Question 1

The similarity between all goods and services,whether tangible or intangible,is that they:

Accepted Answer

A)  are not subject to economic analysis. 
B)  require technical expertise. 
C)  have no price tags. 
D)  are made from scarce resources and are subject to economic analysis. 
A)  are not subject to economic analysis. 
B)  require technical expertise. 
C)  have no price tags. 
D)  are made from scarce resources and are subject to economic analysis.

Question 2

Tom is a castaway who washes up on a remote island.He can kill eight birds per hour or catch ten fish per day.The natives on the island can kill ten birds per day or catch twenty fish per day.Tom has a comparative advantage in:

Accepted Answer

A)  hunting birds. 
B)  fishing. 
C)  both hunting birds and fishing 
D)  neither hunting birds or fishing. 
A)  hunting birds. 
B)  fishing. 
C)  both hunting birds and fishing 
D)  neither hunting birds or fishing.

Question 3

Which of the following contribute to increases in productivity?

Accepted Answer

A)  incentives for innovation 
B)  more physical capital 
C)  an improved education system 
D)  all of the above 
A)  incentives for innovation 
B)  more physical capital 
C)  an improved education system 
D)  all of the above

Question 4

Scarcity:

Accepted Answer

A)  is only a problem in communist countries. 
B)  is a problem in both communist and socialist countries, but not in market economies. 
C)  does not exist in wealthy countries. 
D)  will never be eradicated because humans develop new wants as productive capabilities improve. 
A)  is only a problem in communist countries. 
B)  is a problem in both communist and socialist countries, but not in market economies. 
C)  does not exist in wealthy countries. 
D)  will never be eradicated because humans develop new wants as productive capabilities improve.

Question 5

Scarcity means that:

Accepted Answer

A)  human desires are limited. 
B)  resources are insufficient to satisfy all human desires. 
C)  choices are unnecessary. 
D)  all but the very wealthy must face choices. 
A)  human desires are limited. 
B)  resources are insufficient to satisfy all human desires. 
C)  choices are unnecessary. 
D)  all but the very wealthy must face choices.

Question 6

Which of the following are consequences of inflation?

Accepted Answer

A)  It increase the burdens on people with fixed incomes when inflation is not anticipated. 
B)  It hurts savers but helps those who have borrowed at a fixed rate. 
C)  Inflation imposes costs on people who devote resources to protecting themselves from expected inflation. 
D)  all of the above 
A)  It increase the burdens on people with fixed incomes when inflation is not anticipated. 
B)  It hurts savers but helps those who have borrowed at a fixed rate. 
C)  Inflation imposes costs on people who devote resources to protecting themselves from expected inflation. 
D)  all of the above

Question 7

Which of the following best defines rational behavior?

Accepted Answer

A)  analyzing the total costs of a decision 
B)  analyzing the total benefits of a decision 
C)  undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities 
D)  undertaking activities whenever the marginal benefit exceeds the marginal cost 
A)  analyzing the total costs of a decision 
B)  analyzing the total benefits of a decision 
C)  undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities 
D)  undertaking activities whenever the marginal benefit exceeds the marginal cost

Question 8

Two parties can capture gains from specialization and trade whenever:

Accepted Answer

A)  One party is twice as good as producing all goods as the other. 
B)  The opportunity costs of producing each good are the same for both parties. 
C)  Both parties can produce equal amounts of both goods. 
D)  None of the above are true. 
A)  One party is twice as good as producing all goods as the other. 
B)  The opportunity costs of producing each good are the same for both parties. 
C)  Both parties can produce equal amounts of both goods. 
D)  None of the above are true.

Question 9

The opportunity cost of going to college includes:

Accepted Answer

A)  both tuition and the value of the student's time. 
B)  tuition, but not the value of the student's time, which is a monetary cost. 
C)  neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
D)  neither tuition nor the value of the student's time, at least at state-supported universities and colleges. 
A)  both tuition and the value of the student's time. 
B)  tuition, but not the value of the student's time, which is a monetary cost. 
C)  neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
D)  neither tuition nor the value of the student's time, at least at state-supported universities and colleges.

Question 10

Individuals:

Accepted Answer

A)  respond to incentives in predictable ways. 
B)  decrease the level of an activity in response to negative incentives. 
C)  respond to positive incentives by increasing the level of activity. 
D)  do all of the above. 
A)  respond to incentives in predictable ways. 
B)  decrease the level of an activity in response to negative incentives. 
C)  respond to positive incentives by increasing the level of activity. 
D)  do all of the above.

Question 11

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Accepted Answer

A) True 
 B)False

Question 12

Advantages of specialization do not include:

Accepted Answer

A)  reduced interdependence. 
B)  the exploitation of comparative advantage. 
C)  the ability to utilize more complex production processes. 
D)  gains from learning by doing. 
A)  reduced interdependence. 
B)  the exploitation of comparative advantage. 
C)  the ability to utilize more complex production processes. 
D)  gains from learning by doing.

Question 13

Despite the warning on a package of cigarettes about the potential health hazards of smoking,a man lights up a cigarette.An economist would conclude that:

Accepted Answer

A)  in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
B)  the man is behaving irrationally. 
C)  the smoker is unconcerned about his future health. 
D)  in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost. 
A)  in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
B)  the man is behaving irrationally. 
C)  the smoker is unconcerned about his future health. 
D)  in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Question 14

The market mechanism assures full employment and stable prices

Accepted Answer

A) True 
 B)False

Question 15

An increase in population,ceteris paribus,will raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 16

An example of a capital resource is:

Accepted Answer

A)  stock in a computer software company. 
B)  a bond issued by a company selling electric generators. 
C)  a dump truck. 
D)  an employee of a moving company. 
A)  stock in a computer software company. 
B)  a bond issued by a company selling electric generators. 
C)  a dump truck. 
D)  an employee of a moving company.

Question 17

A permanent change to a much higher price of gasoline would lead us to expect fewer gas guzzlers on the road,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 18

The opportunity cost of attending a university for a year is measured by:

Accepted Answer

A)  the tuition fees incurred. 
B)  the size of the student loans the student becomes responsible for. 
C)  the sum of all expenditures on rent, food, books, and tuition incurred during the school year. 
D)  the value of the best opportunity or opportunities foregone in order to enroll for the year. 
A)  the tuition fees incurred. 
B)  the size of the student loans the student becomes responsible for. 
C)  the sum of all expenditures on rent, food, books, and tuition incurred during the school year. 
D)  the value of the best opportunity or opportunities foregone in order to enroll for the year.

Question 19

Farmer Fred could grow wheat and barley.He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land.The price of wheat is $2.00 per bushel and the price of barley $ 0.80.Show the benefits to Fred from specialization.What should he specialize in?

Accepted Answer

Farmer Fred could make $150 if he grew o

Question 20

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000.The price of the new sport utility vehicle is $22,000.

Accepted Answer

A)  If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. 
B)  You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C)  If you do not purchase the new sport utility vehicle, your net loss will be $2,000. 
D)  If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000. 
A)  If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. 
B)  You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C)  If you do not purchase the new sport utility vehicle, your net loss will be $2,000. 
D)  If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000.

Exam 2: Economics: Eight Powerful Ideas

The similarity between all goods and services,whether tangible or intangible,is that they:

Tom is a castaway who washes up on a remote island.He can kill eight birds per hour or catch ten fish per day.The natives on the island can kill ten birds per day or catch twenty fish per day.Tom has a comparative advantage in:

Which of the following contribute to increases in productivity?

Scarcity:

Scarcity means that:

Which of the following are consequences of inflation?

Which of the following best defines rational behavior?

Two parties can capture gains from specialization and trade whenever:

The opportunity cost of going to college includes:

Individuals:

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Advantages of specialization do not include:

Despite the warning on a package of cigarettes about the potential health hazards of smoking,a man lights up a cigarette.An economist would conclude that:

The market mechanism assures full employment and stable prices

An increase in population,ceteris paribus,will raise the standard of living.

An example of a capital resource is:

A permanent change to a much higher price of gasoline would lead us to expect fewer gas guzzlers on the road,ceteris paribus.

The opportunity cost of attending a university for a year is measured by:

Farmer Fred could grow wheat and barley.He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land.The price of wheat is $2.00 per bushel and the price of barley $ 0.80.Show the benefits to Fred from specialization.What should he specialize in?

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000.The price of the new sport utility vehicle is $22,000.

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

Filters