Question 1

A small country produces only two goods, music downloads and flash drives. Given its limited resources, this country has the following production possibilities:

Accepted Answer

The answer of A small country produces only two goods,...

Question 2

Stephanie has only one hour to study for an exam in math or to complete an assignment in economics. For Stephanie, the opportunity cost of spending the hour completing the economics assignment is

Accepted Answer

A) a lower grade in the math exam. 
B) a higher grade in the math exam. 
C) a lower grade in both the math exam and the economics assignment. 
D) a higher grade in both the math exam and the economics assignment. 
E) none because history and economics are unrelated. 
A) a lower grade in the math exam. 
B) a higher grade in the math exam. 
C) a lower grade in both the math exam and the economics assignment. 
D) a higher grade in both the math exam and the economics assignment. 
E) none because history and economics are unrelated.

Question 3

Which of the following statements about economic interaction is not true?

Accepted Answer

A) It is a fact of economic life. 
B) It requires a market. 
C) It can occur within a family. 
D) It makes our lives better. 
E) It requires people to make sacrifices by giving up what they may have otherwise. 
A) It is a fact of economic life. 
B) It requires a market. 
C) It can occur within a family. 
D) It makes our lives better. 
E) It requires people to make sacrifices by giving up what they may have otherwise.

Question 4

When a country like North Korea is characterized as a command economy, it's because most prices are

Accepted Answer

A) determined in the market, and they usually lead to market failures. 
B) set by the government, which usually leads to inefficiencies. 
C) determined in the market, and they result in efficient outcomes. 
D) set by the government, and they result in efficient outcomes. 
E) determined in the market, and they usually lead to inefficiencies. 
A) determined in the market, and they usually lead to market failures. 
B) set by the government, which usually leads to inefficiencies. 
C) determined in the market, and they result in efficient outcomes. 
D) set by the government, and they result in efficient outcomes. 
E) determined in the market, and they usually lead to inefficiencies.

Question 5

A voluntary exchange of existing consumer goods is beneficial because it

Accepted Answer

A) makes those engaging in the exchange better off. 
B) changes the total quantity of goods produced. 
C) reallocates existing goods. 
D) reduces scarcity. 
E) requires choice. 
A) makes those engaging in the exchange better off. 
B) changes the total quantity of goods produced. 
C) reallocates existing goods. 
D) reduces scarcity. 
E) requires choice.

Question 6

Which of the following statements is false?

Accepted Answer

A) In a centrally planned economy, decisions concerning the three essential questions are made by those who control the government. 
B) In a market economy, firms do not interact with consumers. 
C) The two alternative approaches to the three essential questions are market economies and command economies. 
D) In a market economy, decisions concerning the three essential questions result from interactions taking place in markets. 
E) In both centrally planned and market economies, the three essential economic questions are what, how, and for whom. 
A) In a centrally planned economy, decisions concerning the three essential questions are made by those who control the government. 
B) In a market economy, firms do not interact with consumers. 
C) The two alternative approaches to the three essential questions are market economies and command economies. 
D) In a market economy, decisions concerning the three essential questions result from interactions taking place in markets. 
E) In both centrally planned and market economies, the three essential economic questions are what, how, and for whom.

Question 7

Exhibit 1-4  
-Refer to Exhibit 1-4. The opportunity cost of producing the first TV set is

Accepted Answer

A) 15 units of computers. 
B) 5 units of computers. 
C) 43 units of computers. 
D) 42 units of computers. 
E) 1 unit of computers. 
A) 15 units of computers. 
B) 5 units of computers. 
C) 43 units of computers. 
D) 42 units of computers. 
E) 1 unit of computers.

Question 8

Suppose an economy can produce either smartphones or trucks. The production possibilities for this economy are shown in the table below. Show that this production possibilities schedule depicts increasing opportunity costs.

Accepted Answer

A chart such as the one below

Question 9

A movement along the production possibilities curve shows how an economy increases its output with more resources.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 1-1
  
-Refer to Exhibit 1-1. Suppose that Adam has three hours to study for an exam in economics and another exam in sociology on the same day. The amount of time he spends studying economics and its relation to his grade in the two classes are shown in the table. The opportunity cost of increasing the time spent on studying economics from two hour to three hours is

Accepted Answer

A) 55 points on the sociology grade. 
B) 40 points on the sociology grade. 
C) 15 points on the sociology grade. 
D) 10 points on the sociology grade. 
E) zero. 
A) 55 points on the sociology grade. 
B) 40 points on the sociology grade. 
C) 15 points on the sociology grade. 
D) 10 points on the sociology grade. 
E) zero.

Question 11

Exhibit 1-9  
-Refer to Exhibit 1-9. Which of the following is more likely to lead to the economy's attainment of Point A?

Accepted Answer

A) A decrease in education expenditures 
B) Increased consumption 
C) An increase in the working-age population 
D) A depletion of resources 
E) None of these because Point A is impossible to attain 
A) A decrease in education expenditures 
B) Increased consumption 
C) An increase in the working-age population 
D) A depletion of resources 
E) None of these because Point A is impossible to attain

Question 12

The opportunity cost for a student to attend college is zero if the student receives a scholarship.

Accepted Answer

A) True 
 B)False

Question 13

Why is it reasonable to assume that when trade is voluntary, those involved in the trade will gain?

Accepted Answer

As long as the decision to trade is volu

Question 14

What is the role of government in a market economy?

Accepted Answer

There are three aspects to the governmen

Question 15

Exhibit 1-9  
-Refer to Exhibit 1-9. The attainment of Point A in the future

Accepted Answer

A) is more likely to occur if the economy chooses more education. 
B) can occur, but why it can is not understood. 
C) is impossible. 
D) is more likely to occur if the economy initially moves to Point B to conserve resources. 
E) is more likely to occur if the economy chooses more consumption. 
A) is more likely to occur if the economy chooses more education. 
B) can occur, but why it can is not understood. 
C) is impossible. 
D) is more likely to occur if the economy initially moves to Point B to conserve resources. 
E) is more likely to occur if the economy chooses more consumption.

Question 16

Exhibit 1-7  
-Refer to Exhibit 1-7. Point E

Accepted Answer

A) occurs when resources are not efficiently allocated. 
B) may be attained with a sufficient improvement in technology. 
C) can be attained with existing resources. 
D) is impossible to attain, even in the future. 
E) shows the most efficient use of valuable resources. 
A) occurs when resources are not efficiently allocated. 
B) may be attained with a sufficient improvement in technology. 
C) can be attained with existing resources. 
D) is impossible to attain, even in the future. 
E) shows the most efficient use of valuable resources.

Question 17

People make decisions when doing something involves

Accepted Answer

A) no benefits. 
B) only benefits. 
C) giving up nothing else. 
D) an opportunity cost. 
E) different types of resources. 
A) no benefits. 
B) only benefits. 
C) giving up nothing else. 
D) an opportunity cost. 
E) different types of resources.

Question 18

Exhibit 1-8  
-Refer to Exhibit 1-8. Point C is more efficient than Point

Accepted Answer

A) A. 
B) B. 
C) D. 
D) E. 
E) G. 
A) A. 
B) B. 
C) D. 
D) E. 
E) G.

Question 19

In economics, choices are made based on

Accepted Answer

A) benefits but not costs. 
B) opportunity costs. 
C) producers. 
D) emotion. 
E) what is not available to the person making the choice. 
A) benefits but not costs. 
B) opportunity costs. 
C) producers. 
D) emotion. 
E) what is not available to the person making the choice.

Question 20

Of the following individuals, who bears the highest opportunity cost of going to college?

Accepted Answer

A) A pro-football player earning $2 million a year 
B) A high school graduate without a job 
C) A high school dropout earning the minimum wage in a fast-food restaurant 
D) A teenager who attends college and also works on campus 
E) A retiree 
A) A pro-football player earning $2 million a year 
B) A high school graduate without a job 
C) A high school dropout earning the minimum wage in a fast-food restaurant 
D) A teenager who attends college and also works on campus 
E) A retiree

Exam 1: The Central Idea

A small country produces only two goods, music downloads and flash drives. Given its limited resources, this country has the following production possibilities:

Stephanie has only one hour to study for an exam in math or to complete an assignment in economics. For Stephanie, the opportunity cost of spending the hour completing the economics assignment is

Which of the following statements about economic interaction is not true?

When a country like North Korea is characterized as a command economy, it's because most prices are

A voluntary exchange of existing consumer goods is beneficial because it

Which of the following statements is false?

Exhibit 1-4 -Refer to Exhibit 1-4. The opportunity cost of producing the first TV set is

Suppose an economy can produce either smartphones or trucks. The production possibilities for this economy are shown in the table below. Show that this production possibilities schedule depicts increasing opportunity costs.

A movement along the production possibilities curve shows how an economy increases its output with more resources.

Exhibit 1-9 -Refer to Exhibit 1-9. Which of the following is more likely to lead to the economy's attainment of Point A?

The opportunity cost for a student to attend college is zero if the student receives a scholarship.

Why is it reasonable to assume that when trade is voluntary, those involved in the trade will gain?

What is the role of government in a market economy?

Exhibit 1-9 -Refer to Exhibit 1-9. The attainment of Point A in the future

Exhibit 1-7 -Refer to Exhibit 1-7. Point E

People make decisions when doing something involves

Exhibit 1-8 -Refer to Exhibit 1-8. Point C is more efficient than Point

In economics, choices are made based on

Of the following individuals, who bears the highest opportunity cost of going to college?

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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