Question 1

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A) enhance equality. 
B) reduce efficiency. 
C) reduce the reward for working hard. 
D) All of the above are correct. 
A) enhance equality. 
B) reduce efficiency. 
C) reduce the reward for working hard. 
D) All of the above are correct.

Question 2

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Accepted Answer

A) trade can make everyone better off. 
B) people face trade-offs. 
C) rational people think at the margin. 
D) people respond to incentives. 
A) trade can make everyone better off. 
B) people face trade-offs. 
C) rational people think at the margin. 
D) people respond to incentives.

Question 3

Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?

Accepted Answer

A) 1 percent per year 
B) 2 percent per year 
C) 3 percent per year 
D) 4 percent per year 
A) 1 percent per year 
B) 2 percent per year 
C) 3 percent per year 
D) 4 percent per year

Question 4

Incomes of U.S. households in the 1970s and 1980s

Accepted Answer

A) grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades. 
B) grew rapidly, due to several increases in the minimum wage during those decades. 
C) grew rapidly, due to government policies that discouraged the importation of foreign products during those decades. 
D) grew slowly, due to slow growth of the output of goods and services per hour of U.S. workers' time during those decades. 
A) grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades. 
B) grew rapidly, due to several increases in the minimum wage during those decades. 
C) grew rapidly, due to government policies that discouraged the importation of foreign products during those decades. 
D) grew slowly, due to slow growth of the output of goods and services per hour of U.S. workers' time during those decades.

Question 5

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Accepted Answer

A) $32,000. 
B) $42,000. 
C) $50,000. 
D) $58,000. 
A) $32,000. 
B) $42,000. 
C) $50,000. 
D) $58,000.

Question 6

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. A customer is willing to pay $60 for the 601st heart rate monitor. Should the company produce and sell it? Explain.

Accepted Answer

No, because the marg

Question 7

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 8

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

Accepted Answer

A) how much she spent applying to Northwestern, and the difference between living expenses at Northwestern and the other university 
B) how much she spent applying to Northwestern, but not the difference between living expenses at Northwestern and the other university 
C) the difference between living expenses at Northwestern and her second choice, but not how much she spent applying to Northwestern 
D) neither how much she spent applying to Northwestern nor the difference between living expenses at Northwestern and her second choice 
A) how much she spent applying to Northwestern, and the difference between living expenses at Northwestern and the other university 
B) how much she spent applying to Northwestern, but not the difference between living expenses at Northwestern and the other university 
C) the difference between living expenses at Northwestern and her second choice, but not how much she spent applying to Northwestern 
D) neither how much she spent applying to Northwestern nor the difference between living expenses at Northwestern and her second choice

Question 9

What does the "invisible hand" refers to?

Accepted Answer

How the decisions of

Question 10

Consider Larry's decision to go to college. If he goes to college, he will spend a total of $120,000 on tuition, $30,000 on room and board, and $3,500 on books over four years. If he does not go to college, he will earn $30,000 annually working in a store and spend $7,000 on room and board each year. Larry's cost of going to college is

Accepted Answer

A) $123,500. 
B) $153,500. 
C) $190,500 
D) $245,500 
A) $123,500. 
B) $153,500. 
C) $190,500 
D) $245,500

Question 11

Scenario 1-5
Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-5. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo

Question 12

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 13

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Accepted Answer

A) even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Maureen's incentive to attend college. 
B) even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Maureen's incentive to attend college. 
C) only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college. 
D) only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen's incentive to attend college. 
A) even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Maureen's incentive to attend college. 
B) even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Maureen's incentive to attend college. 
C) only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college. 
D) only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen's incentive to attend college.

Question 14

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A) market. 
B) consumer. 
C) producer. 
D) economy. 
A) market. 
B) consumer. 
C) producer. 
D) economy.

Question 15

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Accepted Answer

A) For the first 30 houses, the average cost per house was $250,000. 
B) The marginal cost of the 31st house, if it is built, will be $260,000. 
C) If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it. 
D) All of the above are correct. 
A) For the first 30 houses, the average cost per house was $250,000. 
B) The marginal cost of the 31st house, if it is built, will be $260,000. 
C) If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it. 
D) All of the above are correct.

Question 16

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A) inflation 
B) unemployment 
C) both inflation and unemployment 
D) neither inflation nor unemployment 
A) inflation 
B) unemployment 
C) both inflation and unemployment 
D) neither inflation nor unemployment

Question 17

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 18

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

Accepted Answer

A) worker productivity in Bangladesh is higher than in India. 
B) the standard of living will likely be higher in India than in Bangladesh. 
C) productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D) there will be no difference between the standard of living in India and Bangladesh. 
A) worker productivity in Bangladesh is higher than in India. 
B) the standard of living will likely be higher in India than in Bangladesh. 
C) productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D) there will be no difference between the standard of living in India and Bangladesh.

Question 19

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

Accepted Answer

A) the value to Barb of the option she would have chosen had Option B not been available. 
B) the value to Barb of Options A, C and D combined. 
C) the average of the values to Barb of Options A, C, and D. 
D) $100. 
A) the value to Barb of the option she would have chosen had Option B not been available. 
B) the value to Barb of Options A, C and D combined. 
C) the average of the values to Barb of Options A, C, and D. 
D) $100.

Question 20

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Accepted Answer

A) market power caused by a change in the country's standard of living. 
B) market power caused by a single firm controlling the newspaper production. 
C) inflation caused by increased productivity in the economy. 
D) inflation caused by an increase in the quantity of money in the economy. 
A) market power caused by a change in the country's standard of living. 
B) market power caused by a single firm controlling the newspaper production. 
C) inflation caused by increased productivity in the economy. 
D) inflation caused by an increase in the quantity of money in the economy.

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?

Incomes of U.S. households in the 1970s and 1980s

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

What does the "invisible hand" refers to?

The invisible hand ensures that economic prosperity is distributed equally.

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

The English word that comes from the Greek word for "one who manages a household" is

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31^st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Scarcity means that there is less of a good or resource available than people wish to have.

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

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

Exam 1: Ten Principles of Economics

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?

Incomes of U.S. households in the 1970s and 1980s

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

What does the "invisible hand" refers to?

The invisible hand ensures that economic prosperity is distributed equally.

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

The English word that comes from the Greek word for "one who manages a household" is

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Scarcity means that there is less of a good or resource available than people wish to have.

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

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

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31^st house, its total cost will increase to $7.76 million. Which of the following statements is correct?