Question 1

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 2

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

Accepted Answer

A) productivity. 
B) an externality. 
C) market power. 
D) property rights. 
A) productivity. 
B) an externality. 
C) market power. 
D) property rights.

Question 3

The ability of an individual to own and exercise control over scarce resources is called

Accepted Answer

A) market failure. 
B) property rights. 
C) externality. 
D) market power. 
A) market failure. 
B) property rights. 
C) externality. 
D) market power.

Question 4

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 5

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Accepted Answer

A) slow productivity growth in the US. 
B) increased competition from Japan. 
C) increased competition from European countries. 
D) a rapid decrease in the quantity of money in the economy. 
A) slow productivity growth in the US. 
B) increased competition from Japan. 
C) increased competition from European countries. 
D) a rapid decrease in the quantity of money in the economy.

Question 6

During the early 1920s in Germany, prices

Accepted Answer

A) doubled annually. 
B) doubled monthly. 
C) tripled monthly. 
D) tripled annually. 
A) doubled annually. 
B) doubled monthly. 
C) tripled monthly. 
D) tripled annually.

Question 7

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) Melissa can attend the concert only if she takes her sister with her. 
B) Greg is hungry and homeless. 
C) Brian must repair the tire on his bike before he can ride it to class. 
D) Kendra must decide between going to Colorado or Cancun for spring break. 
A) Melissa can attend the concert only if she takes her sister with her. 
B) Greg is hungry and homeless. 
C) Brian must repair the tire on his bike before he can ride it to class. 
D) Kendra must decide between going to Colorado or Cancun for spring break.

Question 8

When computing the opportunity cost of attending a concert you should include

Accepted Answer

A) the price you pay for the ticket and the value of your time. 
B) the price you pay for the ticket, but not the value of your time. 
C) the value of your time, but not the price you pay for the ticket. 
D) neither the price of the ticket nor the value of your time. 
A) the price you pay for the ticket and the value of your time. 
B) the price you pay for the ticket, but not the value of your time. 
C) the value of your time, but not the price you pay for the ticket. 
D) neither the price of the ticket nor the value of your time.

Question 9

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Accepted Answer

A) True 
 B)False

Question 10

The property of society getting the most it can from its scarce resources is called

Accepted Answer

A) equity. 
B) efficiency. 
C) equality. 
D) efficacy. 
A) equity. 
B) efficiency. 
C) equality. 
D) efficacy.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of

Accepted Answer

A) market power. 
B) inefficient trade. 
C) inadequate enforcement of property rights. 
D) the invisible hand at work. 
A) market power. 
B) inefficient trade. 
C) inadequate enforcement of property rights. 
D) the invisible hand at work.

Question 13

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Accepted Answer

A) more than $40, as the average benefit will exceed the marginal cost. 
B) more than $40, as the marginal benefit will exceed the marginal cost. 
C) more than $80, as the average benefit will exceed the marginal cost. 
D) more than $80, as the marginal benefit will exceed the marginal cost. 
A) more than $40, as the average benefit will exceed the marginal cost. 
B) more than $40, as the marginal benefit will exceed the marginal cost. 
C) more than $80, as the average benefit will exceed the marginal cost. 
D) more than $80, as the marginal benefit will exceed the marginal cost.

Question 15

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?

Accepted Answer

A) only the one with a low level of output per person. 
B) only the one with a high level of output per person. 
C) both 
D) neither 
A) only the one with a low level of output per person. 
B) only the one with a high level of output per person. 
C) both 
D) neither

Question 16

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 17

Which of the following is a decision that economists study?

Accepted Answer

A) how much people work 
B) what people buy 
C) how much money people save 
D) All of the above are correct. 
A) how much people work 
B) what people buy 
C) how much money people save 
D) All of the above are correct.

Question 18

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 19

Which of the following is true?

Accepted Answer

A) Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B) Government policies usually improve upon both equality and efficiency. 
C) As long as the economic pie continually gets larger, no one will have to go hungry. 
D) Efficiency and equality can both be achieved if the economic pie is cut into equal pieces. 
A) Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B) Government policies usually improve upon both equality and efficiency. 
C) As long as the economic pie continually gets larger, no one will have to go hungry. 
D) Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

Question 20

Productivity is defined as the

Accepted Answer

A) amount of goods and services produced from each unit of labor input. 
B) number of workers required to produce a given amount of goods and services. 
C) amount of labor that can be saved by replacing workers with machines. 
D) actual amount of effort workers put into an hour of working time. 
A) amount of goods and services produced from each unit of labor input. 
B) number of workers required to produce a given amount of goods and services. 
C) amount of labor that can be saved by replacing workers with machines. 
D) actual amount of effort workers put into an hour of working time.

Exam 1: Ten Principles of Economics

Which of the following is not an example of scarcity?

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

The ability of an individual to own and exercise control over scarce resources is called

Inflation increases the value of money.

Slow growth in US incomes during the 1970s and 1980s was primarily due to

During the early 1920s in Germany, prices

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

When computing the opportunity cost of attending a concert you should include

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

The property of society getting the most it can from its scarce resources is called

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

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?

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.

Which of the following is a decision that economists study?

Which of the following is true?

Productivity is defined as the

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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