Question 1

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 2

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge

Question 3

When a single person (or small group) has the ability to influence market prices, there is

Accepted Answer

A)  competition. 
B)  market power. 
C)  an externality. 
D)  a lack of property rights. 
A)  competition. 
B)  market power. 
C)  an externality. 
D)  a lack of property rights.

Question 4

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Accepted Answer

A)  Polish firms are faced with stricter government regulations than Romanian firms. 
B)  total income is divided among fewer workers in Poland since it has a smaller labor force than Romanib. 
C)  Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops. 
D)  productivity in Poland is higher than in Romania. 
A)  Polish firms are faced with stricter government regulations than Romanian firms. 
B)  total income is divided among fewer workers in Poland since it has a smaller labor force than Romanib. 
C)  Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops. 
D)  productivity in Poland is higher than in Romania.

Question 5

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Accepted Answer

A)  The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
B)  The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
C)  Only half of the cost of the parking permit is part of the opportunity cost of attending college. 
D)  The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances. 
A)  The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
B)  The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. 
C)  Only half of the cost of the parking permit is part of the opportunity cost of attending college. 
D)  The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.

Question 6

When calculating the cost of college, which of the following should you probably not include?

Accepted Answer

A)  The cost of tuition 
B)  The cost of books required for college classes 
C)  The income you would have earned had you not gone to college 
D)  The cost of rent for your off-campus apartment. 
A)  The cost of tuition 
B)  The cost of books required for college classes 
C)  The income you would have earned had you not gone to college 
D)  The cost of rent for your off-campus apartment.

Question 7

Which of the following could reduce economic efficiency?

Accepted Answer

A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct 
A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct

Question 8

Which of the following statements does not apply to a market economy?

Accepted Answer

A)  Firms decide whom to hire and what to produce. 
B)  The "invisible hand" usually maximizes the well­being of society as a whole. 
C)  Households decide which firms to work for and what to buy with their incomes. 
D)  Government policies are the primary forces that guide the decisions of firms and households. 
A)  Firms decide whom to hire and what to produce. 
B)  The "invisible hand" usually maximizes the well­being of society as a whole. 
C)  Households decide which firms to work for and what to buy with their incomes. 
D)  Government policies are the primary forces that guide the decisions of firms and households.

Question 9

Which of the following is not an example of a group responding to an incentive?

Accepted Answer

A)  Students attend class because of an attendance policy that reduces their grade for absences. 
B)  Consumers buy more of a product when it is on sale at a reduced price. 
C)  Universities offer fewer online classes when they generate more revenue than traditional classes. 
D)  Employees work harder to earn higher commissions. 
A)  Students attend class because of an attendance policy that reduces their grade for absences. 
B)  Consumers buy more of a product when it is on sale at a reduced price. 
C)  Universities offer fewer online classes when they generate more revenue than traditional classes. 
D)  Employees work harder to earn higher commissions.

Question 10

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)  This is progress because freed-up labor is used to produce other goods. 
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)  This is progress because freed-up labor is used to produce other goods.

Question 11

The business cycle is measured by the

Accepted Answer

A)  production of goods and services. 
B)  number of people employed. 
C)  the interest rate. 
D)  Both a and b are correct. 
A)  production of goods and services. 
B)  number of people employed. 
C)  the interest rate. 
D)  Both a and b are correct.

Question 12

Rick buys a 1966 Mustang for $3,000, planning to restore and sell the car. He goes on to spend $9,000 restoring the car. At this point he can sell the car for $10,000. As an alternative, he can spend an additional $3,000 replacing the engine. With a new engine the car would sell for $13,000. Rick should

Accepted Answer

A)  complete the repairs and sell the car for $13,000. 
B)  sell the car now for $10,000. 
C)  never try such an expensive project again. 
D)  be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it. 
A)  complete the repairs and sell the car for $13,000. 
B)  sell the car now for $10,000. 
C)  never try such an expensive project again. 
D)  be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it.

Question 13

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Accepted Answer

A)  only the one with a low level of output per person. 
B)  only the one with a high level of output per person. 
C)  both 
D)  neither 
A)  only the one with a low level of output per person. 
B)  only the one with a high level of output per person. 
C)  both 
D)  neither

Question 14

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Accepted Answer

The answer of Economists use the term to refer to...

Question 15

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 16

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 17

If the United States decides to trade with Yemen, we know that

Accepted Answer

A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast. 
A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast.

Question 18

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited. 
A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited.

Question 19

Economists use the term to refer to an increase in the overall level of prices in the economy.

Accepted Answer

The answer of Economists use the term to refer to...

Question 20

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Accepted Answer

A)  $33,800. 
B)  $42,600. 
C)  $49,800. 
D)  $57,000. 
A)  $33,800. 
B)  $42,600. 
C)  $49,800. 
D)  $57,000.

Exam 1: Ten Principles of Economics

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

When a single person (or small group) has the ability to influence market prices, there is

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

When calculating the cost of college, which of the following should you probably not include?

Which of the following could reduce economic efficiency?

Which of the following statements does not apply to a market economy?

Which of the following is not an example of a group responding to an incentive?

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?

The business cycle is measured by the

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

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

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.

If the United States decides to trade with Yemen, we know that

The phenomenon of scarcity stems from the fact that

Economists use the term to refer to an increase in the overall level of prices in the economy.

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

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

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