Question 1

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Accepted Answer

A) "unimportant." 
B) "slow." 
C) "edge." 
D) "irrational." 
A) "unimportant." 
B) "slow." 
C) "edge." 
D) "irrational."

Question 2

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

A) 10% 
B) 40% 
C) 85% 
D) 100% 
A) 10% 
B) 40% 
C) 85% 
D) 100%

Question 3

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Accepted Answer

A) $0. 
B) $15. 
C) $305. 
D) $315. 
A) $0. 
B) $15. 
C) $305. 
D) $315.

Question 4

Which of the following is an example of something economists study?

Accepted Answer

A) Mitch chooses to work overtime to earn extra income for his family. 
B) Megan sells her physics textbook from last semester to her roommate for half the price of a new textbook. 
C) The unemployment rate in the United States has fallen by two percentage points in the last few years. 
D) All of the above are correct. 
A) Mitch chooses to work overtime to earn extra income for his family. 
B) Megan sells her physics textbook from last semester to her roommate for half the price of a new textbook. 
C) The unemployment rate in the United States has fallen by two percentage points in the last few years. 
D) All of the above are correct.

Question 5

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Accepted Answer

A) an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
B) an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
C) a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
D) a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
A) an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
B) an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
C) a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
D) a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.

Question 6

If Switzerland chooses to engage in trade, it

Accepted Answer

A) will only benefit if it trades with countries that produce goods Switzerland cannot produce. 
B) cannot benefit if it trades with less developed countries. 
C) should first attempt to produce the good itself. 
D) can benefit by trading with any other country. 
A) will only benefit if it trades with countries that produce goods Switzerland cannot produce. 
B) cannot benefit if it trades with less developed countries. 
C) should first attempt to produce the good itself. 
D) can benefit by trading with any other country.

Question 7

To increase living standards, public policy should

Accepted Answer

A) ensure that workers are well educated and have the necessary tools and technology. 
B) make unemployment benefits more generous. 
C) move workers into jobs directly from high school. 
D) ensure a greater degree of equality, taking all income-earners into account. 
A) ensure that workers are well educated and have the necessary tools and technology. 
B) make unemployment benefits more generous. 
C) move workers into jobs directly from high school. 
D) ensure a greater degree of equality, taking all income-earners into account.

Question 8

In the short run, which of the following is not correct?

Accepted Answer

A) Increasing the money supply increases the demand for goods and services. 
B) Increasing the money supply encourages firms to hire more workers. 
C) Lowering the money supply leads to a higher level of unemployment. 
D) Policies that encourage higher employment will also induce a lower rate of inflation. 
A) Increasing the money supply increases the demand for goods and services. 
B) Increasing the money supply encourages firms to hire more workers. 
C) Lowering the money supply leads to a higher level of unemployment. 
D) Policies that encourage higher employment will also induce a lower rate of inflation.

Question 9

College-age athletes who drop out of college to play professional sports

Accepted Answer

A) are not rational decision makers. 
B) are well aware that their opportunity cost of attending college is very high. 
C) are concerned more about present circumstances than their future. 
D) underestimate the value of a college education. 
A) are not rational decision makers. 
B) are well aware that their opportunity cost of attending college is very high. 
C) are concerned more about present circumstances than their future. 
D) underestimate the value of a college education.

Question 10

The phenomenon of scarcity stems from the fact that

Accepted Answer

A) most economies' production methods are not very good. 
B) in most economies, wealthy people consume disproportionate quantities of goods and services. 
C) governments restrict production of too many goods and services. 
D) resources are limited. 
A) most economies' production methods are not very good. 
B) in most economies, wealthy people consume disproportionate quantities of goods and services. 
C) governments restrict production of too many goods and services. 
D) resources are limited.

Question 11

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Accepted Answer

A) the value of a good to society, but not the cost of making it. 
B) the cost of making a good to society, but not its value. 
C) both the value of a good to society and the cost of making it. 
D) neither the value of a good to society nor the cost of making it. 
A) the value of a good to society, but not the cost of making it. 
B) the cost of making a good to society, but not its value. 
C) both the value of a good to society and the cost of making it. 
D) neither the value of a good to society nor the cost of making it.

Question 12

Give an example of government intervention that is intended to improve equality.

Accepted Answer

The income

Question 13

Which of these activities will most likely result in an external benefit?

Accepted Answer

A) Ted purchases a dilapidated house and cleans up the yard and exterior of the house. 
B) Tim purchases an iPhone and downloads new apps. 
C) Terri purchases a new SUV and drives it to work every day. 
D) Thomas purchases a suit and wears it on his interviews. 
A) Ted purchases a dilapidated house and cleans up the yard and exterior of the house. 
B) Tim purchases an iPhone and downloads new apps. 
C) Terri purchases a new SUV and drives it to work every day. 
D) Thomas purchases a suit and wears it on his interviews.

Question 14

When society gets the most it can from its scarce resources, then the outcome is called

Accepted Answer

A) equitable. 
B) efficient. 
C) normal. 
D) efficacious. 
A) equitable. 
B) efficient. 
C) normal. 
D) efficacious.

Question 15

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?

Accepted Answer

A) Inflation fell and unemployment fell. 
B) Inflation and unemployment were both unaffected. 
C) Inflation fell and unemployment increased. 
D) Inflation fell and unemployment was unchanged. 
A) Inflation fell and unemployment fell. 
B) Inflation and unemployment were both unaffected. 
C) Inflation fell and unemployment increased. 
D) Inflation fell and unemployment was unchanged.

Question 16

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Zack quits his job at a consulting...

Question 17

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Accepted Answer

A) True 
 B)False

Question 18

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Accepted Answer

A) worried about inflation. 
B) worried about unemployment. 
C) hoping to increase the demand for goods and services. 
D) worried that the economy is growing too slowly. 
A) worried about inflation. 
B) worried about unemployment. 
C) hoping to increase the demand for goods and services. 
D) worried that the economy is growing too slowly.

Question 19

Inflation is the primary determinant of a country's living standards.

Accepted Answer

A) True 
 B)False

Question 20

Equality means distributing society's resources in the most efficient manner.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Approximately what percentage of the world's economies experience scarcity?

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Which of the following is an example of something economists study?

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

If Switzerland chooses to engage in trade, it

To increase living standards, public policy should

In the short run, which of the following is not correct?

College-age athletes who drop out of college to play professional sports

The phenomenon of scarcity stems from the fact that

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Give an example of government intervention that is intended to improve equality.

Which of these activities will most likely result in an external benefit?

When society gets the most it can from its scarce resources, then the outcome is called

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Inflation is the primary determinant of a country's living standards.

Equality means distributing society's resources in the most efficient manner.

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

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.