Question 1

Which of the following is true?

Accepted Answer

A) Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B) Government policies usually improve upon both equality and efficiency. 
C) As long as the economic pie continually gets larger, no one will have to go hungry. 
D) Efficiency and equality can both be achieved if the economic pie is cut into equal pieces. 
A) Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B) Government policies usually improve upon both equality and efficiency. 
C) As long as the economic pie continually gets larger, no one will have to go hungry. 
D) Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

Question 2

Over the past century, the average income in the United States has risen about

Accepted Answer

A) twofold. 
B) fivefold. 
C) eightfold. 
D) tenfold. 
A) twofold. 
B) fivefold. 
C) eightfold. 
D) tenfold.

Question 3

Scenario 1-1
You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of going to the movies?

Accepted Answer

$12.50 and

Question 4

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A) efficiency. 
B) equality. 
C) externalities. 
D) productivity. 
A) efficiency. 
B) equality. 
C) externalities. 
D) productivity.

Question 5

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A) the influence of labor unions in America. 
B) tariff protection imposed by the American government. 
C) the enactment of minimum-wage laws in America. 
D) the rise in American productivity. 
A) the influence of labor unions in America. 
B) tariff protection imposed by the American government. 
C) the enactment of minimum-wage laws in America. 
D) the rise in American productivity.

Question 6

When computing the opportunity cost of attending a basketball game you should include

Accepted Answer

A) the price you pay for the ticket and the value of your time. 
B) the price you pay for the ticket, but not the value of your time. 
C) the value of your time, but not the price you pay for the ticket. 
D) neither the price of the ticket nor the value of your time. 
A) the price you pay for the ticket and the value of your time. 
B) the price you pay for the ticket, but not the value of your time. 
C) the value of your time, but not the price you pay for the ticket. 
D) neither the price of the ticket nor the value of your time.

Question 7

Inflation is defined as

Accepted Answer

A) a period of rising productivity in the economy. 
B) a period of rising income in the economy. 
C) an increase in the overall level of output in the economy. 
D) an increase in the overall level of prices in the economy. 
A) a period of rising productivity in the economy. 
B) a period of rising income in the economy. 
C) an increase in the overall level of output in the economy. 
D) an increase in the overall level of prices in the economy.

Question 8

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about trade is false?

Accepted Answer

A) Trade increases competition. 
B) With trade, one country wins and one country loses. 
C) Bulgaria can benefit, potentially, from trade with any other country. 
D) Trade allows people to buy a greater variety of goods and services at lower cost. 
A) Trade increases competition. 
B) With trade, one country wins and one country loses. 
C) Bulgaria can benefit, potentially, from trade with any other country. 
D) Trade allows people to buy a greater variety of goods and services at lower cost.

Question 10

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor

Question 11

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

Accepted Answer

A) An athlete works out at a gym. 
B) A secretary smokes a cigarette in a crowded break room. 
C) A young mother pushes her baby in a stroller. 
D) A construction worker eats a hotdog during his lunch break. 
A) An athlete works out at a gym. 
B) A secretary smokes a cigarette in a crowded break room. 
C) A young mother pushes her baby in a stroller. 
D) A construction worker eats a hotdog during his lunch break.

Question 12

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Accepted Answer

A) an increase in the number of unskilled jobs available. 
B) a decrease in the number of unskilled jobs available. 
C) a decrease in the number of workers wanting unskilled jobs. 
D) None of the above is correct. 
A) an increase in the number of unskilled jobs available. 
B) a decrease in the number of unskilled jobs available. 
C) a decrease in the number of workers wanting unskilled jobs. 
D) None of the above is correct.

Question 13

The term market failure refers to

Accepted Answer

A) a situation in which the market on its own fails to allocate resources efficiently. 
B) an unsuccessful advertising campaign which reduces demand for a product. 
C) a situation in which competition among firms becomes ruthless. 
D) a firm that is forced out of business because of losses. 
A) a situation in which the market on its own fails to allocate resources efficiently. 
B) an unsuccessful advertising campaign which reduces demand for a product. 
C) a situation in which competition among firms becomes ruthless. 
D) a firm that is forced out of business because of losses.

Question 14

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Accepted Answer

A) could be due to slower money supply growth. We would expect unemployment to be higher. 
B) could be due to slower money supply growth. We would expect unemployment to be lower. 
C) could be due to higher money supply growth. We would expect unemployment to be higher. 
D) could be due to higher money supply growth. We would expect unemployment to be lower. 
A) could be due to slower money supply growth. We would expect unemployment to be higher. 
B) could be due to slower money supply growth. We would expect unemployment to be lower. 
C) could be due to higher money supply growth. We would expect unemployment to be higher. 
D) could be due to higher money supply growth. We would expect unemployment to be lower.

Question 15

Stephen is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A) He should sell the car now for $3,800. 
B) He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800. 
C) He should complete the additional work and sell the car for $5,800. 
D) It does not matter which action he takes since the outcome will be the same either way. 
A) He should sell the car now for $3,800. 
B) He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800. 
C) He should complete the additional work and sell the car for $5,800. 
D) It does not matter which action he takes since the outcome will be the same either way.

Question 16

According to Adam Smith, the success of decentralized market economies is primarily due to

Accepted Answer

A) the basic benevolence of society. 
B) society's legal system. 
C) individuals' pursuit of self-interest. 
D) partnerships that are forged between business and government. 
A) the basic benevolence of society. 
B) society's legal system. 
C) individuals' pursuit of self-interest. 
D) partnerships that are forged between business and government.

Question 17

Market power refers to the

Accepted Answer

A) power of a single person or small group to influence market prices. 
B) ability of a person or small group to successfully market new products. 
C) power of the government to regulate a market. 
D) importance of a certain market in relation to the overall economy. 
A) power of a single person or small group to influence market prices. 
B) ability of a person or small group to successfully market new products. 
C) power of the government to regulate a market. 
D) importance of a certain market in relation to the overall economy.

Question 18

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Accepted Answer

A) an increase in the number of people wanting to live in apartments in New York City. 
B) a decrease in the number of people wanting to live in apartments in New York City. 
C) an increase in the number of apartments available for rent in New York City. 
D) None of the above is correct. 
A) an increase in the number of people wanting to live in apartments in New York City. 
B) a decrease in the number of people wanting to live in apartments in New York City. 
C) an increase in the number of apartments available for rent in New York City. 
D) None of the above is correct.

Question 19

Explain the concept of externality and give an example.

Accepted Answer

The impact of one pe

Question 20

Efficiency

Accepted Answer

A) and equality both refer to how much a society can produce with its resources. 
B) and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C) refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D) refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources 
A) and equality both refer to how much a society can produce with its resources. 
B) and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C) refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D) refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources

Which of the following is true?

Over the past century, the average income in the United States has risen about

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

The historical rise in living standards of American workers is primarily a result of

When computing the opportunity cost of attending a basketball game you should include

Inflation is defined as

The business cycle refers to fluctuations in economic activity such as employment and production.

Which of the following statements about trade is false?

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

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

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

The term market failure refers to

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

According to Adam Smith, the success of decentralized market economies is primarily due to

Market power refers to the

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Explain the concept of externality and give an example.

Efficiency

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

Which of the following is true?

Over the past century, the average income in the United States has risen about

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

The historical rise in living standards of American workers is primarily a result of

When computing the opportunity cost of attending a basketball game you should include

Inflation is defined as

The business cycle refers to fluctuations in economic activity such as employment and production.

Which of the following statements about trade is false?

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

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

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

The term market failure refers to

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

According to Adam Smith, the success of decentralized market economies is primarily due to

Market power refers to the

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Explain the concept of externality and give an example.

Efficiency

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