Question 1

Which of the following goods best meets the definition of scarcity?

Accepted Answer

A) air 
B) water in the ocean 
C) water in a city 
D) wood in a forest 
A) air 
B) water in the ocean 
C) water in a city 
D) wood in a forest

Question 2

What is one advantage that market economies have over central planning?

Accepted Answer

A) Market economies provide an equal distribution of goods and services to consumers. 
B) Market economies establish government economic control. 
C) Market economies solve the problem of scarcity. 
D) Market economies are more efficient. 
A) Market economies provide an equal distribution of goods and services to consumers. 
B) Market economies establish government economic control. 
C) Market economies solve the problem of scarcity. 
D) Market economies are more efficient.

Question 3

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping. For Daniel, what would his tradeoff be?

Accepted Answer

A) nothing, since no dollar value can be put on sleep 
B) nothing, since studying would be more beneficial than sleep 
C) the six hours of sleep he could have had if he had gone to bed before midnight 
D) the two hours of rest he would have gotten 
A) nothing, since no dollar value can be put on sleep 
B) nothing, since studying would be more beneficial than sleep 
C) the six hours of sleep he could have had if he had gone to bed before midnight 
D) the two hours of rest he would have gotten

Question 4

What is the curve that illustrates the tradeoff between inflation and unemployment?

Accepted Answer

A) Laffer curve 
B) Lorenz curve 
C) Phillips curve 
D) Fisher curve 
A) Laffer curve 
B) Lorenz curve 
C) Phillips curve 
D) Fisher curve

Question 5

Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. What is the opportunity cost of Option B?

Accepted Answer

A) the value to him of the Option he would have chosen if Option B were not available 
B) the value to him of Options A, C, and D combined 
C) $300 
D) $100 
A) the value to him of the Option he would have chosen if Option B were not available 
B) the value to him of Options A, C, and D combined 
C) $300 
D) $100

Question 6

What are two reasons for a government to intervene in a market?

Accepted Answer

A) to raise revenues and to promote stability 
B) to promote equity and to promote efficiency 
C) to promote equity and to promote stability 
D) to promote efficiency and to promote stability 
A) to raise revenues and to promote stability 
B) to promote equity and to promote efficiency 
C) to promote equity and to promote stability 
D) to promote efficiency and to promote stability

Question 7

What is the primary determinant of a country's standard of living?

Accepted Answer

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

Question 8

What is the opportunity cost of an item?

Accepted Answer

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

Question 9

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

Accepted Answer

A) True 
 B)False

Question 10

What do we know about college-age athletes who drop out of college to play professional sports?

Accepted Answer

A) They are not rational decision makers. 
B) They are well aware that their opportunity cost of attending college is very high. 
C) They are concerned more about present circumstances than their future. 
D) They underestimate the value of a college education. 
A) They are not rational decision makers. 
B) They are well aware that their opportunity cost of attending college is very high. 
C) They are concerned more about present circumstances than their future. 
D) They underestimate the value of a college education.

Question 11

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 12

When society requires that firms reduce pollution, what happens?

Accepted Answer

A) There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers. 
B) There is no tradeoff, since everyone benefits from reduced pollution. 
C) There is no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms affected by the requirements. 
D) There is a tradeoff only if some firms are forced to close. 
A) There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers. 
B) There is no tradeoff, since everyone benefits from reduced pollution. 
C) There is no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms affected by the requirements. 
D) There is a tradeoff only if some firms are forced to close.

Question 13

How does the invisible hand primarily work to promote general well-being in the economy?

Accepted Answer

A) through government intervention 
B) through the political process 
C) through self interest 
D) through altruism 
A) through government intervention 
B) through the political process 
C) through self interest 
D) through altruism

Question 14

Complete the following statement: In the presence of a market failure,

Accepted Answer

A) government action might not improve on the market outcome because sometimes public policies simply reward the politically powerful. 
B) government action might not improve on the market outcome because some leaders are not fully informed about the effects of their actions. 
C) government action can sometimes improve on the market outcome. 
D) government action will always improve on the market outcome. 
A) government action might not improve on the market outcome because sometimes public policies simply reward the politically powerful. 
B) government action might not improve on the market outcome because some leaders are not fully informed about the effects of their actions. 
C) government action can sometimes improve on the market outcome. 
D) government action will always improve on the market outcome.

Question 15

Which of these consumption activities will most likely impose an external cost?

Accepted Answer

A) An executive plays a vigorous game of golf. 
B) A student in a dorm plays her CDs at 120 decibels late at night. 
C) A young mother exercises to an aerobics video. 
D) A construction worker eats a sandwich during his lunch break. 
A) An executive plays a vigorous game of golf. 
B) A student in a dorm plays her CDs at 120 decibels late at night. 
C) A young mother exercises to an aerobics video. 
D) A construction worker eats a sandwich during his lunch break.

Question 16

Economists study

Accepted Answer

A) how people make decisions. 
B) how governments interact with one another. 
C) the forces and trends that affect only the economy as a whole. 
D) how societies change over time. 
A) how people make decisions. 
B) how governments interact with one another. 
C) the forces and trends that affect only the economy as a whole. 
D) how societies change over time.

Question 17

After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, which of the following must occur?

Accepted Answer

A) The marginal benefit of Cancun must increase. 
B) The marginal cost of Cancun must decrease. 
C) The marginal benefit of Ft. Lauderdale must increase. 
D) The marginal cost of Ft. Lauderdale must increase. 
A) The marginal benefit of Cancun must increase. 
B) The marginal cost of Cancun must decrease. 
C) The marginal benefit of Ft. Lauderdale must increase. 
D) The marginal cost of Ft. Lauderdale must increase.

Question 18

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

A) 25% 
B) 50% 
C) 75% 
D) 100% 
A) 25% 
B) 50% 
C) 75% 
D) 100%

Question 19

What is the word that comes from the Greek word for "one who manages a household"?

Accepted Answer

A) market 
B) consumer 
C) producer 
D) economy 
A) market 
B) consumer 
C) producer 
D) economy

Question 20

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 10 months per year.

Accepted Answer

The concept of working longer per year w

Which of the following goods best meets the definition of scarcity?

What is one advantage that market economies have over central planning?

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping. For Daniel, what would his tradeoff be?

What is the curve that illustrates the tradeoff between inflation and unemployment?

Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. What is the opportunity cost of Option B?

What are two reasons for a government to intervene in a market?

What is the primary determinant of a country's standard of living?

What is the opportunity cost of an item?

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

What do we know about college-age athletes who drop out of college to play professional sports?

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

When society requires that firms reduce pollution, what happens?

How does the invisible hand primarily work to promote general well-being in the economy?

Complete the following statement: In the presence of a market failure,

Which of these consumption activities will most likely impose an external cost?

Economists study

After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, which of the following must occur?

Approximately what percentage of the world's economies experience scarcity?

What is the word that comes from the Greek word for "one who manages a household"?

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 10 months per year.

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

Exam 1: Ten Principles of Economics

Which of the following goods best meets the definition of scarcity?

What is one advantage that market economies have over central planning?

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping. For Daniel, what would his tradeoff be?

What is the curve that illustrates the tradeoff between inflation and unemployment?

Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. What is the opportunity cost of Option B?

What are two reasons for a government to intervene in a market?

What is the primary determinant of a country's standard of living?

What is the opportunity cost of an item?

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

What do we know about college-age athletes who drop out of college to play professional sports?

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

When society requires that firms reduce pollution, what happens?

How does the invisible hand primarily work to promote general well-being in the economy?

Complete the following statement: In the presence of a market failure,

Which of these consumption activities will most likely impose an external cost?

Economists study

After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, which of the following must occur?

Approximately what percentage of the world's economies experience scarcity?

What is the word that comes from the Greek word for "one who manages a household"?

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 10 months per year.

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