Question 1

A friend of yours asks you why market prices are better than government-determined prices.What do you say?

Accepted Answer

A)  Because they generally reflect the value of a good to society,but not the cost of making it. 
B)  Because they generally reflect the cost to society of making a good,but not its value. 
C)  Because they generally reflect both the value of a good to society and the cost of making it. 
D)  Because they generally reflect neither the value of a good to society nor the cost of making it. 
A)  Because they generally reflect the value of a good to society,but not the cost of making it. 
B)  Because they generally reflect the cost to society of making a good,but not its value. 
C)  Because they generally reflect both the value of a good to society and the cost of making it. 
D)  Because they generally reflect neither the value of a good to society nor the cost of making it.

Question 2

What is NOT a benefit from trade?

Accepted Answer

A)  the ability to specialize 
B)  a greater variety of goods and services becoming available 
C)  less competition 
D)  lower prices 
A)  the ability to specialize 
B)  a greater variety of goods and services becoming available 
C)  less competition 
D)  lower prices

Question 3

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping.For Daniel,what would his tradeoff be?

Accepted Answer

A)  nothing,because no dollar value can be put on sleep 
B)  nothing,because studying would be more beneficial than sleep 
C)  the six hours of sleep he could have had if he had gone to bed before midnight 
D)  the two hours of rest he would have gotten 
A)  nothing,because no dollar value can be put on sleep 
B)  nothing,because studying would be more beneficial than sleep 
C)  the six hours of sleep he could have had if he had gone to bed before midnight 
D)  the two hours of rest he would have gotten

Question 4

What will happen if a copper refinery does NOT bear the entire cost of the smoke it emits?

Accepted Answer

A)  It will not emit any smoke so as to avoid the entire cost of the smoke. 
B)  It will emit lower levels of smoke. 
C)  It will emit an acceptable level of smoke. 
D)  It will emit too much smoke. 
A)  It will not emit any smoke so as to avoid the entire cost of the smoke. 
B)  It will emit lower levels of smoke. 
C)  It will emit an acceptable level of smoke. 
D)  It will emit too much smoke.

Question 5

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

Accepted Answer

To lower inflation,the government may ch

Question 6

How do prices direct economic activity in a market economy?

Accepted Answer

A)  by influencing the actions of buyers and sellers 
B)  by reducing scarcity of the goods and services produced 
C)  by eliminating the need for government intervention 
D)  by allocating goods and services produced in the most equitable way 
A)  by influencing the actions of buyers and sellers 
B)  by reducing scarcity of the goods and services produced 
C)  by eliminating the need for government intervention 
D)  by allocating goods and services produced in the most equitable way

Question 7

What happened to prices in Germany during the early 1920s?

Accepted Answer

A)  They doubled annually. 
B)  They doubled monthly. 
C)  They tripled monthly. 
D)  They tripled annually. 
A)  They doubled annually. 
B)  They doubled monthly. 
C)  They tripled monthly. 
D)  They tripled annually.

Question 8

After much consideration,you have chosen Cancun over Fort Lauderdale for your spring break trip this year.For this decision to change,what must occur?

Accepted Answer

A)  The marginal benefit of Cancun must increase. 
B)  The marginal cost of Cancun must decrease. 
C)  The marginal benefit of Fort Lauderdale must increase. 
D)  The marginal cost of Fort Lauderdale must increase. 
A)  The marginal benefit of Cancun must increase. 
B)  The marginal cost of Cancun must decrease. 
C)  The marginal benefit of Fort Lauderdale must increase. 
D)  The marginal cost of Fort Lauderdale must increase.

Question 9

How does the invisible hand primarily work to promote general well-being in the economy?

Accepted Answer

A)  through government intervention 
B)  through the political process 
C)  through self-interest 
D)  through altruism 
A)  through government intervention 
B)  through the political process 
C)  through self-interest 
D)  through altruism

Question 10

What happens when government policies such as the welfare system try to help the neediest members of society?

Accepted Answer

A)  It increases equity and reduces efficiency. 
B)  It reduces charitable contributions in an economy. 
C)  It increases the productivity of the needy in society. 
D)  It causes market failure to occur. 
A)  It increases equity and reduces efficiency. 
B)  It reduces charitable contributions in an economy. 
C)  It increases the productivity of the needy in society. 
D)  It causes market failure to occur.

Question 11

Why do both households and societies face many decisions?

Accepted Answer

A)  Resources are scarce. 
B)  Populations may fluctuate over time. 
C)  Wages for households and therefore society fluctuate with business cycles. 
D)  People,by nature,tend to disagree. 
A)  Resources are scarce. 
B)  Populations may fluctuate over time. 
C)  Wages for households and therefore society fluctuate with business cycles. 
D)  People,by nature,tend to disagree.

Question 12

What does the saying "There is no such thing as a free lunch" mean?

Accepted Answer

A)  Even people on welfare have to pay for food. 
B)  The cost of living is always increasing. 
C)  To get something we like,we usually have to give up another thing we like. 
D)  All costs are included in the price of a product. 
A)  Even people on welfare have to pay for food. 
B)  The cost of living is always increasing. 
C)  To get something we like,we usually have to give up another thing we like. 
D)  All costs are included in the price of a product.

Question 13

What is the best example of a marginal change?

Accepted Answer

A)  College tuition rose by 1% last year. 
B)  Kim gets a big promotion at work.She also gets a raise from $25,000 per year to $40,000 per year. 
C)  Mark graduates from university and takes a job.His income increases from $10,000 per year to $50,000 per year. 
D)  A drought hits Saskatchewan and the price of wheat increases from $4.00 per bushel to $8.00 per bushel. 
A)  College tuition rose by 1% last year. 
B)  Kim gets a big promotion at work.She also gets a raise from $25,000 per year to $40,000 per year. 
C)  Mark graduates from university and takes a job.His income increases from $10,000 per year to $50,000 per year. 
D)  A drought hits Saskatchewan and the price of wheat increases from $4.00 per bushel to $8.00 per bushel.

Question 14

What would happen to the study of economics if scarcity disappeared?

Accepted Answer

Since economics is the study of how soci

Question 15

What do we know about college-age athletes who drop out of college to play professional sports?

Accepted Answer

A)  They are not rational decision makers. 
B)  They are well aware that their opportunity cost of attending college is very high. 
C)  They are concerned more about present circumstances than their future. 
D)  They underestimate the value of a college education. 
A)  They are not rational decision makers. 
B)  They are well aware that their opportunity cost of attending college is very high. 
C)  They are concerned more about present circumstances than their future. 
D)  They underestimate the value of a college education.

Question 16

What does the word "margin" mean?

Accepted Answer

A)  edge 
B)  distance 
C)  inside 
D)  measure 
A)  edge 
B)  distance 
C)  inside 
D)  measure

Question 17

How is the self-interest of the participants in an economy guided into promoting general economic self-interest?

Accepted Answer

A)  by the invisible hand 
B)  by market power 
C)  by government intervention 
D)  by property rights 
A)  by the invisible hand 
B)  by market power 
C)  by government intervention 
D)  by property rights

Question 18

Define opportunity cost.What is the opportunity cost to you of attending university? What was your opportunity cost of coming to class today?

Accepted Answer

Whatever must be given up to obtain some

Question 19

A worker in Bangladesh can earn $1 per day making cotton cloth on a handloom.A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Accepted Answer

A)  Canadian textile workers belong to a union. 
B)  There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C)  Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Bangladesh has a low-wage policy to make its textile industry more competitive in world markets. 
A)  Canadian textile workers belong to a union. 
B)  There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C)  Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Bangladesh has a low-wage policy to make its textile industry more competitive in world markets.

Question 20

Since taxes affect only the price paid by the buyer,they cannot have an adverse impact on the allocation of society's resources.

Accepted Answer

A) True 
 B)False

A friend of yours asks you why market prices are better than government-determined prices.What do you say?

What is NOT a benefit from trade?

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping.For Daniel,what would his tradeoff be?

What will happen if a copper refinery does NOT bear the entire cost of the smoke it emits?

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

How do prices direct economic activity in a market economy?

What happened to prices in Germany during the early 1920s?

After much consideration,you have chosen Cancun over Fort Lauderdale for your spring break trip this year.For this decision to change,what must occur?

How does the invisible hand primarily work to promote general well-being in the economy?

What happens when government policies such as the welfare system try to help the neediest members of society?

Why do both households and societies face many decisions?

What does the saying "There is no such thing as a free lunch" mean?

What is the best example of a marginal change?

What would happen to the study of economics if scarcity disappeared?

What do we know about college-age athletes who drop out of college to play professional sports?

What does the word "margin" mean?

How is the self-interest of the participants in an economy guided into promoting general economic self-interest?

Define opportunity cost.What is the opportunity cost to you of attending university? What was your opportunity cost of coming to class today?

A worker in Bangladesh can earn $1 per day making cotton cloth on a handloom.A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Since taxes affect only the price paid by the buyer,they cannot have an adverse impact on the allocation of society's resources.

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

A friend of yours asks you why market prices are better than government-determined prices.What do you say?

What is NOT a benefit from trade?

Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping.For Daniel,what would his tradeoff be?

What will happen if a copper refinery does NOT bear the entire cost of the smoke it emits?

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

How do prices direct economic activity in a market economy?

What happened to prices in Germany during the early 1920s?

After much consideration,you have chosen Cancun over Fort Lauderdale for your spring break trip this year.For this decision to change,what must occur?

How does the invisible hand primarily work to promote general well-being in the economy?

What happens when government policies such as the welfare system try to help the neediest members of society?

Why do both households and societies face many decisions?

What does the saying "There is no such thing as a free lunch" mean?

What is the best example of a marginal change?

What would happen to the study of economics if scarcity disappeared?

What do we know about college-age athletes who drop out of college to play professional sports?

What does the word "margin" mean?

How is the self-interest of the participants in an economy guided into promoting general economic self-interest?

Define opportunity cost.What is the opportunity cost to you of attending university? What was your opportunity cost of coming to class today?

A worker in Bangladesh can earn $1 per day making cotton cloth on a handloom.A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Since taxes affect only the price paid by the buyer,they cannot have an adverse impact on the allocation of society's resources.

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters