Question 1

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Accepted Answer

A)  the invisible hand. 
B)  market power. 
C)  government intervention. 
D)  oikonomos. 
A)  the invisible hand. 
B)  market power. 
C)  government intervention. 
D)  oikonomos.

Question 2

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

Question 3

Both the production of goods and services and the unemployment rate are used to measure

Accepted Answer

A)  the business cycle. 
B)  productivity. 
C)  the interest rate. 
D)  inflation. 
A)  the business cycle. 
B)  productivity. 
C)  the interest rate. 
D)  inflation.

Question 4

If wages for accountants rose,then accountants' leisure time would have a lower opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

Resources are

Accepted Answer

A)  scarce for households but plentiful for economies. 
B)  plentiful for households but scarce for economies. 
C)  scarce for households and scarce for economies. 
D)  plentiful for households and plentiful for economies. 
A)  scarce for households but plentiful for economies. 
B)  plentiful for households but scarce for economies. 
C)  scarce for households and scarce for economies. 
D)  plentiful for households and plentiful for economies.

Question 6

High-school athletes who skip college to become professional athletes

Accepted Answer

A)  obviously do not understand the value of a college education. 
B)  usually do so because they cannot get into college. 
C)  understand that the opportunity cost of attending college is very high. 
D)  are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes. 
A)  obviously do not understand the value of a college education. 
B)  usually do so because they cannot get into college. 
C)  understand that the opportunity cost of attending college is very high. 
D)  are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.

Question 7

The primary determinant of a country's standard of living is

Accepted Answer

A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force. 
A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force.

Question 8

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation,the government may ch

Question 9

Trade between the United States and India

Accepted Answer

A)  benefits both the United States and India. 
B)  is a losing proposition for the United States because India has cheaper labor. 
C)  is a losing proposition for India because capital is much more abundant in the U.S. than in India. 
D)  is a losing proposition for India because U.S. workers are more productive. 
A)  benefits both the United States and India. 
B)  is a losing proposition for the United States because India has cheaper labor. 
C)  is a losing proposition for India because capital is much more abundant in the U.S. than in India. 
D)  is a losing proposition for India because U.S. workers are more productive.

Question 10

Which of the following is not an example of scarcity?

Accepted Answer

A)  Only some people can afford to buy a Ferrari. 
B)  Every individual in society cannot attain the highest standard of living to which he or she might aspire. 
C)  Doug has an unlimited supply of apples in his orchard. 
D)  Each member of a household cannot get everything he or she wants. 
A)  Only some people can afford to buy a Ferrari. 
B)  Every individual in society cannot attain the highest standard of living to which he or she might aspire. 
C)  Doug has an unlimited supply of apples in his orchard. 
D)  Each member of a household cannot get everything he or she wants.

Question 11

Olivia was accepted to Notre Dame and another college.She is trying to decide where to go.Which of the following should she include in making her decision?

Accepted Answer

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

Question 12

When calculating the cost of college,which of the following should you probably include?

Accepted Answer

A)  The cost of your meal plan for the cafeteria. 
B)  The cost of books required for college classes 
C)  The income you earn at your part-time job. 
D)  The cost of living in the dormitory. 
A)  The cost of your meal plan for the cafeteria. 
B)  The cost of books required for college classes 
C)  The income you earn at your part-time job. 
D)  The cost of living in the dormitory.

Question 13

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 14

The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

Accepted Answer

A) True 
 B)False

Question 15

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 16

If the United States decides to trade with Mexico,we know that

Accepted Answer

A)  Mexico will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Mexico because workers in the United States are more productive. 
C)  Mexico and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast. 
A)  Mexico will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Mexico because workers in the United States are more productive. 
C)  Mexico and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast.

Question 17

If the average cost of transporting a passenger on the train from Chicago to St.Louis is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 18

The basic principles of economics suggest that

Accepted Answer

A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct. 
A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct.

Question 19

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 20

Rational people make decisions at the margin by

Accepted Answer

A)  following marginal traditions. 
B)  behaving in a random fashion. 
C)  thinking in black-and-white terms. 
D)  comparing marginal costs and marginal benefits. 
A)  following marginal traditions. 
B)  behaving in a random fashion. 
C)  thinking in black-and-white terms. 
D)  comparing marginal costs and marginal benefits.

Exam 1: Ten Principles of Economics.

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

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.

Both the production of goods and services and the unemployment rate are used to measure

If wages for accountants rose,then accountants' leisure time would have a lower opportunity cost.

Resources are

High-school athletes who skip college to become professional athletes

The primary determinant of a country's standard of living is

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Trade between the United States and India

Which of the following is not an example of scarcity?

Olivia was accepted to Notre Dame and another college.She is trying to decide where to go.Which of the following should she include in making her decision?

When calculating the cost of college,which of the following should you probably include?

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

To improve living standards,policymakers should

If the United States decides to trade with Mexico,we know that

If the average cost of transporting a passenger on the train from Chicago to St.Louis is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

The basic principles of economics suggest that

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

Rational people make decisions at the margin by

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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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