Question 1

Economic choice and competitive behavior are the result of

Accepted Answer

A)  scarcity. 
B)  poverty. 
C)  public ownership of resources. 
D)  private ownership of resources. 
A)  scarcity. 
B)  poverty. 
C)  public ownership of resources. 
D)  private ownership of resources.

Question 2

Which of the following statements is correct about the economic way of thinking?

Accepted Answer

A)  If the buyer of a good gains, the seller must lose an equal amount. 
B)  The value of goods is objective; it is equal to the cost of supplying the good. 
C)  Opportunity costs will always be incurred when scarce resources are used to produce a good. 
D)  Changes in incentives generally have no effect on human behavior. 
A)  If the buyer of a good gains, the seller must lose an equal amount. 
B)  The value of goods is objective; it is equal to the cost of supplying the good. 
C)  Opportunity costs will always be incurred when scarce resources are used to produce a good. 
D)  Changes in incentives generally have no effect on human behavior.

Question 3

During the last four decades, the composition of federal spending has

Accepted Answer

A)  been virtually unchanged, but federal spending as a share of GDP has declined substantially. 
B)  been virtually unchanged, but federal spending as a share of GDP has increased sharply. 
C)  shifted away from national defense and toward spending on income transfers and health care. 
D)  shifted away from health care and income transfers and toward spending on national defense. 
A)  been virtually unchanged, but federal spending as a share of GDP has declined substantially. 
B)  been virtually unchanged, but federal spending as a share of GDP has increased sharply. 
C)  shifted away from national defense and toward spending on income transfers and health care. 
D)  shifted away from health care and income transfers and toward spending on national defense.

Question 4

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Accepted Answer

A)  the difference between positive and normative economics. 
B)  the fallacy of composition. 
C)  that association is not causation. 
D)  the law of unintended consequences. 
A)  the difference between positive and normative economics. 
B)  the fallacy of composition. 
C)  that association is not causation. 
D)  the law of unintended consequences.

Question 5

The private sector cost of tax revenues is equal to the

Accepted Answer

A)  tax revenue collected by government from individuals in the economy. 
B)  income that could have been earned by government employees if they had worked in the private sector. 
C)  difference between government expenditures and tax revenues. 
D)  tax revenue plus the cost of tax compliance and the excess burden of taxation. 
A)  tax revenue collected by government from individuals in the economy. 
B)  income that could have been earned by government employees if they had worked in the private sector. 
C)  difference between government expenditures and tax revenues. 
D)  tax revenue plus the cost of tax compliance and the excess burden of taxation.

Question 6

Economists use the term ceteris paribus to indicate that

Accepted Answer

A)  supply and demand are in balance. 
B)  other things are assumed to be constant. 
C)  the analysis is true for the individual but not for the economy as a whole. 
D)  their conclusions are based on normative economics rather than positive economic analysis. 
A)  supply and demand are in balance. 
B)  other things are assumed to be constant. 
C)  the analysis is true for the individual but not for the economy as a whole. 
D)  their conclusions are based on normative economics rather than positive economic analysis.

Question 7

How has the structure of the personal income tax changed and the share of taxes paid by various income groups changed in recent decades?

Accepted Answer

Compared to the 1960s and 1970s, the mar

Question 8

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Accepted Answer

A)  The higher prices that result from making them illegal results in more property theft by users to afford the drugs. 
B)  The usage of police and law enforcement resources to enforce drug laws leads to lower enforcement (and thus a higher amount) of other crimes. 
C)  Without the ability to use the legal system to enforce contracts, violence often results when one party to a drug deal does not live up to their end of the bargain, thus the amount of violence increases by making drugs illegal. 
D)  All of the above would be considered secondary effects of making drugs illegal. 
A)  The higher prices that result from making them illegal results in more property theft by users to afford the drugs. 
B)  The usage of police and law enforcement resources to enforce drug laws leads to lower enforcement (and thus a higher amount) of other crimes. 
C)  Without the ability to use the legal system to enforce contracts, violence often results when one party to a drug deal does not live up to their end of the bargain, thus the amount of violence increases by making drugs illegal. 
D)  All of the above would be considered secondary effects of making drugs illegal.

Question 9

Which of the following is true of resources?

Accepted Answer

A)  Resources are inputs used to produce goods and services. 
B)  Human resources reflect the skills and productive knowledge of human beings. 
C)  With the passage of time, investment activities can increase the availability of resources. 
D)  All of the above are true. 
A)  Resources are inputs used to produce goods and services. 
B)  Human resources reflect the skills and productive knowledge of human beings. 
C)  With the passage of time, investment activities can increase the availability of resources. 
D)  All of the above are true.

Question 10

Which of the following provides the bulk of revenue for the federal government?

Accepted Answer

A)  corporate income taxes and grants from state and local governments 
B)  personal income and payroll taxes 
C)  user charges and funds borrowed from the general public 
D)  corporate income and sales taxes 
A)  corporate income taxes and grants from state and local governments 
B)  personal income and payroll taxes 
C)  user charges and funds borrowed from the general public 
D)  corporate income and sales taxes

Question 11

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes. What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

Accepted Answer

A)  It rose to nearly 90 percent. 
B)  It rose to approximately 80 percent. 
C)  It was virtually constant at approximately 70 percent. 
D)  It fell to approximately 55 percent. 
A)  It rose to nearly 90 percent. 
B)  It rose to approximately 80 percent. 
C)  It was virtually constant at approximately 70 percent. 
D)  It fell to approximately 55 percent.

Question 12

The fallacy of composition is the fallacious view that

Accepted Answer

A)  economic activity will benefit everyone. 
B)  what is true for the individual will also be true for the group. 
C)  it is possible for the whole to be greater than the sum of the individual parts. 
D)  association does not necessarily indicate causation. 
A)  economic activity will benefit everyone. 
B)  what is true for the individual will also be true for the group. 
C)  it is possible for the whole to be greater than the sum of the individual parts. 
D)  association does not necessarily indicate causation.

Question 13

What percentage of the total government expenditures of the United States is undertaken at the federal level?

Accepted Answer

A)  Approximately 20 percent. 
B)  Approximately 40 percent. 
C)  Approximately 60 percent. 
D)  Approximately 80 percent. 
A)  Approximately 20 percent. 
B)  Approximately 40 percent. 
C)  Approximately 60 percent. 
D)  Approximately 80 percent.

Question 14

The most fundamental concept in economics is that

Accepted Answer

A)  changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive. 
B)  changes in incentives generally do not influence human behavior. 
C)  goods that are provided by government are free for society. 
D)  individuals generally do not consider other alternatives when making a choice. 
A)  changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive. 
B)  changes in incentives generally do not influence human behavior. 
C)  goods that are provided by government are free for society. 
D)  individuals generally do not consider other alternatives when making a choice.

Question 15

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

Accepted Answer

A)  charge a stand-by passenger no less than the full fare of $500. 
B)  charge a stand-by passenger less than $100. 
C)  charge a stand-by passenger more than $500. 
D)  charge a stand-by passenger more than $100. 
E)  fill the seats at the last minute for any price. 
A)  charge a stand-by passenger no less than the full fare of $500. 
B)  charge a stand-by passenger less than $100. 
C)  charge a stand-by passenger more than $500. 
D)  charge a stand-by passenger more than $100. 
E)  fill the seats at the last minute for any price.

Question 16

The economic way of thinking stresses that

Accepted Answer

A)  changes in personal costs and benefits generally do not influence human behavior. 
B)  incentives matter--when an option becomes less costly, people will be more likely to choose it. 
C)  if one individual gains from an economic activity, then someone else must lose. 
D)  goods provided by government do not consume valuable scarce resources since government activity is not part of the market economy. 
A)  changes in personal costs and benefits generally do not influence human behavior. 
B)  incentives matter--when an option becomes less costly, people will be more likely to choose it. 
C)  if one individual gains from an economic activity, then someone else must lose. 
D)  goods provided by government do not consume valuable scarce resources since government activity is not part of the market economy.

Question 17

Total government spending (federal, state, and local) sums to approximately

Accepted Answer

A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  50 percent of the U.S. economy. 
A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  50 percent of the U.S. economy.

Question 18

Economic theory indicates that, the size of government will be

Accepted Answer

A)  unrelated to economic growth. 
B)  negatively related to economic growth at all possible sizes of government. 
C)  positively related to economic growth at all possible sizes of government. 
D)  positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger. 
A)  unrelated to economic growth. 
B)  negatively related to economic growth at all possible sizes of government. 
C)  positively related to economic growth at all possible sizes of government. 
D)  positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger.

Question 19

Discuss how size of government can negatively affect economic growth.

Accepted Answer

First, higher taxes and/or additional bo

Question 20

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Accepted Answer

A)  Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B)  Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C)  Because people generally do not know which products are reviewed by these consumer magazines. 
D)  None of the above explain this behavior. 
A)  Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B)  Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C)  Because people generally do not know which products are reviewed by these consumer magazines. 
D)  None of the above explain this behavior.

Economic choice and competitive behavior are the result of

Which of the following statements is correct about the economic way of thinking?

During the last four decades, the composition of federal spending has

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

The private sector cost of tax revenues is equal to the

Economists use the term ceteris paribus to indicate that

How has the structure of the personal income tax changed and the share of taxes paid by various income groups changed in recent decades?

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Which of the following is true of resources?

Which of the following provides the bulk of revenue for the federal government?

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes. What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

The fallacy of composition is the fallacious view that

What percentage of the total government expenditures of the United States is undertaken at the federal level?

The most fundamental concept in economics is that

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

The economic way of thinking stresses that

Total government spending (federal, state, and local) sums to approximately

Economic theory indicates that, the size of government will be

Discuss how size of government can negatively affect economic growth.

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 1: The Economic Approach

Economic choice and competitive behavior are the result of

Which of the following statements is correct about the economic way of thinking?

During the last four decades, the composition of federal spending has

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

The private sector cost of tax revenues is equal to the

Economists use the term ceteris paribus to indicate that

How has the structure of the personal income tax changed and the share of taxes paid by various income groups changed in recent decades?

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Which of the following is true of resources?

Which of the following provides the bulk of revenue for the federal government?

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes. What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

The fallacy of composition is the fallacious view that

What percentage of the total government expenditures of the United States is undertaken at the federal level?

The most fundamental concept in economics is that

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

The economic way of thinking stresses that

Total government spending (federal, state, and local) sums to approximately

Economic theory indicates that, the size of government will be

Discuss how size of government can negatively affect economic growth.

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters