Question 1

Households face many of the same decisions that societies face. Explain why this is true.

Accepted Answer

Like households, societies must decide w...

Question 2

Russell learned in his economics class that income depends primarily on productivity. He took a summer job in construction, and worked very hard as a manual labourer for one month at $8 per hour. His hard work and reliability led the foreman to give Russell a new responsibility - operating a steel roller at $15 per hour. The new job required much less effort than the old job, and left Russell wondering why his income had increased when his effort had gone down. How can you explain this situation to Russell?

Accepted Answer

Income is based on productivit...

Question 3

In economics, the cost of something is:

Accepted Answer

A)   the out-of-pocket expense of obtaining it
B)   what you give up to get it
C)   always measured in units of time
D)   always higher than people thinkE) A) and B)
F) A) and C)

Question 4

Market power refers to the:

Accepted Answer

A)   relative importance of a market to the overall economy
B)   ability of a person or group of people to successfully market new products
C)   power of the government to regulate a market
D)   power of a single person (or small group of people)  to unduly influence market pricesE) A) and D)
F) C) and D)

Question 5

If paper-pulp factories generate too much water pollution with their discharge, which kills local fish stocks then:

Accepted Answer

A)   the government will not be able to do anything to stop this
B)   the factories will be concerned about the loss of fish and reduce their pollution
C)   the government can treat the water for pollution and restock the river
D)   the government can use environmental regulations to reduce the pollution and improve economic well beingE) C) and D)
F) B) and C)

Question 6

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

Question 7

If stricter regulations are used to reduce pollution then:

Accepted Answer

A)   everyone will benefit so there is no trade-off
B)   only firms that polluted will be affected
C)   there will be no trade-off as the firms can afford to reduce pollution
D)   incomes of these firm's owners, workers and customers will be affected, and this means a trade-off must resultE) A) and C)
F) A) and B)

Question 8

In international trade, if one party gains, the other party loses.

Accepted Answer

A) True 
 B)False

Question 9

Protecting domestic jobs from foreign competition is the best way to raise labour productivity.

Accepted Answer

A) True 
 B)False

Question 10

Most analysts believe that the failure of communism can be blamed on the failure of central planning to allocate resources efficiently. Why is it difficult for central planners to allocate resources efficiently?

Accepted Answer

Efficient allocation of resources depend...

Question 11

To increase living standards, the most appropriate public policy measure is to:

Accepted Answer

A)   accelerate the conversion of natural forests to farmland
B)   make unemployment benefits more generous
C)   encourage workers to become more educated and have the necessary tools and technology
D)   require all workers to belong to unions and set high minimum wagesE) C) and D)
F) A) and C)

Question 12

When markets allocate resources efficiently, the natural outcome of this is market failure.

Accepted Answer

A) True 
 B)False

Question 13

Stan buys a 1966 Mustang with the intention of repairing, restoring and selling it. He anticipates that it will cost him $10 000 to purchase, repair and restore the car, and that he can sell the finished car for $13 000. When he has spent a total of $10 000 on the project, he discovers that he needs to replace the engine. It will cost Stan $4000 to replace the engine. He can sell the car without the new engine for $9000. What should he do?

Accepted Answer

Stan should be indifferent about finishi...

Question 14

Trade between Australia and New Zealand:

Accepted Answer

A)   is a losing proposition for New Zealand because Australian workers are more productive
B)   is a losing proposition for Australia because New Zealand has cheaper labour
C)   is like a sports contest - one side wins and the other side loses
D)   benefits both Australia and New ZealandE) B) and D)
F) B) and C)

Question 15

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)   In the short run, reducing inflation is associated with rising unemployment
B)   In the short run, reducing inflation is associated with falling unemployment
C)   In the long run, reducing inflation is associated with falling unemployment
D)   In the long run, reducing inflation is associated with rising unemploymentE) C) and D)
F) B) and D)

Question 16

Inflation in an economy is primarily caused by profiteering by greedy firms.

Accepted Answer

A) True 
 B)False

Question 17

A marginal change is a large and significant change to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 18

In the old days of the Soviet Union, ideology dictated that the prices of consumer goods should decline over time. Hence, the Soviet planners consistently set the prices of goods like bread and meat much below the cost of the materials used to produce them. They did not, however, subsidise the prices of the goods and materials used by producers. Soviet fur breeders were supposed to purchase animal products at high prices to feed their mink and sable, and bread and meat at low prices to feed their families. If these producers responded to incentives, how do you think they adjusted their purchases of grain, animal products, bread and meat?

Accepted Answer

The fur breeders would have an incentive...

Question 19

For society, a good is not scarce if:

Accepted Answer

A)   all members of society can have all they want of it
B)   at least one individual in society can obtain all he or she wants of the good
C)   firms are producing at full capacity
D)   those who have enough income can buy all they want of the goodE) None of the above
F) A) and D)

Question 20

Lee accepts a contract to photograph a wedding on Saturday for $1000. She cancels plans to go to the zoo with her friends instead. Her opportunity cost of photographing the wedding is:

Accepted Answer

A)   the $1000 she earns
B)   the enjoyment of spending the day with her friends at the zoo
C)   the $1000 less the enjoyment she would have received from being at the zoo with her friends
D)   nothing, as she wasn't going to earn any money at the zooE) A) and B)
F) A) and C)

Exam 1: Ten Lessons From Economics

Correct Answer
verified
Stan should be indifferent about finishi...
View Answer

In economics, the cost of something is:

Correct Answer
verified

If paper-pulp factories generate too much water pollution with their discharge, which kills local fish stocks then:

Correct Answer
verified

Protecting domestic jobs from foreign competition is the best way to raise labour productivity.

Correct Answer
verified

Most analysts believe that the failure of communism can be blamed on the failure of central planning to allocate resources efficiently. Why is it difficult for central planners to allocate resources efficiently?

Correct Answer
verified
Efficient allocation of resources depend...
View Answer

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

Correct Answer
verified

When markets allocate resources efficiently, the natural outcome of this is market failure.

Correct Answer
verified

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct Answer
verified

Lee accepts a contract to photograph a wedding on Saturday for $1000. She cancels plans to go to the zoo with her friends instead. Her opportunity cost of photographing the wedding is:

Correct Answer
verified

Correct Answer
verified
Income is based on productivit...
View Answer

A marginal change is a large and significant change to an existing plan of action.

Correct Answer
verified

Trade between Australia and New Zealand:

Correct Answer
verified

In international trade, if one party gains, the other party loses.

Correct Answer
verified

For society, a good is not scarce if:

Correct Answer
verified

If stricter regulations are used to reduce pollution then:

Correct Answer
verified

Households face many of the same decisions that societies face. Explain why this is true.

Correct Answer
verified
Like households, societies must decide w...
View Answer

To increase living standards, the most appropriate public policy measure is to:

Correct Answer
verified

Market power refers to the:

Correct Answer
verified

Inflation in an economy is primarily caused by profiteering by greedy firms.

Correct Answer
verified

Correct Answer
verified
The fur breeders would have an incentive...
View Answer

Exam 1: Ten Lessons From Economics

Correct AnswerverifiedStan should be indifferent about finishi...View AnswerShow Answer

In economics, the cost of something is:

Correct AnswerverifiedShow Answer

If paper-pulp factories generate too much water pollution with their discharge, which kills local fish stocks then:

Correct AnswerverifiedShow Answer

Protecting domestic jobs from foreign competition is the best way to raise labour productivity.

Correct AnswerverifiedShow Answer

Most analysts believe that the failure of communism can be blamed on the failure of central planning to allocate resources efficiently. Why is it difficult for central planners to allocate resources efficiently?

Correct AnswerverifiedEfficient allocation of resources depend...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When markets allocate resources efficiently, the natural outcome of this is market failure.

Correct AnswerverifiedShow Answer

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct AnswerverifiedShow Answer

Lee accepts a contract to photograph a wedding on Saturday for $1000. She cancels plans to go to the zoo with her friends instead. Her opportunity cost of photographing the wedding is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIncome is based on productivit...View AnswerShow Answer

A marginal change is a large and significant change to an existing plan of action.

Correct AnswerverifiedShow Answer

Trade between Australia and New Zealand:

Correct AnswerverifiedShow Answer

In international trade, if one party gains, the other party loses.

Correct AnswerverifiedShow Answer

For society, a good is not scarce if:

Correct AnswerverifiedShow Answer

If stricter regulations are used to reduce pollution then:

Correct AnswerverifiedShow Answer

Households face many of the same decisions that societies face. Explain why this is true.

Correct AnswerverifiedLike households, societies must decide w...View AnswerShow Answer

To increase living standards, the most appropriate public policy measure is to:

Correct AnswerverifiedShow Answer

Market power refers to the:

Correct AnswerverifiedShow Answer

Inflation in an economy is primarily caused by profiteering by greedy firms.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe fur breeders would have an incentive...View AnswerShow Answer

Correct Answer
verified
Stan should be indifferent about finishi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Efficient allocation of resources depend...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Income is based on productivit...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Like households, societies must decide w...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The fur breeders would have an incentive...
View Answer