Question 1

Economic goods are:

Accepted Answer

A)  only those commodities priced in monetary terms. 
B)  scarce products that are created from scarce resources. 
C)  the opposite of normative economic goods. 
D)  not subject to scarcity. 
A)  only those commodities priced in monetary terms. 
B)  scarce products that are created from scarce resources. 
C)  the opposite of normative economic goods. 
D)  not subject to scarcity.

Question 2

Government policies that use taxes and government spending in an attempt to stabilize the economy are known as

Accepted Answer

A)  fluctuation policy. 
B)  cyclical policy. 
C)  monetary policy. 
D)  fiscal policy. 
A)  fluctuation policy. 
B)  cyclical policy. 
C)  monetary policy. 
D)  fiscal policy.

Question 3

The opportunity cost of attending a college basketball game is:

Accepted Answer

A)  price of the admission to the game. 
B)  the sum of the value of all the alternative uses of your time while at the game. 
C)  the value of the highest alternative use of your time and money sacrificed as a result of attending the game. 
D)  less if your favorite team wins. 
A)  price of the admission to the game. 
B)  the sum of the value of all the alternative uses of your time while at the game. 
C)  the value of the highest alternative use of your time and money sacrificed as a result of attending the game. 
D)  less if your favorite team wins.

Question 4

Ted has decided to buy a burger and fries at a restaurant,but is considering whether to buy a drink as well.If the price of a burger is $2,fries are $1,drinks are $1,but a value meal with all three costs $3.80,the marginal cost to Ted of the drink is:

Accepted Answer

A)  $0.20 
B)  $0.80 
C)  $1.00 
D)  $3.80 
A)  $0.20 
B)  $0.80 
C)  $1.00 
D)  $3.80

Question 5

Resources are used more efficiently if people,regions,and countries specialize in goods for which they have a(n):

Accepted Answer

A)  disincentive to trade with others. 
B)  higher opportunity cost. 
C)  absolute advantage in production. 
D)  comparative advantage in production. 
A)  disincentive to trade with others. 
B)  higher opportunity cost. 
C)  absolute advantage in production. 
D)  comparative advantage in production.

Question 6

Economists believe that people respond to incentives in predictable ways.Therefore,if the government imposed a tax on each child born,you would expect that:

Accepted Answer

A)  families would have the same number of children, but wait longer to begin having them. 
B)  more children would be born, but spaced further apart. 
C)  more children would be adopted. 
D)  fewer children would be born. 
A)  families would have the same number of children, but wait longer to begin having them. 
B)  more children would be born, but spaced further apart. 
C)  more children would be adopted. 
D)  fewer children would be born.

Question 7

Which of the following demonstrates marginal thinking?

Accepted Answer

A)  Deciding to never eat meat. 
B)  Deciding to spend one more hour studying economics tonight because you think the improvement on your next text will be large enough to make it worthwhile to you. 
C)  Deciding to go to a Sociology class that you usually skip because there is a guest lecturer you are really interested in hearing that day. 
D)  Both b. and c. demonstrate marginal thinking. 
A)  Deciding to never eat meat. 
B)  Deciding to spend one more hour studying economics tonight because you think the improvement on your next text will be large enough to make it worthwhile to you. 
C)  Deciding to go to a Sociology class that you usually skip because there is a guest lecturer you are really interested in hearing that day. 
D)  Both b. and c. demonstrate marginal thinking.

Question 8

The opportunity cost of attending college is likely to include all except which of the following?

Accepted Answer

A)  the cost of required textbooks 
B)  tuition fees 
C)  the income you forego in order to attend classes 
D)  the cost of haircuts received during the school term 
A)  the cost of required textbooks 
B)  tuition fees 
C)  the income you forego in order to attend classes 
D)  the cost of haircuts received during the school term

Question 9

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Why doesn't Sergei make his own clothes?

Accepted Answer

A)  He has already made all the clothes he will need for a few years. 
B)  The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C)  Sergei just can't find the material he likes in the United States. 
D)  Sergei has a comparative advantage in tailoring clothes. 
A)  He has already made all the clothes he will need for a few years. 
B)  The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C)  Sergei just can't find the material he likes in the United States. 
D)  Sergei has a comparative advantage in tailoring clothes.

Question 10

The opportunity cost of a two-week vacation in Hawaii for an Arizona resident includes:

Accepted Answer

A)  the cost of the beach resort hotel accommodations. 
B)  the airfare to and from Honolulu International Airport. 
C)  two weeks of wages that could have been earned. 
D)  all of the above. 
A)  the cost of the beach resort hotel accommodations. 
B)  the airfare to and from Honolulu International Airport. 
C)  two weeks of wages that could have been earned. 
D)  all of the above.

Question 11

In a market system,decisions about how to allocate resources are made:

Accepted Answer

A)  by central planning boards in each industry. 
B)  by a lottery system. 
C)  by individuals and firms interacting in markets coordinated by market prices. 
D)  by large conglomerates working cooperatively with the government. 
A)  by central planning boards in each industry. 
B)  by a lottery system. 
C)  by individuals and firms interacting in markets coordinated by market prices. 
D)  by large conglomerates working cooperatively with the government.

Question 12

The marginal benefit to you of drinking bottled iced tea is $1.50.The price of a bottle of iced tea is $1.25.

Accepted Answer

A)  If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B)  If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C)  You will not purchase iced tea if you are acting rationally. 
D)  If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents. 
A)  If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B)  If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C)  You will not purchase iced tea if you are acting rationally. 
D)  If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

Question 13

Which of the following statements is most consistent with the rule of rational choice?

Accepted Answer

A)  "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B)  "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C)  "Police forces should be enlarged until virtually all crime is eliminated." 
D)  "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved." 
A)  "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B)  "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C)  "Police forces should be enlarged until virtually all crime is eliminated." 
D)  "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

Question 14

Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?

Accepted Answer

In general it would not make s

Question 15

Which of the following is an example of a resource?

Accepted Answer

A)  land 
B)  capital 
C)  entrepreneurship 
D)  All of the above 
A)  land 
B)  capital 
C)  entrepreneurship 
D)  All of the above

Question 16

How would an economist respond to the following statement: "Wanting more goods makes us greedy."

Accepted Answer

Economists do not view the unlimited hum

Question 17

Which of the following do not contribute to economic growth?

Accepted Answer

A)  substantial increases in money supply 
B)  increased productivity 
C)  savings and investment 
D)  new production technologies 
A)  substantial increases in money supply 
B)  increased productivity 
C)  savings and investment 
D)  new production technologies

Question 18

Opportunity cost includes

Accepted Answer

A)  monetary costs only. 
B)  non-monetary costs only. 
C)  both monetary and non-monetary costs. 
D)  neither monetary nor non-monetary costs. 
A)  monetary costs only. 
B)  non-monetary costs only. 
C)  both monetary and non-monetary costs. 
D)  neither monetary nor non-monetary costs.

Question 19

The opportunity cost of an action is:

Accepted Answer

A)  the value of the best foregone alternative. 
B)  the difference between the benefits that result and the expenses incurred as a result of the action. 
C)  the same as the expected benefit of the action. 
D)  the same for everyone who undertakes the action. 
A)  the value of the best foregone alternative. 
B)  the difference between the benefits that result and the expenses incurred as a result of the action. 
C)  the same as the expected benefit of the action. 
D)  the same for everyone who undertakes the action.

Question 20

Which of the following is not true?

Accepted Answer

A)  Voluntary exchange is expected to be advantageous to both parties to the exchange. 
B)  What one trader gains from a trade, the other must lose. 
C)  If one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. 
D)  The expectation of gain motivates people to engage in trade. 
A)  Voluntary exchange is expected to be advantageous to both parties to the exchange. 
B)  What one trader gains from a trade, the other must lose. 
C)  If one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. 
D)  The expectation of gain motivates people to engage in trade.

Exam 2: Economics: Eight Powerful Ideas

Economic goods are:

Government policies that use taxes and government spending in an attempt to stabilize the economy are known as

The opportunity cost of attending a college basketball game is:

Ted has decided to buy a burger and fries at a restaurant,but is considering whether to buy a drink as well.If the price of a burger is $2,fries are $1,drinks are $1,but a value meal with all three costs $3.80,the marginal cost to Ted of the drink is:

Resources are used more efficiently if people,regions,and countries specialize in goods for which they have a(n):

Economists believe that people respond to incentives in predictable ways.Therefore,if the government imposed a tax on each child born,you would expect that:

Which of the following demonstrates marginal thinking?

The opportunity cost of attending college is likely to include all except which of the following?

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Why doesn't Sergei make his own clothes?

The opportunity cost of a two-week vacation in Hawaii for an Arizona resident includes:

In a market system,decisions about how to allocate resources are made:

The marginal benefit to you of drinking bottled iced tea is $1.50.The price of a bottle of iced tea is $1.25.

Which of the following statements is most consistent with the rule of rational choice?

Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?

Which of the following is an example of a resource?

How would an economist respond to the following statement: "Wanting more goods makes us greedy."

Which of the following do not contribute to economic growth?

Opportunity cost includes

The opportunity cost of an action is:

Which of the following is not true?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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