Question 1

How are the fundamental economic questions answered in a market economy?

Accepted Answer

A)  The government alone decides the answers. 
B)  Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C)  Households and firms interact in markets to decide the answers to these questions. 
D)  Large corporations alone decide the answers. 
A)  The government alone decides the answers. 
B)  Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C)  Households and firms interact in markets to decide the answers to these questions. 
D)  Large corporations alone decide the answers.

Question 2

When voluntary exchange takes place, both parties gain from the exchange.

Accepted Answer

A) True 
 B)False

Question 3

Explain why economics is considered a social science.

Accepted Answer

Economics is a social science

Question 4

Which of the following is not an example of an economic trade-off that a firm has to make?

Accepted Answer

A)  whether it is cheaper to produce with more machines or with more workers 
B)  whether it is cheaper to outsource the production of a good or service 
C)  whether or not consumers will buy its products 
D)  whether it should produce more of its product 
A)  whether it is cheaper to produce with more machines or with more workers 
B)  whether it is cheaper to outsource the production of a good or service 
C)  whether or not consumers will buy its products 
D)  whether it should produce more of its product

Question 5

What is opportunity cost?

Accepted Answer

Opportunity cost refers to the highest-v

Question 6

In economics, choices must be made because we live in a world of

Accepted Answer

A)  unemployment. 
B)  scarcity. 
C)  greed. 
D)  unlimited resources. 
A)  unemployment. 
B)  scarcity. 
C)  greed. 
D)  unlimited resources.

Question 7

Explain the economic idea that 'people respond to incentives.'

Accepted Answer

Human beings act from a variety of motiv

Question 8

What is meant by the statement that 'optimal decisions are made at the margin'?

Accepted Answer

In economics, the word 'marginal' means

Question 9

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives. This is an example of a macroeconomics topic.

Accepted Answer

A) True 
 B)False

Question 10

A university must decide if it wants to offer more adult literacy classes. This decision involves answering the economic question of 'for whom to produce.'

Accepted Answer

A) True 
 B)False

Question 11

The basic economic problem of ________ has always existed and will continue to exist.

Accepted Answer

A)  scarcity 
B)  efficiency 
C)  inflation 
D)  recession 
A)  scarcity 
B)  efficiency 
C)  inflation 
D)  recession

Question 12

What is a centrally planned economy?

Accepted Answer

A centrally planned economy is

Question 13

In economics, the term 'equity' means

Accepted Answer

A)  everyone has an equal standard of living. 
B)  the hardest working individuals consume all they want. 
C)  only elected officials have high standards of living. 
D)  economic benefits are distributed fairly. 
A)  everyone has an equal standard of living. 
B)  the hardest working individuals consume all they want. 
C)  only elected officials have high standards of living. 
D)  economic benefits are distributed fairly.

Question 14

-Refer to Figure 1-4. Which of the following statements is false?

Accepted Answer

A)  The slope of the tangent at E is positive. 
B)  The slope of the tangent at F is negative. 
C)  The slope of the tangent at E and the slope of the tangent at F are equal. 
D)  Neither the slope of the tangent at E nor the slope of the tangent at F are equal to zero. 
A)  The slope of the tangent at E is positive. 
B)  The slope of the tangent at F is negative. 
C)  The slope of the tangent at E and the slope of the tangent at F are equal. 
D)  Neither the slope of the tangent at E nor the slope of the tangent at F are equal to zero.

Question 15

Which of the following statements is false?

Accepted Answer

A)  An inverse relationship has a negative slope value. 
B)  A direct relationship has a positive slope value. 
C)  A curved line has slope values that change at every point. 
D)  A straight line has a slope of zero. 
A)  An inverse relationship has a negative slope value. 
B)  A direct relationship has a positive slope value. 
C)  A curved line has slope values that change at every point. 
D)  A straight line has a slope of zero.

Question 16

Which of the following generates productive efficiency?

Accepted Answer

A)  competition among sellers 
B)  competition among buyers 
C)  government inspectors 
D)  government production rules and regulations 
A)  competition among sellers 
B)  competition among buyers 
C)  government inspectors 
D)  government production rules and regulations

Question 17

The additional cost to a producer of hiring an additional unit of labour is called the marginal cost.

Accepted Answer

A) True 
 B)False

Question 18

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

Accepted Answer

A)  2 1/2 Russian tea cakes 
B)  2/5 of a Russian tea cake 
C)  $2.50 
D)  $1.00 
A)  2 1/2 Russian tea cakes 
B)  2/5 of a Russian tea cake 
C)  $2.50 
D)  $1.00

Question 19

Marginal analysis involves undertaking an activity

Accepted Answer

A)  until its marginal costs start declining. 
B)  only when its marginal benefits are positive. 
C)  until its marginal benefits equal marginal costs. 
D)  only if its marginal costs are greater than its marginal benefits. 
A)  until its marginal costs start declining. 
B)  only when its marginal benefits are positive. 
C)  until its marginal benefits equal marginal costs. 
D)  only if its marginal costs are greater than its marginal benefits.

Question 20

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

Accepted Answer

A)  people with health insurance will be less likely to be overweight than people without health insurance. 
B)  people with health insurance will be more likely to be overweight than people without health insurance. 
C)  people with health insurance will be equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight. 
A)  people with health insurance will be less likely to be overweight than people without health insurance. 
B)  people with health insurance will be more likely to be overweight than people without health insurance. 
C)  people with health insurance will be equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight.

How are the fundamental economic questions answered in a market economy?

When voluntary exchange takes place, both parties gain from the exchange.

Explain why economics is considered a social science.

Which of the following is not an example of an economic trade-off that a firm has to make?

What is opportunity cost?

In economics, choices must be made because we live in a world of

Explain the economic idea that 'people respond to incentives.'

What is meant by the statement that 'optimal decisions are made at the margin'?

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives. This is an example of a macroeconomics topic.

A university must decide if it wants to offer more adult literacy classes. This decision involves answering the economic question of 'for whom to produce.'

The basic economic problem of ________ has always existed and will continue to exist.

What is a centrally planned economy?

In economics, the term 'equity' means

-Refer to Figure 1-4. Which of the following statements is false?

Which of the following statements is false?

Which of the following generates productive efficiency?

The additional cost to a producer of hiring an additional unit of labour is called the marginal cost.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

Marginal analysis involves undertaking an activity

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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Exam 1: Economics Foundations and Models

How are the fundamental economic questions answered in a market economy?

When voluntary exchange takes place, both parties gain from the exchange.

Explain why economics is considered a social science.

Which of the following is not an example of an economic trade-off that a firm has to make?

What is opportunity cost?

In economics, choices must be made because we live in a world of

Explain the economic idea that 'people respond to incentives.'

What is meant by the statement that 'optimal decisions are made at the margin'?

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives. This is an example of a macroeconomics topic.

A university must decide if it wants to offer more adult literacy classes. This decision involves answering the economic question of 'for whom to produce.'

The basic economic problem of ________ has always existed and will continue to exist.

What is a centrally planned economy?

In economics, the term 'equity' means

-Refer to Figure 1-4. Which of the following statements is false?

Which of the following statements is false?

Which of the following generates productive efficiency?

The additional cost to a producer of hiring an additional unit of labour is called the marginal cost.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

Marginal analysis involves undertaking an activity

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters