Question 1

All ________ economies have been political dictatorships.

Accepted Answer

A) centrally planned 
B) mixed 
C) market 
D) mixed and market 
A) centrally planned 
B) mixed 
C) market 
D) mixed and market

Question 2

Scarcity refers to the situation in which

Accepted Answer

A) unlimited wants exceed limited resources. 
B) unlimited resources exceed limited wants. 
C) a country's population is larger than its resource base. 
D) a nation's poverty level increases faster than its population. 
A) unlimited wants exceed limited resources. 
B) unlimited resources exceed limited wants. 
C) a country's population is larger than its resource base. 
D) a nation's poverty level increases faster than its population.

Question 3

What are the five steps by which economists arrive at a useful economic model?

Accepted Answer

1.Decide on the assumptions to use in de

Question 4

Table 1-3
   Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
-Refer to Table 1-3.What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?

Accepted Answer

A) $10 
B) $20 
C) $25 
D) $91.67 
A) $10 
B) $20 
C) $25 
D) $91.67

Question 5

Mrs.Lovejoy decides to invest in companies which she believes are producing its goods based on the preferences of consumers.Mrs.Lovejoy is investing in companies that are

Accepted Answer

A) productively efficient. 
B) allocatively efficient. 
C) both productively and allocatively efficient. 
D) always going to be profitable. 
A) productively efficient. 
B) allocatively efficient. 
C) both productively and allocatively efficient. 
D) always going to be profitable.

Question 6

Which of the following contributes to the efficiency of markets?

Accepted Answer

A) Governments play an active role in the day-to-day operations of markets. 
B) Markets are able to bring about an equitable distribution of goods and services. 
C) Markets promote equal standards of living. 
D) Markets promote competition and voluntary exchange. 
A) Governments play an active role in the day-to-day operations of markets. 
B) Markets are able to bring about an equitable distribution of goods and services. 
C) Markets promote equal standards of living. 
D) Markets promote competition and voluntary exchange.

Question 7

Scenario 1-1

Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."

-Refer to Scenario 1-1.Had the firm not produced and sold the last 500 cigars,would its profit be higher or lower,and if so by how much?

Accepted Answer

A) Its profit will be $500 higher. 
B) Its profit will be $1,000 higher. 
C) Its profit will be $500 lower. 
D) Its profit will be $1,500 lower. 
A) Its profit will be $500 higher. 
B) Its profit will be $1,000 higher. 
C) Its profit will be $500 lower. 
D) Its profit will be $1,500 lower.

Question 8

According to census figures and the Congressional Budget Office,the number of people ________ is projected to increase and the number of people ________ is projected to decrease by the year 2020.

Accepted Answer

A) who are uninsured; who are insured 
B) who are uninsured; age 65 and older 
C) age 65 and older; who are uninsured 
D) who are insured; age 65 and older 
A) who are uninsured; who are insured 
B) who are uninsured; age 65 and older 
C) age 65 and older; who are uninsured 
D) who are insured; age 65 and older

Question 9

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need.

Question 10

Economists assume that rational people

Accepted Answer

A) never use all available information as they act to achieve their goals. 
B) undertake activities that benefit others and hurt themselves. 
C) only weigh the benefits and costs of the most desirable alternative actions. 
D) respond to economic incentives. 
A) never use all available information as they act to achieve their goals. 
B) undertake activities that benefit others and hurt themselves. 
C) only weigh the benefits and costs of the most desirable alternative actions. 
D) respond to economic incentives.

Question 11

Cassie's Quilts alters,reconstructs and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What should she do?

Accepted Answer

A) She should cut her losses and sell the quilt now. 
B) It does not matter what she does; she is going to take a loss on her project. 
C) She should purchase the period fabric,complete the task and then sell the quilt. 
D) She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time. 
A) She should cut her losses and sell the quilt now. 
B) It does not matter what she does; she is going to take a loss on her project. 
C) She should purchase the period fabric,complete the task and then sell the quilt. 
D) She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.

Question 12

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

Accepted Answer

A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent 
A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent

Question 13

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a dozen eggs?

Accepted Answer

A) 1 2/3 gallons of milk 
B) 3/5 of a gallon of milk 
C) $2.50 
D) $1.50 
A) 1 2/3 gallons of milk 
B) 3/5 of a gallon of milk 
C) $2.50 
D) $1.50

Question 14

According to the Centers for Disease Control and Prevention,________ in 2013 in which less than 20 percent of the population was considered obese.

Accepted Answer

A) Colorado was the only state 
B) there were only 5 states 
C) there were more than 25 states 
D) there were no states 
A) Colorado was the only state 
B) there were only 5 states 
C) there were more than 25 states 
D) there were no states

Question 15

An "omitted variable" is

Accepted Answer

A) a variable which is purposely omitted from an economic analysis. 
B) a variable which is inadvertently omitted from an economic analysis. 
C) a variable that has no impact on other variables in an economic analysis. 
D) a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect. 
A) a variable which is purposely omitted from an economic analysis. 
B) a variable which is inadvertently omitted from an economic analysis. 
C) a variable that has no impact on other variables in an economic analysis. 
D) a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect.

Question 16

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Accepted Answer

A) invest in companies that produce goods and services based on consumer preferences 
B) invest in companies that produce goods and services at the lowest possible cost 
C) invest in companies that fairly distribute their products and services 
D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero 
A) invest in companies that produce goods and services based on consumer preferences 
B) invest in companies that produce goods and services at the lowest possible cost 
C) invest in companies that fairly distribute their products and services 
D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero

Question 17

Every society faces trade-offs.Explain the concept of trade-offs.

Accepted Answer

Trade-offs refer to the idea t

Question 18

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

Accepted Answer

A) True 
 B)False

Question 19

Figure 1-2  
-Refer to Figure 1-2.Calculate the area of the triangle A.

Accepted Answer

A) $8.4 million 
B) $6.3 million 
C) $3.15 million 
D) $2.1 million 
A) $8.4 million 
B) $6.3 million 
C) $3.15 million 
D) $2.1 million

Question 20

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

Accepted Answer

A) purchases; unlimited 
B) choices; scarce 
C) income; available 
D) decisions; household 
A) purchases; unlimited 
B) choices; scarce 
C) income; available 
D) decisions; household

All ________ economies have been political dictatorships.

Scarcity refers to the situation in which

What are the five steps by which economists arrive at a useful economic model?

Mrs.Lovejoy decides to invest in companies which she believes are producing its goods based on the preferences of consumers.Mrs.Lovejoy is investing in companies that are

Which of the following contributes to the efficiency of markets?

According to census figures and the Congressional Budget Office,the number of people is projected to increase and the number of people is projected to decrease by the year 2020.

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Economists assume that rational people

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a dozen eggs?

According to the Centers for Disease Control and Prevention,________ in 2013 in which less than 20 percent of the population was considered obese.

An "omitted variable" is

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Every society faces trade-offs.Explain the concept of trade-offs.

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

Economics is the study of the people make to attain their goals,given their resources.

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 1: Economics: Foundations and Models

All ________ economies have been political dictatorships.

Scarcity refers to the situation in which

What are the five steps by which economists arrive at a useful economic model?

Mrs.Lovejoy decides to invest in companies which she believes are producing its goods based on the preferences of consumers.Mrs.Lovejoy is investing in companies that are

Which of the following contributes to the efficiency of markets?

According to census figures and the Congressional Budget Office,the number of people ________ is projected to increase and the number of people ________ is projected to decrease by the year 2020.

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Economists assume that rational people

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a dozen eggs?

According to the Centers for Disease Control and Prevention,________ in 2013 in which less than 20 percent of the population was considered obese.

An "omitted variable" is

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Every society faces trade-offs.Explain the concept of trade-offs.

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

According to census figures and the Congressional Budget Office,the number of people is projected to increase and the number of people is projected to decrease by the year 2020.

Economics is the study of the people make to attain their goals,given their resources.