Question 1

A rational decision maker takes an action only if the

Accepted Answer

A) marginal benefit is less than the marginal cost. 
B) marginal benefit is greater than the marginal cost. 
C) average benefit is greater than the average cost. 
D) marginal benefit is greater than both the average cost and the marginal cost. 
A) marginal benefit is less than the marginal cost. 
B) marginal benefit is greater than the marginal cost. 
C) average benefit is greater than the average cost. 
D) marginal benefit is greater than both the average cost and the marginal cost.

Question 2

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 3

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 4

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

Accepted Answer

A) Your full room-and-board expenses should always be included. 
B) None of your room-and-board expenses should ever be included. 
C) You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D) You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. 
A) Your full room-and-board expenses should always be included. 
B) None of your room-and-board expenses should ever be included. 
C) You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D) You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.

Question 5

To improve living standards, policymakers should

Accepted Answer

A) impose restrictions on foreign competition. 
B) formulate policies designed to increase productivity. 
C) impose tougher immigration policies. 
D) provide tax breaks for the middle class. 
A) impose restrictions on foreign competition. 
B) formulate policies designed to increase productivity. 
C) impose tougher immigration policies. 
D) provide tax breaks for the middle class.

Question 6

In the short-run, society faces a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 7

One reason we need government, even in a market economy, is that

Accepted Answer

A) there is insufficient market power in the absence of government. 
B) property rights are too strong in the absence of government. 
C) the invisible hand is not perfect. 
D) Both a and b are correct. 
A) there is insufficient market power in the absence of government. 
B) property rights are too strong in the absence of government. 
C) the invisible hand is not perfect. 
D) Both a and b are correct.

Question 8

Market failure can be caused by

Accepted Answer

A) low consumer demand. 
B) equilibrium prices. 
C) externalities and market power. 
D) high prices and foreign competition. 
A) low consumer demand. 
B) equilibrium prices. 
C) externalities and market power. 
D) high prices and foreign competition.

Question 9

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

Question 10

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

Accepted Answer

The answer of Economists use the term ______ to refer...

Question 11

The "invisible hand" refers to

Accepted Answer

A) the government. 
B) the free market. 
C) central planners. 
D) large businesses. 
A) the government. 
B) the free market. 
C) central planners. 
D) large businesses.

Question 12

Causes of market failure include

Accepted Answer

A) externalities and market power. 
B) market power and incorrect forecasts of consumer demand. 
C) externalities and foreign competition. 
D) incorrect forecasts of consumer demand and foreign competition. 
A) externalities and market power. 
B) market power and incorrect forecasts of consumer demand. 
C) externalities and foreign competition. 
D) incorrect forecasts of consumer demand and foreign competition.

Question 13

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of

Accepted Answer

A) a market failure caused by an externality. 
B) a market failure caused by market power. 
C) a market failure caused by equality. 
D) There is no market failure in this case. 
A) a market failure caused by an externality. 
B) a market failure caused by market power. 
C) a market failure caused by equality. 
D) There is no market failure in this case.

Question 14

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Question 15

What are the two short-run effects of increasing the quantity of nation's money?

Accepted Answer

Higher inf

Question 16

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 studying economics?

Accepted Answer

The enjoyment you wo

Question 17

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 18

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 19

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 20

The marginal benefit Susie gets from purchasing a third pair of gloves is

Accepted Answer

A) the same as the total benefit she gets from purchasing three pairs of gloves. 
B) more than the marginal cost of purchasing the third pair of gloves. 
C) the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves. 
D) the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves. 
A) the same as the total benefit she gets from purchasing three pairs of gloves. 
B) more than the marginal cost of purchasing the third pair of gloves. 
C) the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves. 
D) the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.

Exam 1: Ten Principles of Economics

A rational decision maker takes an action only if the

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

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

To improve living standards, policymakers should

In the short-run, society faces a tradeoff between inflation and unemployment.

One reason we need government, even in a market economy, is that

Market failure can be caused by

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

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

The "invisible hand" refers to

Causes of market failure include

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

What are the two short-run effects of increasing the quantity of nation's money?

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

To increase living standards, public policy should

The marginal benefit Susie gets from purchasing a third pair of gloves is

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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