Question 1

England can benefit from trade

Accepted Answer

A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation. 
A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation.

Question 2

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the company's marginal cost?

Accepted Answer

The answer of Scenario 1-6
It costs a company $30,000 to...

Question 3

For which of the following problems can well-designed public policy enhance economic efficiency?

Accepted Answer

A)  both externalities and market power 
B)  externalities, but not market power 
C)  market power, but not externalities 
D)  neither externalities nor market power 
A)  both externalities and market power 
B)  externalities, but not market power 
C)  market power, but not externalities 
D)  neither externalities nor market power

Question 4

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  decreased by 1.7 percent between 1998 and 2008. 
B)  remained unchanged between 1998 and 2008. 
C)  increased by 4.75 percent between 1998 and 2008. 
D)  increased by 6.25 percent between 1998 and 2008. 
A)  decreased by 1.7 percent between 1998 and 2008. 
B)  remained unchanged between 1998 and 2008. 
C)  increased by 4.75 percent between 1998 and 2008. 
D)  increased by 6.25 percent between 1998 and 2008.

Question 5

In a market economy,

Accepted Answer

A)  households decide which firms to work for and what to buy with their incomes. 
B)  firms decide whom to hire and what to make. 
C)  a central planner makes decisions about production and consumption. 
D)  Both a and b are correct. 
A)  households decide which firms to work for and what to buy with their incomes. 
B)  firms decide whom to hire and what to make. 
C)  a central planner makes decisions about production and consumption. 
D)  Both a and b are correct.

Question 6

An example of an externality is the impact of

Accepted Answer

A)  bad weather on the income of farmers. 
B)  the personal income tax on a person's ability to purchase goods and services. 
C)  pollution from a factory on the health of people in the vicinity of the factory. 
D)  increases in health care costs on the health of individuals in society. 
A)  bad weather on the income of farmers. 
B)  the personal income tax on a person's ability to purchase goods and services. 
C)  pollution from a factory on the health of people in the vicinity of the factory. 
D)  increases in health care costs on the health of individuals in society.

Question 7

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Accepted Answer

A)  trade can make everyone better off. 
B)  people face trade-offs. 
C)  rational people think at the margin. 
D)  people respond to incentives. 
A)  trade can make everyone better off. 
B)  people face trade-offs. 
C)  rational people think at the margin. 
D)  people respond to incentives.

Question 8

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Accepted Answer

A)  intended to reduce unemployment. 
B)  may lead to excessive inflation over time. 
C)  resulted in higher taxes and an increased supply of money. 
D)  Both a and b are correct. 
A)  intended to reduce unemployment. 
B)  may lead to excessive inflation over time. 
C)  resulted in higher taxes and an increased supply of money. 
D)  Both a and b are correct.

Question 9

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Accepted Answer

A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct. 
A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct.

Question 10

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo

Question 11

Which of the following statements about markets is most accurate?

Accepted Answer

A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations. 
A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations.

Question 12

The term refers to a small incremental adjustment to an existing plan of action.

Accepted Answer

The answer of The term refers to a small incremental...

Question 13

If an externality is present in a market, economic efficiency may be enhanced by

Accepted Answer

A)  government intervention. 
B)  a decrease in foreign competition. 
C)  fewer market participants. 
D)  weaker property rights. 
A)  government intervention. 
B)  a decrease in foreign competition. 
C)  fewer market participants. 
D)  weaker property rights.

Question 14

Market economies are distinguished from other types of economies largely on the basis of

Accepted Answer

A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers. 
A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers.

Question 15

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

Accepted Answer

A)  how much she spent applying to Northwestern, and the difference between living expenses at Northwestern and the other university 
B)  how much she spent applying to Northwestern, but not the difference between living expenses at Northwestern and the other university 
C)  the difference between living expenses at Northwestern and her second choice, but not how much she spent applying to Northwestern 
D)  neither how much she spent applying to Northwestern nor the difference between living expenses at Northwestern and her second choice 
A)  how much she spent applying to Northwestern, and the difference between living expenses at Northwestern and the other university 
B)  how much she spent applying to Northwestern, but not the difference between living expenses at Northwestern and the other university 
C)  the difference between living expenses at Northwestern and her second choice, but not how much she spent applying to Northwestern 
D)  neither how much she spent applying to Northwestern nor the difference between living expenses at Northwestern and her second choice

Question 16

The "invisible hand" works to promote general well­being in the economy primarily through

Accepted Answer

A)  government intervention. 
B)  the political process. 
C)  people's pursuit of self­interest. 
D)  altruism. 
A)  government intervention. 
B)  the political process. 
C)  people's pursuit of self­interest. 
D)  altruism.

Question 17

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Accepted Answer

A)  15 years. 
B)  25 years. 
C)  35 years. 
D)  45 years. 
A)  15 years. 
B)  25 years. 
C)  35 years. 
D)  45 years.

Question 18

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Accepted Answer

A)  scarcity. 
B)  surpluses. 
C)  inefficiencies. 
D)  inequalities. 
A)  scarcity. 
B)  surpluses. 
C)  inefficiencies. 
D)  inequalities.

Question 19

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

Accepted Answer

A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource. 
A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource.

Question 20

The term market failure refers to

Accepted Answer

A)  a situation in which the market on its own fails to allocate resources efficiently. 
B)  an unsuccessful advertising campaign which reduces demand for a product. 
C)  a situation in which competition among firms becomes ruthless. 
D)  a firm which is forced out of business because of losses. 
A)  a situation in which the market on its own fails to allocate resources efficiently. 
B)  an unsuccessful advertising campaign which reduces demand for a product. 
C)  a situation in which competition among firms becomes ruthless. 
D)  a firm which is forced out of business because of losses.

Exam 1: Ten Principles of Economics

England can benefit from trade

Scenario 1-6 It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. -Refer to Scenario 1-6. What is the company's marginal cost?

For which of the following problems can well-designed public policy enhance economic efficiency?

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

In a market economy,

An example of an externality is the impact of

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Which of the following statements about markets is most accurate?

The term refers to a small incremental adjustment to an existing plan of action.

If an externality is present in a market, economic efficiency may be enhanced by

Market economies are distinguished from other types of economies largely on the basis of

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

The "invisible hand" works to promote general well­being in the economy primarily through

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

The term market failure refers to

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

Filters

The "invisible hand" works to promote general wellbeing in the economy primarily through