Question 1

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 2

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

Accepted Answer

A)  Your full room-and-board expenses should always be included. 
B)  None of your room-and-board expenses should ever be included. 
C)  You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D)  You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. 
A)  Your full room-and-board expenses should always be included. 
B)  None of your room-and-board expenses should ever be included. 
C)  You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D)  You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.

Question 3

A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand?

Accepted Answer

A)  Yes,because making tables is profitable. 
B)  No,because she may not be able to sell the additional tables. 
C)  It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables. 
D)  It depends on the average cost of producing more tables and the average revenue she will earn from selling more tables. 
A)  Yes,because making tables is profitable. 
B)  No,because she may not be able to sell the additional tables. 
C)  It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables. 
D)  It depends on the average cost of producing more tables and the average revenue she will earn from selling more tables.

Question 4

If the price of a gallon of milk were fixed above the current price,then we would expect

Accepted Answer

A)  an increase in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell. 
B)  an increase in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell. 
C)  a decrease in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell. 
D)  a decrease in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell. 
A)  an increase in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell. 
B)  an increase in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell. 
C)  a decrease in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell. 
D)  a decrease in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell.

Question 5

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)  studies show that individuals with higher levels of income pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  employing individuals to clean up pollution causes increases in employment and income. 
A)  studies show that individuals with higher levels of income pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  employing individuals to clean up pollution causes increases in employment and income.

Question 6

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Accepted Answer

A)  cost of teaching increased. 
B)  benefit of teaching increased. 
C)  cost of teaching decreased. 
D)  cost of a corporate job increased. 
A)  cost of teaching increased. 
B)  benefit of teaching increased. 
C)  cost of teaching decreased. 
D)  cost of a corporate job increased.

Question 7

The principle that "trade can make everyone better off" applies to interactions and trade between

Accepted Answer

A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct. 
A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct.

Question 8

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 9

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)  every person is entitled to life,liberty,and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive. 
A)  every person is entitled to life,liberty,and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive.

Question 10

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 9 months per year.

Accepted Answer

The concept of working longer per year w

Question 11

The decisions of firms and households are guided by prices and self-interest in a

Accepted Answer

A)  command economy. 
B)  centrally-planned economy. 
C)  market economy. 
D)  All of the above are correct. 
A)  command economy. 
B)  centrally-planned economy. 
C)  market economy. 
D)  All of the above are correct.

Question 12

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 13

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 14

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Accepted Answer

A)  This loss of jobs has been detrimental to our economy. 
B)  The government should provide subsidies to encourage more people to become farmers. 
C)  This reduction in the number of farmers explains the increase in the price of food. 
D)  Economists understand this is progress because the proportion of the population that used to be farmers is now employed in other professions. 
A)  This loss of jobs has been detrimental to our economy. 
B)  The government should provide subsidies to encourage more people to become farmers. 
C)  This reduction in the number of farmers explains the increase in the price of food. 
D)  Economists understand this is progress because the proportion of the population that used to be farmers is now employed in other professions.

Question 15

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following firms is most likely to have market power?

Accepted Answer

A)  a grocery store in a metropolitan area 
B)  a gas station in a suburb 
C)  a pub in a college town 
D)  the only hotel in a rural area 
A)  a grocery store in a metropolitan area 
B)  a gas station in a suburb 
C)  a pub in a college town 
D)  the only hotel in a rural area

Question 17

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Accepted Answer

A)  guns and butter. 
B)  efficiency and equality. 
C)  inflation and unemployment. 
D)  work and leisure. 
A)  guns and butter. 
B)  efficiency and equality. 
C)  inflation and unemployment. 
D)  work and leisure.

Question 18

When the "invisible hand" guides economic activity,prices of products reflect

Accepted Answer

A)  only the values that society places on those products. 
B)  only the costs to society of producing those products. 
C)  both the values that society places on those products and the costs to society of producing those products. 
D)  none of the above;when the "invisible hand" guides economic activity,prices of products are set by the government in a manner that is thought to be "fair." 
A)  only the values that society places on those products. 
B)  only the costs to society of producing those products. 
C)  both the values that society places on those products and the costs to society of producing those products. 
D)  none of the above;when the "invisible hand" guides economic activity,prices of products are set by the government in a manner that is thought to be "fair."

Question 19

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity. 
A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity.

Question 20

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)  efficiency. 
B)  equality. 
C)  externalities. 
D)  productivity. 
A)  efficiency. 
B)  equality. 
C)  externalities. 
D)  productivity.

Exam 1: Ten Principles of Economics

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

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand?

If the price of a gallon of milk were fixed above the current price,then we would expect

A tradeoff exists between a clean environment and a higher level of income in that

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

The principle that "trade can make everyone better off" applies to interactions and trade between

The business cycle refers to fluctuations in economic activity such as employment and production.

Both The Wealth of Nations and the Declaration of Independence share the point of view that

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 9 months per year.

The decisions of firms and households are guided by prices and self-interest in a

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

Trade can make everyone better off except in the case where one person is better at doing everything.

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Market failure refers to a situation in which the market does not allocate resources efficiently.

Which of the following firms is most likely to have market power?

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

When the "invisible hand" guides economic activity,prices of products reflect

The historical rise in living standards of American workers is primarily a result of

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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 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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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