Question 1

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

Accepted Answer

A) only Sam is made better off by trade. 
B) only Annie is made better off by trade. 
C) both Sam and Annie are made better off by trade. 
D) neither Sam nor Annie are made better off by trade. 
A) only Sam is made better off by trade. 
B) only Annie is made better off by trade. 
C) both Sam and Annie are made better off by trade. 
D) neither Sam nor Annie are made better off by trade.

Question 2

Consider Paul's decision to go to college. If he goes to college, he will spend $90,000 on tuition, $15,000 on room and board, and $7,000 on books. If he does not go to college, he will earn $22,000 working at a construction job and he will spend $11,000 on room and board. Paul's cost of going to college is

Accepted Answer

A) $96,000. 
B) $110,000. 
C) $114,000. 
D) $123,000. 
A) $96,000. 
B) $110,000. 
C) $114,000. 
D) $123,000.

Question 3

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Accepted Answer

A) The average American purchases more televisions than the average Nigerian. 
B) The average American has better nutrition and healthcare than the average Nigerian. 
C) The average American has a longer life expectancy than the average Nigerian. 
D) All of the above are correct. 
A) The average American purchases more televisions than the average Nigerian. 
B) The average American has better nutrition and healthcare than the average Nigerian. 
C) The average American has a longer life expectancy than the average Nigerian. 
D) All of the above are correct.

Question 4

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A) Michelle can attend the concert only if she takes her sister with her. 
B) Michael is hungry and homeless. 
C) Andrea must repair the tire on her bike before she can ride it to class. 
D) Dani must decide between going to Florida or Brazil for spring break. 
A) Michelle can attend the concert only if she takes her sister with her. 
B) Michael is hungry and homeless. 
C) Andrea must repair the tire on her bike before she can ride it to class. 
D) Dani must decide between going to Florida or Brazil for spring break.

Question 5

What is another word for "marginal"?

Accepted Answer

incrementa

Question 6

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Accepted Answer

A) not emit any pollution so as to avoid the entire cost of the pollution. 
B) emit lower levels of pollution. 
C) emit an acceptable level of pollution. 
D) emit too much pollution. 
A) not emit any pollution so as to avoid the entire cost of the pollution. 
B) emit lower levels of pollution. 
C) emit an acceptable level of pollution. 
D) emit too much pollution.

Question 7

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 8

In considering how to allocate its scarce resources among its various members, a household considers

Accepted Answer

A) each member's abilities. 
B) each member's efforts. 
C) each member's desires. 
D) All of the above are correct. 
A) each member's abilities. 
B) each member's efforts. 
C) each member's desires. 
D) All of the above are correct.

Question 9

The tradeoff between inflation and unemployment

Accepted Answer

A) implies that policies designed to reduce unemployment also reduce inflation. 
B) was eliminated by improved economic policies in the 1900s. 
C) is a long-run tradeoff, persisting for decades, according to most economists. 
D) None of the above are correct. 
A) implies that policies designed to reduce unemployment also reduce inflation. 
B) was eliminated by improved economic policies in the 1900s. 
C) is a long-run tradeoff, persisting for decades, according to most economists. 
D) None of the above are correct.

Question 10

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

Accepted Answer

A) the quantity of money 
B) the level of unemployment 
C) productivity 
D) equality 
A) the quantity of money 
B) the level of unemployment 
C) productivity 
D) equality

Question 11

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Accepted Answer

A) True 
 B)False

Question 12

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Accepted Answer

A) cost of leaving was greater than the marginal benefit. 
B) benefit of leaving was greater than the marginal cost. 
C) benefit of teaching was greater than the marginal cost. 
D) All of the above are correct. 
A) cost of leaving was greater than the marginal benefit. 
B) benefit of leaving was greater than the marginal cost. 
C) benefit of teaching was greater than the marginal cost. 
D) All of the above are correct.

Question 13

The "invisible hand" influences market behavior through trade.​

Accepted Answer

A) True 
 B)False

Question 14

A direct or positive relationship exists between a country's

Accepted Answer

A) productivity and its standard of living. 
B) amount of government spending and its productivity. 
C) total population and its average citizen's income. 
D) rate of population growth and the extent of its trade with other countries. 
A) productivity and its standard of living. 
B) amount of government spending and its productivity. 
C) total population and its average citizen's income. 
D) rate of population growth and the extent of its trade with other countries.

Question 15

Which of the following is an important cause of inflation in an economy?

Accepted Answer

A) increases in productivity in the economy 
B) the influence of positive externalities on the economy 
C) lack of property rights in the economy 
D) growth in the quantity of money in the economy 
A) increases in productivity in the economy 
B) the influence of positive externalities on the economy 
C) lack of property rights in the economy 
D) growth in the quantity of money in the economy

Question 16

Economists use the word equality to describe a situation in which

Accepted Answer

A) each member of society has the same income. 
B) each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C) society is getting the maximum benefits from its scarce resources. 
D) society's resources are used efficiently. 
A) each member of society has the same income. 
B) each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C) society is getting the maximum benefits from its scarce resources. 
D) society's resources are used efficiently.

Question 17

Which of the following statements does not apply to a market economy?

Accepted Answer

A) Firms decide whom to hire and what to produce. 
B) The "invisible hand" usually maximizes the income of society as a whole. 
C) Households decide which firms to work for and what to buy with their incomes. 
D) Government policies are the primary forces that guide the decisions of firms and households. 
A) Firms decide whom to hire and what to produce. 
B) The "invisible hand" usually maximizes the income of society as a whole. 
C) Households decide which firms to work for and what to buy with their incomes. 
D) Government policies are the primary forces that guide the decisions of firms and households.

Question 18

The cost of an action is measured in terms of foregone opportunities.

Accepted Answer

A) True 
 B)False

Question 19

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker

Accepted Answer

A) decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B) increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C) decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D) increased between 1998 and 2008, so we would expect inflation to have increased accordingly. 
A) decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B) increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C) decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D) increased between 1998 and 2008, so we would expect inflation to have increased accordingly.

Question 20

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

What is another word for "marginal"?

If an electric power plant does not bear the entire cost of the pollution it emits, it will

With careful planning, we can usually get something that we like without having to give up something else that we like.

In considering how to allocate its scarce resources among its various members, a household considers

The tradeoff between inflation and unemployment

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

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

The "invisible hand" influences market behavior through trade.​

A direct or positive relationship exists between a country's

Which of the following is an important cause of inflation in an economy?

Economists use the word equality to describe a situation in which

Which of the following statements does not apply to a market economy?

The cost of an action is measured in terms of foregone opportunities.

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

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 "invisible hand" influences market behavior through trade.