Question 1

Economics is a study of

Accepted Answer

A) choices and interactions among people when resources are scarce. 
B) how to eliminate scarcity. 
C) how to make choices and interact in order to avoid scarcity. 
D) how to avoid scarcity by making choices. 
E) how to make money in stock markets. 
A) choices and interactions among people when resources are scarce. 
B) how to eliminate scarcity. 
C) how to make choices and interact in order to avoid scarcity. 
D) how to avoid scarcity by making choices. 
E) how to make money in stock markets.

Question 2

According to the textbook, the main reason for Mark Zuckerberg to leave college and to start a new company, Facebook, is that

Accepted Answer

A) he had failed many courses in college. 
B) the opportunity cost is higher for him to stay in college than to run Facebook. 
C) the opportunity cost is lower for him to stay in college than to run Facebook. 
D) the opportunity cost is zero for him to stay in college. 
E) the opportunity cost is zero for him to run Facebook. 
A) he had failed many courses in college. 
B) the opportunity cost is higher for him to stay in college than to run Facebook. 
C) the opportunity cost is lower for him to stay in college than to run Facebook. 
D) the opportunity cost is zero for him to stay in college. 
E) the opportunity cost is zero for him to run Facebook.

Question 3

A division of labor occurs when some workers do all tasks while others do nothing.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 1-2  
-According to Exhibit 1-2, if Anne and Sam each worked separately, how many meals per day would be served by each of them?

Accepted Answer

A) 40 
B) 4 
C) 2 
D) 20 
E) 5 
A) 40 
B) 4 
C) 2 
D) 20 
E) 5

Question 5

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

Accepted Answer

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

Question 6

Production can be increased whenever people

Accepted Answer

A) engage in activities with a high opportunity cost. 
B) specialize in whichever field they have a comparative advantage in. 
C) specialize in whatever interests them. 
D) do not allocate goods through trade. 
E) make decisions according to societal needs. 
A) engage in activities with a high opportunity cost. 
B) specialize in whichever field they have a comparative advantage in. 
C) specialize in whatever interests them. 
D) do not allocate goods through trade. 
E) make decisions according to societal needs.

Question 7

Economic interaction with other countries

Accepted Answer

A) benefits only small countries that cannot produce everything. 
B) benefits only large countries that have a comparative advantage in producing everything. 
C) can benefit no country. 
D) can benefit small or large countries. 
E) benefits only small countries that have a comparative disadvantage. 
A) benefits only small countries that cannot produce everything. 
B) benefits only large countries that have a comparative advantage in producing everything. 
C) can benefit no country. 
D) can benefit small or large countries. 
E) benefits only small countries that have a comparative disadvantage.

Question 8

The goods that individual producers specialize in are determined solely by the amounts of time and resources they need to produce those goods.

Accepted Answer

A) True 
 B)False

Question 9

A country trades with other countries because

Accepted Answer

A) it can gain in production and consumption. 
B) it wants to improve foreign relations. 
C) its government can earn taxes on imported goods. 
D) it has an excess production capacity. 
E) its residents always prefer imported goods to domestic goods. 
A) it can gain in production and consumption. 
B) it wants to improve foreign relations. 
C) its government can earn taxes on imported goods. 
D) it has an excess production capacity. 
E) its residents always prefer imported goods to domestic goods.

Question 10

The role of government in a market system

Accepted Answer

A) includes encouraging market failures. 
B) does not exist. 
C) is restricted to establishing property rights. 
D) includes improving situations that would otherwise result in a government failure. 
E) includes improving situations that would otherwise result in a market failure. 
A) includes encouraging market failures. 
B) does not exist. 
C) is restricted to establishing property rights. 
D) includes improving situations that would otherwise result in a government failure. 
E) includes improving situations that would otherwise result in a market failure.

Question 11

There is no legitimate role for government in a market economy.

Accepted Answer

A) True 
 B)False

Question 12

When the economy is in recession, jobs are generally harder to find and more people go to college. We can conclude that the opportunity cost of

Accepted Answer

A) going to college decreases when the economy is in recession. 
B) going to college increases when the economy is in recession. 
C) working increases when the economy is in recession. 
D) working is zero when the economy is in recession. 
E) going to college is always higher than the opportunity cost of working. 
A) going to college decreases when the economy is in recession. 
B) going to college increases when the economy is in recession. 
C) working increases when the economy is in recession. 
D) working is zero when the economy is in recession. 
E) going to college is always higher than the opportunity cost of working.

Question 13

Which of the following statements is true?

Accepted Answer

A) There are no gains from trade between people in different countries because, with international trade, it's the countries that trade, and not its people, that realize the gains. 
B) Trade between people in different countries cannot occur. 
C) Trade between people in different countries can occur, but it will not result in an increase in consumer satisfaction. 
D) Trade between people in different countries can occur, but it will not lead them to better utilize their comparative advantage. 
E) Trade between people in different countries can occur, and the gains that occur are the same as the gains from trade within a country. 
A) There are no gains from trade between people in different countries because, with international trade, it's the countries that trade, and not its people, that realize the gains. 
B) Trade between people in different countries cannot occur. 
C) Trade between people in different countries can occur, but it will not result in an increase in consumer satisfaction. 
D) Trade between people in different countries can occur, but it will not lead them to better utilize their comparative advantage. 
E) Trade between people in different countries can occur, and the gains that occur are the same as the gains from trade within a country.

Question 14

An example of opportunity cost is the

Accepted Answer

A) income that a person does not earn because she has retired and decided not to work at all. 
B) pleasure that an economics student derives from studying economics. 
C) Chinese food that you gave up when you chose to eat Italian food. 
D) tuition you pay to attend college. 
E) price paid for a concert ticket when you go to that concert. 
A) income that a person does not earn because she has retired and decided not to work at all. 
B) pleasure that an economics student derives from studying economics. 
C) Chinese food that you gave up when you chose to eat Italian food. 
D) tuition you pay to attend college. 
E) price paid for a concert ticket when you go to that concert.

Question 15

Exhibit 1-4  
-The typical production possibilities schedule shows that the opportunity cost for producing more of one good requires giving up an increasing amount of production of another good.

Accepted Answer

A) True 
 B)False

Question 16

A government failure results when

Accepted Answer

A) the government allows a market failure to occur. 
B) the government establishes property rights. 
C) the market economy does not provide good answers to the three questions. 
D) government intervention is unable to correct a market failure. 
E) the government intervenes in a market economy. 
A) the government allows a market failure to occur. 
B) the government establishes property rights. 
C) the market economy does not provide good answers to the three questions. 
D) government intervention is unable to correct a market failure. 
E) the government intervenes in a market economy.

Question 17

Choices are made in order to avoid scarcity.

Accepted Answer

A) True 
 B)False

Question 18

What explains the occurrence of increasing opportunity costs?

Accepted Answer

Increasing opportunity costs o

Question 19

Suppose that an economy produces only two goods: computers and movies. If the economy at all times utilizes all its resources, and it decides to use more of its available resources to produce computers,

Accepted Answer

A) the production of movies will drop. 
B) the production of both movies and computers will drop. 
C) the production of movies will rise. 
D) the production of movies will not change but the production of computers will increase. 
E) then will be no change in the production of either computers or movies. 
A) the production of movies will drop. 
B) the production of both movies and computers will drop. 
C) the production of movies will rise. 
D) the production of movies will not change but the production of computers will increase. 
E) then will be no change in the production of either computers or movies.

Question 20

Suppose you must divide your time between studying for your chemistry final exam and writing a final paper for your history class. The time and the grades in the two classes are as follows:

Accepted Answer

The answer of Suppose you must divide your time between...

Exam 1: The Central Idea

Economics is a study of

According to the textbook, the main reason for Mark Zuckerberg to leave college and to start a new company, Facebook, is that

A division of labor occurs when some workers do all tasks while others do nothing.

Exhibit 1-2 -According to Exhibit 1-2, if Anne and Sam each worked separately, how many meals per day would be served by each of them?

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

Production can be increased whenever people

Economic interaction with other countries

The goods that individual producers specialize in are determined solely by the amounts of time and resources they need to produce those goods.

A country trades with other countries because

The role of government in a market system

There is no legitimate role for government in a market economy.

When the economy is in recession, jobs are generally harder to find and more people go to college. We can conclude that the opportunity cost of

Which of the following statements is true?

An example of opportunity cost is the

Exhibit 1-4 -The typical production possibilities schedule shows that the opportunity cost for producing more of one good requires giving up an increasing amount of production of another good.

A government failure results when

Choices are made in order to avoid scarcity.

What explains the occurrence of increasing opportunity costs?

Suppose that an economy produces only two goods: computers and movies. If the economy at all times utilizes all its resources, and it decides to use more of its available resources to produce computers,

Suppose you must divide your time between studying for your chemistry final exam and writing a final paper for your history class. The time and the grades in the two classes are as follows:

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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