Question 1

What does efficiency mean?

Accepted Answer

A) Society is conserving resources in order to save them for the future. 
B) Society's goods and services are distributed fairly among society's members. 
C) Society has lessened its dependence on foreign energy sources. 
D) Society is getting the most it can from its scarce resources. 
A) Society is conserving resources in order to save them for the future. 
B) Society's goods and services are distributed fairly among society's members. 
C) Society has lessened its dependence on foreign energy sources. 
D) Society is getting the most it can from its scarce resources.

Question 2

Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. He discovers that he needs an additional repair, which will cost $400, in order to complete the repairs. He can sell the boat as it is now for $300. What should he do?

Accepted Answer

A) He should cut his losses and take the $300. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the boat. 
D) It doesn't matter which action he takes; the outcome is the same either way. 
A) He should cut his losses and take the $300. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the boat. 
D) It doesn't matter which action he takes; the outcome is the same either way.

Question 3

Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $8 an hour. What is her opportunity cost of working?

Accepted Answer

A) the $24 she earns working 
B) the $24 minus the enjoyment she would have received from watching the video 
C) the enjoyment she would have received had she watched the video 
D) nothing, since she would have received less than $24 of enjoyment from the video 
A) the $24 she earns working 
B) the $24 minus the enjoyment she would have received from watching the video 
C) the enjoyment she would have received had she watched the video 
D) nothing, since she would have received less than $24 of enjoyment from the video

Question 4

Suppose your management professor has been offered a corporate job with a 30% pay increase. He has decided not to take the job. What happened for him?

Accepted Answer

A) The marginal cost of leaving was greater than the marginal benefit. 
B) The marginal benefit of leaving was greater than the marginal cost. 
C) The marginal benefit of leaving was less than the marginal cost. 
D) The marginal benefit of teaching was greater than the marginal cost. 
A) The marginal cost of leaving was greater than the marginal benefit. 
B) The marginal benefit of leaving was greater than the marginal cost. 
C) The marginal benefit of leaving was less than the marginal cost. 
D) The marginal benefit of teaching was greater than the marginal cost.

Question 5

For society, when is a good NOT scarce?

Accepted Answer

A) if at least one individual in society can obtain all he or she wants of the good 
B) if firms are producing at full capacity 
C) if all members of society can have all they want of it 
D) if those who have enough income can buy all they want of the good 
A) if at least one individual in society can obtain all he or she wants of the good 
B) if firms are producing at full capacity 
C) if all members of society can have all they want of it 
D) if those who have enough income can buy all they want of the good

Question 6

A worker in Bangladesh can earn $1 per day making cotton cloth on a hand loom. A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Accepted Answer

A) Canadian textile workers belong to a union. 
B) There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C) Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D) Bangladesh has a low-wage policy to make its textile industry more competitive in world markets. 
A) Canadian textile workers belong to a union. 
B) There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C) Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D) Bangladesh has a low-wage policy to make its textile industry more competitive in world markets.

Question 7

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Accepted Answer

Whatever must be given up to obtain some

Question 8

Which of the following statements is NOT true? Households and economies both

Accepted Answer

A) must allocate scarce resources. 
B) face many decisions. 
C) must allocate the goods and services they produce. 
D) must have a central decision maker. 
A) must allocate scarce resources. 
B) face many decisions. 
C) must allocate the goods and services they produce. 
D) must have a central decision maker.

Question 9

In a market economy, what guides economic activity?

Accepted Answer

A) the government 
B) corporations 
C) central planners 
D) prices 
A) the government 
B) corporations 
C) central planners 
D) prices

Question 10

How does the government enforce property rights?

Accepted Answer

A) by requiring property owners to pay property taxes 
B) by providing police and courts 
C) by allowing people to decide whether or not they wish to own property 
D) by providing a system of recording property deeds 
A) by requiring property owners to pay property taxes 
B) by providing police and courts 
C) by allowing people to decide whether or not they wish to own property 
D) by providing a system of recording property deeds

Question 11

The government can potentially improve market outcomes if market inequalities or market failure exists.

Accepted Answer

A) True 
 B)False

Question 12

What does economics study?

Accepted Answer

A) how society manages its scarce resources 
B) the government's role in society 
C) how to increase production 
D) How firms make profits 
A) how society manages its scarce resources 
B) the government's role in society 
C) how to increase production 
D) How firms make profits

Question 13

What does the term market failure refer to?

Accepted Answer

A) a situation in which the market on its own fails to allocate resources efficiently 
B) an unsuccessful advertising campaign that reduces buyer demand 
C) a situation in which competition among firms becomes ruthless 
D) a firm that is forced out of business because of losses 
A) a situation in which the market on its own fails to allocate resources efficiently 
B) an unsuccessful advertising campaign that reduces buyer demand 
C) a situation in which competition among firms becomes ruthless 
D) a firm that is forced out of business because of losses

Question 14

What happens if Japan chooses to engage in trade?

Accepted Answer

A) It will only benefit if it trades with countries that produce goods it cannot produce. 
B) It cannot benefit if it trades with less developed countries. 
C) It should first attempt to produce the good itself. 
D) It can benefit by trading with any other country. 
A) It will only benefit if it trades with countries that produce goods it cannot produce. 
B) It cannot benefit if it trades with less developed countries. 
C) It should first attempt to produce the good itself. 
D) It can benefit by trading with any other country.

Question 15

What are two causes of market failure?

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 16

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

Accepted Answer

A) South African firms are faced with stricter government regulations than Kenyan firms. 
B) Total income is divided among fewer workers in Kenya since it has a smaller labour force than South Africa. 
C) Kenya's climate allows for longer growing seasons and therefore Kenya can produce large quantities of grain. 
D) Productivity in Kenya is higher than in South Africa. 
A) South African firms are faced with stricter government regulations than Kenyan firms. 
B) Total income is divided among fewer workers in Kenya since it has a smaller labour force than South Africa. 
C) Kenya's climate allows for longer growing seasons and therefore Kenya can produce large quantities of grain. 
D) Productivity in Kenya is higher than in South Africa.

Question 17

What does trade between Canada and India do?

Accepted Answer

A) benefits both Canada and India 
B) is a losing proposition for Canada because India has cheaper labour 
C) is like a sports contest: one side wins and the other side loses 
D) is a losing proposition for India because Canadian workers are more productive 
A) benefits both Canada and India 
B) is a losing proposition for Canada because India has cheaper labour 
C) is like a sports contest: one side wins and the other side loses 
D) is a losing proposition for India because Canadian workers are more productive

Question 18

For what reason do both households and societies face many decisions?

Accepted Answer

A) because resources are scarce 
B) because populations may increase or decrease over time 
C) because wages for households and therefore society fluctuate with business cycles 
D) because people, by nature, tend to disagree 
A) because resources are scarce 
B) because populations may increase or decrease over time 
C) because wages for households and therefore society fluctuate with business cycles 
D) because people, by nature, tend to disagree

Question 19

What happens when the government prevents prices from adjusting naturally to supply and demand?

Accepted Answer

A) It stabilizes the economy by reducing market uncertainties. 
B) It adversely affects the allocation of resources. 
C) The improvement in equity justifies the reduction in efficiency. 
D) The improvement in efficiency justifies the reduction in equity. 
A) It stabilizes the economy by reducing market uncertainties. 
B) It adversely affects the allocation of resources. 
C) The improvement in equity justifies the reduction in efficiency. 
D) The improvement in efficiency justifies the reduction in equity.

Question 20

When does a rational decision maker take an action?

Accepted Answer

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

What does efficiency mean?

Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. He discovers that he needs an additional repair, which will cost $400, in order to complete the repairs. He can sell the boat as it is now for $300. What should he do?

Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $8 an hour. What is her opportunity cost of working?

Suppose your management professor has been offered a corporate job with a 30% pay increase. He has decided not to take the job. What happened for him?

For society, when is a good NOT scarce?

A worker in Bangladesh can earn $1 per day making cotton cloth on a hand loom. A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Which of the following statements is NOT true? Households and economies both

In a market economy, what guides economic activity?

How does the government enforce property rights?

The government can potentially improve market outcomes if market inequalities or market failure exists.

What does economics study?

What does the term market failure refer to?

What happens if Japan chooses to engage in trade?

What are two causes of market failure?

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

What does trade between Canada and India do?

For what reason do both households and societies face many decisions?

What happens when the government prevents prices from adjusting naturally to supply and demand?

When does a rational decision maker take an action?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

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

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

What does efficiency mean?

Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. He discovers that he needs an additional repair, which will cost $400, in order to complete the repairs. He can sell the boat as it is now for $300. What should he do?

Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $8 an hour. What is her opportunity cost of working?

Suppose your management professor has been offered a corporate job with a 30% pay increase. He has decided not to take the job. What happened for him?

For society, when is a good NOT scarce?

A worker in Bangladesh can earn $1 per day making cotton cloth on a hand loom. A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Which of the following statements is NOT true? Households and economies both

In a market economy, what guides economic activity?

How does the government enforce property rights?

The government can potentially improve market outcomes if market inequalities or market failure exists.

What does economics study?

What does the term market failure refer to?

What happens if Japan chooses to engage in trade?

What are two causes of market failure?

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

What does trade between Canada and India do?

For what reason do both households and societies face many decisions?

What happens when the government prevents prices from adjusting naturally to supply and demand?

When does a rational decision maker take an action?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

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

Five Debates Over Macroeconomic Policy

Filters