Question 1

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A) only the values that society places on those products. 
B) only the costs to society of producing those products. 
C) both the values that society places on those products and the costs to society of producing those products. 
D) none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair." 
A) only the values that society places on those products. 
B) only the costs to society of producing those products. 
C) both the values that society places on those products and the costs to society of producing those products. 
D) none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."

Question 2

Which of the following is the primary cause of inflation?

Accepted Answer

A) an increase in the quantity of money 
B) an increase in government spending 
C) an increase in unemployment 
D) an increase in productivity 
A) an increase in the quantity of money 
B) an increase in government spending 
C) an increase in unemployment 
D) an increase in productivity

Question 3

Which of these activities will most likely impose an external cost?

Accepted Answer

A) Betty plants flowers in her garden. 
B) Bonnie gets a flu vaccine. 
C) Bridget drives her car after having too much alcohol to drink. 
D) Becky buys a new flat screen television. 
A) Betty plants flowers in her garden. 
B) Bonnie gets a flu vaccine. 
C) Bridget drives her car after having too much alcohol to drink. 
D) Becky buys a new flat screen television.

Question 4

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A) Melissa needs to pay her rent and her electric bill. 
B) Kevin must choose between buying a new flat screen television and buying his textbooks for this semester. 
C) Robert must decide between studying for his psychology exam and working at his part-time job. 
D) Lisa can spend her money on a new smart phone or on a weekend trip. 
A) Melissa needs to pay her rent and her electric bill. 
B) Kevin must choose between buying a new flat screen television and buying his textbooks for this semester. 
C) Robert must decide between studying for his psychology exam and working at his part-time job. 
D) Lisa can spend her money on a new smart phone or on a weekend trip.

Question 5

The study of how society manages its scarce resources is most closely associated with which field of study?

Accepted Answer

A) environmental studies 
B) economics 
C) management 
D) accounting 
A) environmental studies 
B) economics 
C) management 
D) accounting

Question 6

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the company's average cost?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 7

A rational decisionmaker takes an action if and only if

Accepted Answer

A) the marginal benefit of the action exceeds the marginal cost of the action. 
B) the marginal cost of the action exceeds the marginal benefit of the action. 
C) the marginal cost of the action is zero. 
D) the opportunity cost of the action is zero. 
A) the marginal benefit of the action exceeds the marginal cost of the action. 
B) the marginal cost of the action exceeds the marginal benefit of the action. 
C) the marginal cost of the action is zero. 
D) the opportunity cost of the action is zero.

Question 8

Fundamentally, economics deals with

Accepted Answer

A) scarcity. 
B) money. 
C) poverty. 
D) banking. 
A) scarcity. 
B) money. 
C) poverty. 
D) banking.

Question 9

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 10

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Accepted Answer

A) For the first 24 houses, the average cost per house was $205,000. 
B) The marginal cost of the 25th house, if it is built, will equal $250,000. 
C) If the company can sell the 25th house for at least $202,000, then it should build it. 
D) All of the above are correct. 
A) For the first 24 houses, the average cost per house was $205,000. 
B) The marginal cost of the 25th house, if it is built, will equal $250,000. 
C) If the company can sell the 25th house for at least $202,000, then it should build it. 
D) All of the above are correct.

Question 11

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the company's average cost?

Accepted Answer

The answer of Scenario 1-6
It costs a company $30,000 to...

Question 12

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A) the success of labor unions. 
B) minimum-wage laws. 
C) improvements in productivity. 
D) None of the above are correct. 
A) the success of labor unions. 
B) minimum-wage laws. 
C) improvements in productivity. 
D) None of the above are correct.

Question 13

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A) opportunity cost. 
B) productivity. 
C) externality. 
D) marginal benefit. 
A) opportunity cost. 
B) productivity. 
C) externality. 
D) marginal benefit.

Question 14

Which of the following is a principle concerning how people interact?

Accepted Answer

A) Markets are usually a good way to organize economic activity. 
B) Rational people think at the margin. 
C) People respond to incentives. 
D) All of the above are correct. 
A) Markets are usually a good way to organize economic activity. 
B) Rational people think at the margin. 
C) People respond to incentives. 
D) All of the above are correct.

Question 15

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of going to the movies?

Accepted Answer

The answer of Scenario 1-2
Suppose that you have a choice...

Question 16

What is the most important factor that explains differences in living standards among countries?

Accepted Answer

A) labor unions 
B) minimum wage laws 
C) productivity 
D) efficiency 
A) labor unions 
B) minimum wage laws 
C) productivity 
D) efficiency

Question 17

For markets to work well, there must be

Accepted Answer

A) market power. 
B) a central planner. 
C) property rights. 
D) abundant, not scarce, resources. 
A) market power. 
B) a central planner. 
C) property rights. 
D) abundant, not scarce, resources.

Question 18

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Accepted Answer

A) increase efficiency and increase equality. 
B) increase efficiency but decrease equality. 
C) decrease efficiency but increase equality. 
D) decrease efficiency and decrease equality. 
A) increase efficiency and increase equality. 
B) increase efficiency but decrease equality. 
C) decrease efficiency but increase equality. 
D) decrease efficiency and decrease equality.

Question 19

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation, the government may c

Question 20

Which of the following is not an example of the opportunity cost of going to school?

Accepted Answer

A) The money a student could have earned by working if he had not gone to college. 
B) The nap a student could have enjoyed if he had not attended class. 
C) The party a student could have enjoyed if he had not stayed in to study for his exam. 
D) The money a student spends on rent for his apartment while attending school. 
A) The money a student could have earned by working if he had not gone to college. 
B) The nap a student could have enjoyed if he had not attended class. 
C) The party a student could have enjoyed if he had not stayed in to study for his exam. 
D) The money a student spends on rent for his apartment while attending school.

Exam 1: Ten Principles of Economics

When the "invisible hand" guides economic activity, prices of products reflect

Which of the following is the primary cause of inflation?

Which of these activities will most likely impose an external cost?

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

The study of how society manages its scarce resources is most closely associated with which field of study?

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's average cost?

A rational decisionmaker takes an action if and only if

Fundamentally, economics deals with

Trade with any nation can be mutually beneficial.

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Scenario 1-6 It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. -Refer to Scenario 1-6. What is the company's average cost?

The increase in living standards of American workers over the past century is primarily due to

The amount of goods and services produced from each unit of labor input is called

Which of the following is a principle concerning how people interact?

What is the most important factor that explains differences in living standards among countries?

For markets to work well, there must be

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Which of the following is not an example of the opportunity cost of going to school?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25^th house, its total cost will increase to $5.05 million. Which of the following statements is correct?