Question 1

Which of the following is true?

Accepted Answer

A)  The actual result of changing behavior following the rule of rational choice will always make people better off. 
B)  The actual result of changing behavior following the rule of rational choice will never make people better off. 
C)  In terms of the rule of rational choice, zero levels of pollution would be far too costly in terms of what we would have to give up to achieve them. 
D)  The rule of rational choice implies that it is impossible to be too safe. 
A)  The actual result of changing behavior following the rule of rational choice will always make people better off. 
B)  The actual result of changing behavior following the rule of rational choice will never make people better off. 
C)  In terms of the rule of rational choice, zero levels of pollution would be far too costly in terms of what we would have to give up to achieve them. 
D)  The rule of rational choice implies that it is impossible to be too safe.

Question 2

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.The economic way of thinking indicates that legislation of this type would:

Accepted Answer

A)  make it more expensive for parents to provide for their children. 
B)  reduce the value of children to their parents and therefore lead to a reduction in the birth rate. 
C)  reduce the after-tax cost of raising children and therefore increase the birth rate. 
D)  exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity. 
A)  make it more expensive for parents to provide for their children. 
B)  reduce the value of children to their parents and therefore lead to a reduction in the birth rate. 
C)  reduce the after-tax cost of raising children and therefore increase the birth rate. 
D)  exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity.

Question 3

The rule of rational choice is that in trying to make themselves better off,people alter their behavior if the expected marginal benefits to them from doing so ____ the expected marginal costs they will bear.

Accepted Answer

A)  exceed. 
B)  equal. 
C)  are less than. 
D)  Either a. or b. 
A)  exceed. 
B)  equal. 
C)  are less than. 
D)  Either a. or b.

Question 4

A stable monetary environment will typically lead to

Accepted Answer

A)  inflation. 
B)  producers and consumers better coordinating their decisions through markets. 
C)  independence of central banks. 
D)  increased trade deficits and limited budgets deficits. 
A)  inflation. 
B)  producers and consumers better coordinating their decisions through markets. 
C)  independence of central banks. 
D)  increased trade deficits and limited budgets deficits.

Question 5

Human capital is:

Accepted Answer

A)  the same as labor. 
B)  a term describing the tools and equipment owned by households. 
C)  a worker's physical effort when working with machines. 
D)  the expertise or knowledge possessed by workers. 
A)  the same as labor. 
B)  a term describing the tools and equipment owned by households. 
C)  a worker's physical effort when working with machines. 
D)  the expertise or knowledge possessed by workers.

Question 6

Exhibit 2-1   Refer to Exhibit 2-1.A student has only a few hours to prepare for two different exams tomorrow morning.The above table shows alternative possible exam outcomes with three alternative uses of the student's time.The opportunity cost of scoring an 84 on the history exam rather than 76 is:

Accepted Answer

A)  10 points on the economics exam. 
B)  7 points on the economics exam. 
C)  8 points on the history exam. 
D)  12 points on the economics exam. 
A)  10 points on the economics exam. 
B)  7 points on the economics exam. 
C)  8 points on the history exam. 
D)  12 points on the economics exam.

Question 7

The opportunity cost of a decision is the value of the best foregone alternative.

Accepted Answer

A) True 
 B)False

Question 8

In economics,which of the following is considered "land"?

Accepted Answer

A)  A 500 acre forest. 
B)  bauxite deposits. 
C)  underground pools of crude oil. 
D)  All of the above except a. are considered land. 
A)  A 500 acre forest. 
B)  bauxite deposits. 
C)  underground pools of crude oil. 
D)  All of the above except a. are considered land.

Question 9

Marginal thinking is best demonstrated by:

Accepted Answer

A)  choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. 
B)  deciding to never purchase a coat made with animal skins or furs. 
C)  acquiring all the information relevant to a choice before making that choice. 
D)  measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake. 
A)  choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. 
B)  deciding to never purchase a coat made with animal skins or furs. 
C)  acquiring all the information relevant to a choice before making that choice. 
D)  measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake.

Question 10

Entrepreneurship is:

Accepted Answer

A)  human capital. 
B)  another word for the financial capital that can be used to start a business. 
C)  the resource that organizes the other factors of production in order to produce goods and/or services. 
D)  another word for physical capital that is used to produce goods and services. 
A)  human capital. 
B)  another word for the financial capital that can be used to start a business. 
C)  the resource that organizes the other factors of production in order to produce goods and/or services. 
D)  another word for physical capital that is used to produce goods and services.

Question 11

If resources and goods are free to move across states and if Oregon producers choose to specialize in producing honey while California producers choose to specialize in growing almonds,then we could reasonable conclude that:

Accepted Answer

A)  California has a comparative advantage in producing almonds. 
B)  Oregon has a comparative advantage in producing honey. 
C)  the opportunity cost of growing almonds is lower in California than in Oregon. 
D)  all of the above are true. 
A)  California has a comparative advantage in producing almonds. 
B)  Oregon has a comparative advantage in producing honey. 
C)  the opportunity cost of growing almonds is lower in California than in Oregon. 
D)  all of the above are true.

Question 12

Who of the following would economists considered most likely to commit a crime?

Accepted Answer

A)  An individual with a high paying job because he faces a lower opportunity cost if caught 
B)  An individual with a high paying job because he faces a higher opportunity cost if caught 
C)  An individual without a job because he faces a lower opportunity cost if caught 
D)  An individual without a job because he faces a higher opportunity cost if caught 
A)  An individual with a high paying job because he faces a lower opportunity cost if caught 
B)  An individual with a high paying job because he faces a higher opportunity cost if caught 
C)  An individual without a job because he faces a lower opportunity cost if caught 
D)  An individual without a job because he faces a higher opportunity cost if caught

Question 13

Market failure occurs when:

Accepted Answer

A)  the stock markets tumble due to heavy selling. 
B)  the economy fails to allocate resources efficiently on its own. 
C)  demand shows signs of slowing down. 
D)  a country cannot produce a good or service at a lower opportunity cost than others. 
A)  the stock markets tumble due to heavy selling. 
B)  the economy fails to allocate resources efficiently on its own. 
C)  demand shows signs of slowing down. 
D)  a country cannot produce a good or service at a lower opportunity cost than others.

Question 14

In markets,information about the relative value of resources is communicated through:

Accepted Answer

A)  government agencies. 
B)  planning committees. 
C)  prices. 
D)  unions. 
A)  government agencies. 
B)  planning committees. 
C)  prices. 
D)  unions.

Question 15

Tractors,shovels,copy machines,and computer programming expertise are all examples of scarce resources.

Accepted Answer

A) True 
 B)False

Question 16

Maggie is a potter and she likes to dig her own clay for producing pots,cups and other ceramic items.She is aware of two places where she can obtain the right clay for her work.The first field is quite close,just at the edge of town.The second field is 15 miles away and (since there are no access roads)requires a half-day of travel just to get there.Compare the opportunity cost of producing pots using clay from each of these fields.

Accepted Answer

The opportunity cost of the clay necessa

Question 17

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.According to comparative advantage,

Accepted Answer

A)  Tom should kill more birds and fish less, then trade birds for fish. 
B)  Tom should kill fewer birds and fish more, then trade fish for birds. 
C)  Both, Tom should kill more birds and fish less. 
D)  Both, Tom should kill fewer birds and fish more. 
A)  Tom should kill more birds and fish less, then trade birds for fish. 
B)  Tom should kill fewer birds and fish more, then trade fish for birds. 
C)  Both, Tom should kill more birds and fish less. 
D)  Both, Tom should kill fewer birds and fish more.

Question 18

The expression,"There's no such thing as a free lunch" implies that:

Accepted Answer

A)  everyone has to pay for his/her own lunch. 
B)  the person consuming a good must always pay for it. 
C)  costs are incurred when resources are used to produce goods and services. 
D)  no one has time for a good lunch anymore. 
A)  everyone has to pay for his/her own lunch. 
B)  the person consuming a good must always pay for it. 
C)  costs are incurred when resources are used to produce goods and services. 
D)  no one has time for a good lunch anymore.

Question 19

Economists believe that in regards to criminal behavior:

Accepted Answer

A)  people engage in criminal activity because they are genetically predisposed to do so. 
B)  those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs. 
C)  individuals are irrational and don't respond to incentives. 
D)  economics can shed very little light on the subject. 
A)  people engage in criminal activity because they are genetically predisposed to do so. 
B)  those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs. 
C)  individuals are irrational and don't respond to incentives. 
D)  economics can shed very little light on the subject.

Question 20

Gallons of milk at a local grocery store are priced at one for $4.00,or two for $6.00.The marginal cost of buying a second gallon of milk:

Accepted Answer

A)  equals $6.00. 
B)  equals $4.00. 
C)  equals $3.00. 
D)  equals $2.00. 
A)  equals $6.00. 
B)  equals $4.00. 
C)  equals $3.00. 
D)  equals $2.00.

Exam 2: Economics: Eight Powerful Ideas

Which of the following is true?

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.The economic way of thinking indicates that legislation of this type would:

The rule of rational choice is that in trying to make themselves better off,people alter their behavior if the expected marginal benefits to them from doing so ____ the expected marginal costs they will bear.

A stable monetary environment will typically lead to

Human capital is:

Exhibit 2-1 Refer to Exhibit 2-1.A student has only a few hours to prepare for two different exams tomorrow morning.The above table shows alternative possible exam outcomes with three alternative uses of the student's time.The opportunity cost of scoring an 84 on the history exam rather than 76 is:

The opportunity cost of a decision is the value of the best foregone alternative.

In economics,which of the following is considered "land"?

Marginal thinking is best demonstrated by:

Entrepreneurship is:

If resources and goods are free to move across states and if Oregon producers choose to specialize in producing honey while California producers choose to specialize in growing almonds,then we could reasonable conclude that:

Who of the following would economists considered most likely to commit a crime?

Market failure occurs when:

In markets,information about the relative value of resources is communicated through:

Tractors,shovels,copy machines,and computer programming expertise are all examples of scarce resources.

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.According to comparative advantage,

The expression,"There's no such thing as a free lunch" implies that:

Economists believe that in regards to criminal behavior:

Gallons of milk at a local grocery store are priced at one for $4.00,or two for $6.00.The marginal cost of buying a second gallon of milk:

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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