Question 1

Social and political forces affect the way in which the invisible hand works.

Accepted Answer

A) True 
 B)False

Question 2

Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals.

Accepted Answer

A) True 
 B)False

Question 3

An economic force given relatively free rein by society to work through the market is a:

Accepted Answer

A)  market force. 
B)  social force. 
C)  price mechanism. 
D)  political force. 
A)  market force. 
B)  social force. 
C)  price mechanism. 
D)  political force.

Question 4

A policy rule that concludes that a particular course of action is preferable is known as a(n):

Accepted Answer

A)  precept. 
B)  theorem. 
C)  insight. 
D)  policy. 
A)  precept. 
B)  theorem. 
C)  insight. 
D)  policy.

Question 5

Many drugs are illegal in the United States. Despite this law, illegal drugs are usually available at a price many times higher than they would be if the drugs weren't illegal. The high price of illegal drugs is an example of:

Accepted Answer

A)  the market affecting political forces. 
B)  political forces affecting the market. 
C)  the failure of the market. 
D)  the failure of political forces. 
A)  the market affecting political forces. 
B)  political forces affecting the market. 
C)  the failure of the market. 
D)  the failure of political forces.

Question 6

Opportunity cost:

Accepted Answer

A)  includes only monetary expenses. 
B)  is the net benefit forgone by not undertaking the next best alternative. 
C)  is nonexistent for some choices. 
D)  is the same as sunk cost. 
A)  includes only monetary expenses. 
B)  is the net benefit forgone by not undertaking the next best alternative. 
C)  is nonexistent for some choices. 
D)  is the same as sunk cost.

Question 7

Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any calls above 600 minutes. Mary has used 300 minutes this month so far. What is her marginal cost per minute of making two more calls lasting 10 minutes each?

Accepted Answer

A)  $2.50 
B)  25 cents 
C)  4 cents 
D)  $0 
A)  $2.50 
B)  25 cents 
C)  4 cents 
D)  $0

Question 8

The invisible hand theorem relates mostly to:

Accepted Answer

A)  microeconomics. 
B)  macroeconomics. 
C)  normative economics. 
D)  supra-economics. 
A)  microeconomics. 
B)  macroeconomics. 
C)  normative economics. 
D)  supra-economics.

Question 9

The price of computers has fallen each year for the last 30 years. This is probably an example of the working of:

Accepted Answer

A)  economic forces. 
B)  political forces. 
C)  social forces. 
D)  nonmarket forces. 
A)  economic forces. 
B)  political forces. 
C)  social forces. 
D)  nonmarket forces.

Question 10

Even though 80,000 individuals in the United States wait for kidney transplants and, for a price, there are many individuals who would be willing to supply a kidney (a healthy person can donate one kidney without any problems), it remains illegal to buy and sell organs in the United States. A market for kidneys does not exist because of:

Accepted Answer

A)  political forces. 
B)  social forces. 
C)  economic forces. 
D)  market forces. 
A)  political forces. 
B)  social forces. 
C)  economic forces. 
D)  market forces.

Question 11

A basic difference between microeconomics and macroeconomics is that:

Accepted Answer

A)  microeconomics focuses on the choices of individual consumers, whereas macroeconomics considers the behavior of large businesses. 
B)  microeconomics focuses on financial reporting by individuals, whereas macroeconomics focuses on financial reporting by large firms. 
C)  microeconomics examines the choices made by individual participants in an economy, whereas macroeconomics considers the economy's overall performance. 
D)  microeconomics focuses on national markets, whereas macroeconomics concentrates on international markets. 
A)  microeconomics focuses on the choices of individual consumers, whereas macroeconomics considers the behavior of large businesses. 
B)  microeconomics focuses on financial reporting by individuals, whereas macroeconomics focuses on financial reporting by large firms. 
C)  microeconomics examines the choices made by individual participants in an economy, whereas macroeconomics considers the economy's overall performance. 
D)  microeconomics focuses on national markets, whereas macroeconomics concentrates on international markets.

Question 12

Microeconomics includes the study of:

Accepted Answer

A)  inflation. 
B)  unemployment. 
C)  business cycles. 
D)  a firm's pricing policies. 
A)  inflation. 
B)  unemployment. 
C)  business cycles. 
D)  a firm's pricing policies.

Question 13

Political forces:

Accepted Answer

A)  affect the price mechanism through cultural norms. 
B)  affect the price mechanism through the legal system. 
C)  affect the price mechanism through scarcity. 
D)  do not affect the price mechanism. 
A)  affect the price mechanism through cultural norms. 
B)  affect the price mechanism through the legal system. 
C)  affect the price mechanism through scarcity. 
D)  do not affect the price mechanism.

Question 14

You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:

Accepted Answer

A)  purchase only the moonroof because that will provide you with the greatest marginal benefit. 
B)  purchase only the security system because its marginal benefit exceeds its marginal cost. 
C)  purchase both options because the combined cost of both is less than the combined benefit. 
D)  not purchase either because the benefits of each do not exceed the costs. 
A)  purchase only the moonroof because that will provide you with the greatest marginal benefit. 
B)  purchase only the security system because its marginal benefit exceeds its marginal cost. 
C)  purchase both options because the combined cost of both is less than the combined benefit. 
D)  not purchase either because the benefits of each do not exceed the costs.

Question 15

Suppose you paid $300 to take this economics course, which meets 30 times for one hour a class during the course of the semester. Instead of attending class you could have either flipped hamburgers for $10 an hour or waited tables for $8 an hour. Given this information, the opportunity cost of attending each class session is:

Accepted Answer

A)  $30. 
B)  $10. 
C)  $8. 
D)  $13. 
A)  $30. 
B)  $10. 
C)  $8. 
D)  $13.

Question 16

Nepalese villagers sell their kidneys as a way to earn much-needed money. Unfortunately, although the demand for such kidneys in developed economies is high and the medical facilities are available to conduct kidney transplants, the selling and buying of organs is illegal. What idea from Chapter 1 of the text does this situation best illustrate?

Accepted Answer

A)  Sunk costs do not matter in making decisions. 
B)  Marginal revenue should equal marginal cost. 
C)  Social and political forces sometimes rein in market forces. 
D)  Microeconomics and macroeconomics are very much interrelated. 
A)  Sunk costs do not matter in making decisions. 
B)  Marginal revenue should equal marginal cost. 
C)  Social and political forces sometimes rein in market forces. 
D)  Microeconomics and macroeconomics are very much interrelated.

Question 17

The economic decision rule is to undertake an action only when the marginal benefits of that action are greater than its total costs.

Accepted Answer

A) True 
 B)False

Question 18

More than 10,000 visitors waited up to two hours in line to see the rare flower titan arum at the Cambridge Botanical Gardens. What does this situation illustrate to an economist about rationing?

Accepted Answer

A)  Goods don't have to be rationed by lottery or first-come, first-served. Goods can be rationed by price. 
B)  When goods are not fully rationed by monetary price, other rationing mechanisms such as waiting arise. 
C)  When goods are not rationed by monetary price, other rationing mechanisms such as lottery must be introduced. 
D)  There is no need for rationing if anyone who waits long enough can see the flower. 
A)  Goods don't have to be rationed by lottery or first-come, first-served. Goods can be rationed by price. 
B)  When goods are not fully rationed by monetary price, other rationing mechanisms such as waiting arise. 
C)  When goods are not rationed by monetary price, other rationing mechanisms such as lottery must be introduced. 
D)  There is no need for rationing if anyone who waits long enough can see the flower.

Question 19

Countries such as Brazil, India, and Moldova-well-known sources of organ donors-have banned buying and selling organs. This legal action comes at the risk of driving the trade underground. What idea from Chapter 1 of the text does this story best illustrate?

Accepted Answer

A)  Legal and social forces can eliminate economic forces. 
B)  Marginal revenue should equal marginal cost. 
C)  Economic forces always operate despite legal forces. 
D)  The invisible hand is not always invisible. 
A)  Legal and social forces can eliminate economic forces. 
B)  Marginal revenue should equal marginal cost. 
C)  Economic forces always operate despite legal forces. 
D)  The invisible hand is not always invisible.

Question 20

Who probably would argue that you need to study the trees before you can understand the forest?

Accepted Answer

A)  A microeconomist 
B)  A macroeconomist 
C)  A positive economist 
D)  A Keynesian economist 
A)  A microeconomist 
B)  A macroeconomist 
C)  A positive economist 
D)  A Keynesian economist

Social and political forces affect the way in which the invisible hand works.

Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals.

An economic force given relatively free rein by society to work through the market is a:

A policy rule that concludes that a particular course of action is preferable is known as a(n):

Many drugs are illegal in the United States. Despite this law, illegal drugs are usually available at a price many times higher than they would be if the drugs weren't illegal. The high price of illegal drugs is an example of:

Opportunity cost:

The invisible hand theorem relates mostly to:

The price of computers has fallen each year for the last 30 years. This is probably an example of the working of:

A basic difference between microeconomics and macroeconomics is that:

Microeconomics includes the study of:

Political forces:

You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:

The economic decision rule is to undertake an action only when the marginal benefits of that action are greater than its total costs.

More than 10,000 visitors waited up to two hours in line to see the rare flower titan arum at the Cambridge Botanical Gardens. What does this situation illustrate to an economist about rationing?

Countries such as Brazil, India, and Moldova-well-known sources of organ donors-have banned buying and selling organs. This legal action comes at the risk of driving the trade underground. What idea from Chapter 1 of the text does this story best illustrate?

Who probably would argue that you need to study the trees before you can understand the forest?

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Exam 1: Economics and Economic Reasoning

Social and political forces affect the way in which the invisible hand works.

Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals.

An economic force given relatively free rein by society to work through the market is a:

A policy rule that concludes that a particular course of action is preferable is known as a(n):

Many drugs are illegal in the United States. Despite this law, illegal drugs are usually available at a price many times higher than they would be if the drugs weren't illegal. The high price of illegal drugs is an example of:

Opportunity cost:

The invisible hand theorem relates mostly to:

The price of computers has fallen each year for the last 30 years. This is probably an example of the working of:

A basic difference between microeconomics and macroeconomics is that:

Microeconomics includes the study of:

Political forces:

You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:

The economic decision rule is to undertake an action only when the marginal benefits of that action are greater than its total costs.

More than 10,000 visitors waited up to two hours in line to see the rare flower titan arum at the Cambridge Botanical Gardens. What does this situation illustrate to an economist about rationing?

Countries such as Brazil, India, and Moldova-well-known sources of organ donors-have banned buying and selling organs. This legal action comes at the risk of driving the trade underground. What idea from Chapter 1 of the text does this story best illustrate?

Who probably would argue that you need to study the trees before you can understand the forest?

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters