the entire cost of the smoke it emits,it will

Correct AnswerverifiedShow Answer

With the understanding that people respond to incentives,outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

To say that "people respond to incentives" is to say that

Correct AnswerverifiedShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedShow Answer

The basic principles of economics suggest that

Correct AnswerverifiedShow Answer

A marginal change is a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct AnswerverifiedShow Answer

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Correct AnswerverifiedShow Answer

One advantage market economies have over centrally-planned economies is that market economies

Correct AnswerverifiedShow Answer

The word that comes from the Greek word for "one who manages a household" is

Correct AnswerverifiedShow Answer

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct AnswerverifiedShow Answer

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Correct AnswerverifiedShow Answer

To raise productivity,policymakers could

Correct AnswerverifiedShow Answer

A rational decisionmaker

Correct AnswerverifiedShow Answer

Economics is the study of

Correct AnswerverifiedShow Answer

The opportunity cost of going to college is

Correct AnswerverifiedShow Answer

The U.S.president who referred to inflation as "public enemy number one" was

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The concept of working longer per year w...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified