Question 1

The terms equality and efficiency are similar in that they both refer to benefits to society.However they are different in that

Accepted Answer

A)  equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources. 
B)  equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. 
C)  equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. 
D)  equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs. 
A)  equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources. 
B)  equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. 
C)  equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. 
D)  equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.

Question 2

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A)  minimum waste 
B)  maximum benefit 
C)  sameness 
D)  efficiency 
A)  minimum waste 
B)  maximum benefit 
C)  sameness 
D)  efficiency

Question 3

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment 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

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Accepted Answer

A)  For the first 25 houses, the average cost per house was $288,000. 
B)  The marginal cost of the 26th house, if it is built, will be equal to the average cost per house. 
C)  If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it. 
D)  All of the above are correct. 
A)  For the first 25 houses, the average cost per house was $288,000. 
B)  The marginal cost of the 26th house, if it is built, will be equal to the average cost per house. 
C)  If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it. 
D)  All of the above are correct.

Question 5

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Accepted Answer

A)  automakers 
B)  pedestrians 
C)  drivers 
D)  owners of collision-repair shops 
A)  automakers 
B)  pedestrians 
C)  drivers 
D)  owners of collision-repair shops

Question 6

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Accepted Answer

A)  The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
B)  The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
C)  Only half of the cost of the parking permit is part of the opportunity cost of attending college. 
D)  The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances. 
A)  The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
B)  The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
C)  Only half of the cost of the parking permit is part of the opportunity cost of attending college. 
D)  The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.

Question 7

In response to the deep economic downturn in the US in 2008 and 2009,the US

Accepted Answer

A)  reduced taxes. 
B)  increased government spending. 
C)  increased the supply of money. 
D)  All of the above are correct. 
A)  reduced taxes. 
B)  increased government spending. 
C)  increased the supply of money. 
D)  All of the above are correct.

Question 8

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

A)  durable and nondurable goods. 
B)  imports and exports. 
C)  national defense and consumer goods. 
D)  law enforcement and agriculture. 
A)  durable and nondurable goods. 
B)  imports and exports. 
C)  national defense and consumer goods. 
D)  law enforcement and agriculture.

Question 9

Low rates of inflation are generally associated with

Accepted Answer

A)  low rates of government spending. 
B)  small or nonexistent government budget deficits. 
C)  low rates of productivity growth. 
D)  low rates of growth of the quantity of money. 
A)  low rates of government spending. 
B)  small or nonexistent government budget deficits. 
C)  low rates of productivity growth. 
D)  low rates of growth of the quantity of money.

Question 10

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)  efficiency is improved, but equality is not. 
B)  both wealthy people and poor people benefit directly. 
C)  people work less and produce fewer goods and services. 
D)  the government collects more revenue in total. 
A)  efficiency is improved, but equality is not. 
B)  both wealthy people and poor people benefit directly. 
C)  people work less and produce fewer goods and services. 
D)  the government collects more revenue in total.

Question 11

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 12

The opportunity cost of an item is

Accepted Answer

A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item. 
A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item.

Question 13

Economics is the study of how society allocates its unlimited resources.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Sophia is planning her activities for a hot summer day.She would like to go to the local swimming pool and see the latest blockbuster movie,but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity.This illustrates the basic principle that

Accepted Answer

A)  people respond to incentives. 
B)  rational people think at the margin. 
C)  people face tradeoffs. 
D)  improvements in efficiency sometimes come at the expense of equality. 
A)  people respond to incentives. 
B)  rational people think at the margin. 
C)  people face tradeoffs. 
D)  improvements in efficiency sometimes come at the expense of equality.

Question 16

Kevin is the CEO of a large firm and a homeowner who pays a landscaper to maintain his lawn rather than do it himself.Kevin has determined that he can earn more in the hour it would take him to work on his lawn than he must pay his landscaper.This scenario is an example of which principle of economics?

Accepted Answer

A)  Trade can make everyone better off. 
B)  Markets are usually a good way to organize economic activity. 
C)  Governments can sometimes improve market outcomes. 
D)  Prices rise when the government prinst too much money. 
A)  Trade can make everyone better off. 
B)  Markets are usually a good way to organize economic activity. 
C)  Governments can sometimes improve market outcomes. 
D)  Prices rise when the government prinst too much money.

Question 17

U.S.laws requiring that drivers wear seat belts have resulted in

Accepted Answer

A)  a reduction in both driver deaths and pedestrian deaths. 
B)  fewer accidents and fewer deaths per accident. 
C)  fewer driver deaths, fewer accidents and fewer pedestrian deaths. 
D)  little change in the number of driver deaths, but more accidents and more pedestrian deaths. 
A)  a reduction in both driver deaths and pedestrian deaths. 
B)  fewer accidents and fewer deaths per accident. 
C)  fewer driver deaths, fewer accidents and fewer pedestrian deaths. 
D)  little change in the number of driver deaths, but more accidents and more pedestrian deaths.

Question 18

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)  A college student buys a deck of cards to play solitaire in her dorm room. 
B)  An elderly woman plants a flower garden on the vacant lot next to her house. 
C)  An executive purchases a book to read on a business trip. 
D)  A ten-year-old uses his allowance to buy new Nike shoes. 
A)  A college student buys a deck of cards to play solitaire in her dorm room. 
B)  An elderly woman plants a flower garden on the vacant lot next to her house. 
C)  An executive purchases a book to read on a business trip. 
D)  A ten-year-old uses his allowance to buy new Nike shoes.

Question 19

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

Question 20

Which of the following is not an example of the opportunity cost of going to school?

Accepted Answer

A)  The money a student could have earned by working if he had not gone to college. 
B)  The nap a student could have enjoyed if he had not attended class. 
C)  The party a student could have enjoyed if he had not stayed in to study for his exam. 
D)  The money a student spends on rent for his apartment while attending school. 
A)  The money a student could have earned by working if he had not gone to college. 
B)  The nap a student could have enjoyed if he had not attended class. 
C)  The party a student could have enjoyed if he had not stayed in to study for his exam. 
D)  The money a student spends on rent for his apartment while attending school.

The terms equality and efficiency are similar in that they both refer to benefits to society.However they are different in that

Which of the following words and phrases best captures the notion of equality?

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

In response to the deep economic downturn in the US in 2008 and 2009,the US

Guns and butter are used to represent the classic societal tradeoff between spending on

Low rates of inflation are generally associated with

When the government redistributes income from the wealthy to the poor,

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

The opportunity cost of an item is

Economics is the study of how society allocates its unlimited resources.

To increase living standards,public policy should

U.S.laws requiring that drivers wear seat belts have resulted in

Which of these activities will most likely result in an external benefit?

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

Which of the following is not an example of the opportunity cost of going to school?

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.

Filters

Exam 1: Ten Principles of Economics.

The terms equality and efficiency are similar in that they both refer to benefits to society.However they are different in that

Which of the following words and phrases best captures the notion of equality?

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

In response to the deep economic downturn in the US in 2008 and 2009,the US

Guns and butter are used to represent the classic societal tradeoff between spending on

Low rates of inflation are generally associated with

When the government redistributes income from the wealthy to the poor,

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

The opportunity cost of an item is

Economics is the study of how society allocates its unlimited resources.

To increase living standards,public policy should

U.S.laws requiring that drivers wear seat belts have resulted in

Which of these activities will most likely result in an external benefit?

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

Which of the following is not an example of the opportunity cost of going to school?

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.

Filters