Question 1

In the market for factors of production, firms earn income by selling goods and services to households.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is motivated by an equity concern?

Accepted Answer

A) Some states have transferred funds to food bank programs in order to increase benefits to lower-income families. 
B) Following the implementation of subsidies for energy conservation, household demand for rooftop solar panels increased quite significantly in California. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The United States offers patent protection to pharmaceutical manufacturers to prevent others from duplicating their products. 
A) Some states have transferred funds to food bank programs in order to increase benefits to lower-income families. 
B) Following the implementation of subsidies for energy conservation, household demand for rooftop solar panels increased quite significantly in California. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The United States offers patent protection to pharmaceutical manufacturers to prevent others from duplicating their products.

Question 3

Explain the economic idea that "people respond to incentives."

Accepted Answer

Human beings act from a variety of motiv

Question 4

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Accepted Answer

Productive efficiency is an efficiency c

Question 5

Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for? 
A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for?

Question 6

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Accepted Answer

A) zero, since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents 
A) zero, since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents

Question 8

Which of the following statements about competition in a market is true?

Accepted Answer

A) Competition forces firms to outsource the production of their labor-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production. 
A) Competition forces firms to outsource the production of their labor-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production.

Question 9

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively, he can sell the machine "as is" now for $1,000.What is the marginal cost of completing the task?

Accepted Answer

A) $300 
B) $800 
C) $1,100 
D) $1,400 
A) $300 
B) $800 
C) $1,100 
D) $1,400

Question 10

What is a marginal cost?

Accepted Answer

Marginal cost is the

Question 11

How are most fundamental economic decisions now determined in China?

Accepted Answer

A) Individuals, firms, and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because China is a centrally planned economy. 
D) The United Nations decides because China is a developing economy. 
A) Individuals, firms, and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because China is a centrally planned economy. 
D) The United Nations decides because China is a developing economy.

Question 12

All centrally planned economies

Accepted Answer

A) have been political dictatorships. 
B) started out as market economies. 
C) began as mixed economies. 
D) have become mixed economies. 
A) have been political dictatorships. 
B) started out as market economies. 
C) began as mixed economies. 
D) have become mixed economies.

Question 13

What is opportunity cost?

Accepted Answer

Opportunity cost refers to the highest-v

Question 14

Which of the following is a microeconomics question?

Accepted Answer

A) Why do economies experience periods of high inflation? 
B) Will Federal Reserve intervention lower the inflation rate? 
C) Why has growth in the economy increased since the end of the recession? 
D) Will the merger of American Airlines and US Airways increase or decrease airfares? 
A) Why do economies experience periods of high inflation? 
B) Will Federal Reserve intervention lower the inflation rate? 
C) Why has growth in the economy increased since the end of the recession? 
D) Will the merger of American Airlines and US Airways increase or decrease airfares?

Question 15

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

Accepted Answer

A) allocatively efficient. 
B) productively efficient. 
C) guaranteed to make a profit. 
D) all of the above 
A) allocatively efficient. 
B) productively efficient. 
C) guaranteed to make a profit. 
D) all of the above

Question 16

Which of the following statements about scarcity is true?

Accepted Answer

A) Scarcity refers to the situation in which unlimited wants exceed limited resources. 
B) Scarcity is not a problem for the wealthy. 
C) Scarcity is only a problem when a country has too large a population. 
D) Scarcity only arises when there is a wide disparity in income distribution. 
A) Scarcity refers to the situation in which unlimited wants exceed limited resources. 
B) Scarcity is not a problem for the wealthy. 
C) Scarcity is only a problem when a country has too large a population. 
D) Scarcity only arises when there is a wide disparity in income distribution.

Question 17

Marginal analysis involves undertaking an activity

Accepted Answer

A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits. 
A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits.

Question 18

Which of the following is part of an economic model?

Accepted Answer

A) norms 
B) hypotheses 
C) opinions 
D) preferences of economic agents 
A) norms 
B) hypotheses 
C) opinions 
D) preferences of economic agents

Question 19

In economics, the term "equity" means

Accepted Answer

A) everyone has an equal standard of living. 
B) the hardest working individuals consume all they want. 
C) only elected officials have high standards of living. 
D) economic benefits are distributed fairly. 
A) everyone has an equal standard of living. 
B) the hardest working individuals consume all they want. 
C) only elected officials have high standards of living. 
D) economic benefits are distributed fairly.

Question 20

Allocative efficiency best explains ________, and productive efficiency best explains ________.

Accepted Answer

A) how something will be produced; when something will be produced 
B) when something will be produced; why something will be produced 
C) why something will be produced; what will be produced 
D) what will be produced; how something will be produced 
A) how something will be produced; when something will be produced 
B) when something will be produced; why something will be produced 
C) why something will be produced; what will be produced 
D) what will be produced; how something will be produced

In the market for factors of production, firms earn income by selling goods and services to households.

Which of the following is motivated by an equity concern?

Explain the economic idea that "people respond to incentives."

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Which of the following statements about competition in a market is true?

What is a marginal cost?

How are most fundamental economic decisions now determined in China?

All centrally planned economies

What is opportunity cost?

Which of the following is a microeconomics question?

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

Which of the following statements about scarcity is true?

Marginal analysis involves undertaking an activity

Which of the following is part of an economic model?

In economics, the term "equity" means

Allocative efficiency best explains , and productive efficiency best explains .

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 1: Economics: Foundations and Models

In the market for factors of production, firms earn income by selling goods and services to households.

Which of the following is motivated by an equity concern?

Explain the economic idea that "people respond to incentives."

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Which of the following statements about competition in a market is true?

What is a marginal cost?

How are most fundamental economic decisions now determined in China?

All centrally planned economies

What is opportunity cost?

Which of the following is a microeconomics question?

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

Which of the following statements about scarcity is true?

Marginal analysis involves undertaking an activity

Which of the following is part of an economic model?

In economics, the term "equity" means

Allocative efficiency best explains ________, and productive efficiency best explains ________.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Allocative efficiency best explains , and productive efficiency best explains .