Question 1

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 2

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Accepted Answer

A)  should be counted in full, regardless of the costs of eating and sleeping elsewhere.
B)  should be counted only to the extent that they are more expensive at college than elsewhere.
C)  usually exceed the opportunity cost of going to college.
D)  plus the cost of tuition, equals the opportunity cost of going to college.E) A) and B)
F) None of the above

Question 3

Under what conditions might government intervention in a market economy improve the economy's performance?

Accepted Answer

If there is a market failure, such as an...

Question 4

You go to the movieplex where movies ordinarily cost $10. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Accepted Answer

A)  the amount you value the first movie + $3
B)  the amount you value the first movie + $10
C)  $3
D)  $10E) None of the above
F) A) and B)

Question 5

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Accepted Answer

A)  For the first 25 houses, the average cost per house was $288,000.
B)  The marginal cost of the 26th house, if it is built, will be equal to the average cost per house.
C)  If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it.
D)  All of the above are correct.E) A) and C)
F) None of the above

Question 6

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Accepted Answer

A)  is more efficient and more equal for society.
B)  is more efficient but less equal for society.
C)  is more equal but less efficient for society.
D)  is less equal and less efficient for society.E) All of the above
F) A) and C)

Question 7

In response to the deep economic downturn in the US in 2008 and 2009, the US

Accepted Answer

A)  reduced taxes.
B)  increased government spending.
C)  increased the supply of money.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 8

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)  studies show that individuals with higher levels of income pollute less than low-income individuals.
B)  efforts to reduce pollution typically are not completely successful.
C)  laws that reduce pollution raise costs of production and reduce incomes.
D)  employing individuals to clean up pollution causes increases in employment and income.E) A) and D)
F) All of the above

Question 9

In the early 1920s,

Accepted Answer

A)  Germany experienced a very high rate of inflation.
B)  the quantity of German money was declining rapidly.
C)  the value of German money remained almost constant.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 10

Which of the following can lead to market failure?

Accepted Answer

A)  externalities and market power
B)  externalities but not market power
C)  market power but not externalities
D)  neither externalities nor market powerE) A) and D)
F) B) and C)

Question 11

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

Accepted Answer

A)  People face tradeoffs.
B)  The cost of something is what you give up to get it.
C)  Rational people think at the margin.
D)  People respond to incentives.E) B) and D)
F) B) and C)

Question 12

Which of the following is correct?

Accepted Answer

A)  The word economy comes from the Greek word for "rational thinker."
B)  Economists study the management of scarce resources.
C)  Because economists believe that people pursue their best interests, they are not interested in how people interact.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 13

A direct or positive relationship exists between a country's

Accepted Answer

A)  productivity and its standard of living.
B)  amount of government spending and its productivity.
C)  total population and its average citizen's income.
D)  rate of population growth and the extent of its trade with other countries.E) All of the above
F) C) and D)

Question 14

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 low than when prices are high.
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) C) and D)
F) All of the above

Question 15

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 B)
F) A) and C)

Question 16

Suppose one county in Missouri decides it wants to reduce alcohol consumption, so the county passes a law that raises the price of a bottle of beer by $1. As a result, people drive to other counties to drink alcohol, which results in an increase in drunk driving. This illustrates the principle that people respond to incentives.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following claims is consistent with the views of mainstream economists?

Accepted Answer

A)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
B)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
C)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
D)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.E) A) and B)
F) A) and C)

Question 18

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

If the wage for unskilled labor were fixed above the current wage, then we would expect

Accepted Answer

A)  an increase in the number of unskilled jobs available.
B)  a decrease in the number of unskilled jobs available.
C)  a decrease in the number of workers wanting unskilled jobs.
D)  None of the above is correct.E) B) and D)
F) A) and C)

Exam 1: Ten Principles of Economics

Under what conditions might government intervention in a market economy improve the economy's performance?

Correct Answer
verified
If there is a market failure, such as an...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct Answer
verified

A tradeoff exists between a clean environment and a higher level of income in that

Correct Answer
verified

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct Answer
verified

Correct Answer
verified

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26^th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Correct Answer
verified

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
verified

If the wage for unskilled labor were fixed above the current wage, then we would expect

Correct Answer
verified

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Which of the following can lead to market failure?

Correct Answer
verified

In the early 1920s,

Correct Answer
verified

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

Correct Answer
verified

A direct or positive relationship exists between a country's

Correct Answer
verified

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

Correct Answer
verified

Which of the following claims is consistent with the views of mainstream economists?

Correct Answer
verified

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct Answer
verified

Exam 1: Ten Principles of Economics

Under what conditions might government intervention in a market economy improve the economy's performance?

Correct AnswerverifiedIf there is a market failure, such as an...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct AnswerverifiedShow Answer

A tradeoff exists between a clean environment and a higher level of income in that

Correct AnswerverifiedShow Answer

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

If the wage for unskilled labor were fixed above the current wage, then we would expect

Correct AnswerverifiedShow Answer

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Which of the following can lead to market failure?

Correct AnswerverifiedShow Answer

In the early 1920s,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A direct or positive relationship exists between a country's

Correct AnswerverifiedShow Answer

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

Correct AnswerverifiedShow Answer

Which of the following claims is consistent with the views of mainstream economists?

Correct AnswerverifiedShow Answer

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct AnswerverifiedShow Answer

Correct Answer
verified
If there is a market failure, such as an...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26^th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

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
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