Question 1

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Accepted Answer

A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units 
A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units

Question 2

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in

Accepted Answer

A)  a growing number of doctor's choosing to open private practices. 
B)  more medical practices being owned by hospitals than by individual doctors. 
C)  a majority of hospitals closing routine medical practices in order to focus only on emergency care facilities. 
D)  a majority of doctors working directly for insurance companies. 
A)  a growing number of doctor's choosing to open private practices. 
B)  more medical practices being owned by hospitals than by individual doctors. 
C)  a majority of hospitals closing routine medical practices in order to focus only on emergency care facilities. 
D)  a majority of doctors working directly for insurance companies.

Question 3

When production reflects consumer preferences,________ occurs.

Accepted Answer

A)  allocative efficiency 
B)  productive efficiency 
C)  equity 
D)  efficient central planning 
A)  allocative efficiency 
B)  productive efficiency 
C)  equity 
D)  efficient central planning

Question 4

Scarcity is a problem that will eventually disappear as technology advances.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is 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)  Some U.S. colleges are actively recruiting foreign students for their technology-based programs. 
D)  All New York City art museums are considering adopting a free-admission policy for local residents one weekend per month. 
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)  Some U.S. colleges are actively recruiting foreign students for their technology-based programs. 
D)  All New York City art museums are considering adopting a free-admission policy for local residents one weekend per month.

Question 6

Economists assume that rational people do all of the following except

Accepted Answer

A)  use all available information as they act to achieve their goals. 
B)  undertake activities that benefit others and hurt themselves. 
C)  weigh the benefits and costs of all possible alternative actions. 
D)  respond to economic incentives. 
A)  use all available information as they act to achieve their goals. 
B)  undertake activities that benefit others and hurt themselves. 
C)  weigh the benefits and costs of all possible alternative actions. 
D)  respond to economic incentives.

Question 7

In the market for factors of production,firms earn income by selling goods and services to households.

Accepted Answer

A) True 
 B)False

Question 8

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 9

Optimal decisions are made at the point where marginal cost equals zero.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Making "how much" decisions involve

Accepted Answer

A)  calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B)  calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C)  calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D)  determining the additional benefits and the additional costs of that activity. 
A)  calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B)  calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C)  calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D)  determining the additional benefits and the additional costs of that activity.

Question 12

In economics,the accumulated skills and training that workers have is known as

Accepted Answer

A)  human capital. 
B)  entrepreneurship. 
C)  physical capital. 
D)  innovation. 
A)  human capital. 
B)  entrepreneurship. 
C)  physical capital. 
D)  innovation.

Question 13

"The distribution of income should be left to the market" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 14

Who receives the most of what is produced in a market economy?

Accepted Answer

A)  lawmakers and other politically favored groups 
B)  those who are willing and able to buy them 
C)  everyone receives an equal amount 
D)  people who earn the highest incomes 
A)  lawmakers and other politically favored groups 
B)  those who are willing and able to buy them 
C)  everyone receives an equal amount 
D)  people who earn the highest incomes

Question 15

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 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 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 16

All of the following contributed to the downfall of the Soviet Union in 1991 except

Accepted Answer

A)  public dissatisfaction with low living standards and political repression. 
B)  an inability to produce low-cost consumer goods that households wanted. 
C)  lack of high-quality goods and services. 
D)  lack of a strong dictator who can coordinate economic activities. 
A)  public dissatisfaction with low living standards and political repression. 
B)  an inability to produce low-cost consumer goods that households wanted. 
C)  lack of high-quality goods and services. 
D)  lack of a strong dictator who can coordinate economic activities.

Question 17

Explain the economic assumption that "people are rational."

Accepted Answer

"People are rational" means that economi

Question 18

Figure 1-4  
-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 19

Which of the following is a result of a market economy?

Accepted Answer

A)  environmental protection 
B)  an equal income distribution 
C)  agreement on equity 
D)  voluntary exchange 
A)  environmental protection 
B)  an equal income distribution 
C)  agreement on equity 
D)  voluntary exchange

Question 20

Which of the following is a positive economic statement?

Accepted Answer

A)  The standard of living in the United States should be higher. 
B)  If the price of iPhones falls, a larger quantity of iPhones will be purchased. 
C)  The government should revamp the health care system. 
D)  The U.S. government should not have bailed out U.S. auto manufacturers. 
A)  The standard of living in the United States should be higher. 
B)  If the price of iPhones falls, a larger quantity of iPhones will be purchased. 
C)  The government should revamp the health care system. 
D)  The U.S. government should not have bailed out U.S. auto manufacturers.

Exam 1: Economics: Foundations and Models

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in

When production reflects consumer preferences,________ occurs.

Scarcity is a problem that will eventually disappear as technology advances.

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

Economists assume that rational people do all of the following except

In the market for factors of production,firms earn income by selling goods and services to households.

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

Optimal decisions are made at the point where marginal cost equals zero.

Which of the following statements is false?

Making "how much" decisions involve

In economics,the accumulated skills and training that workers have is known as

"The distribution of income should be left to the market" is an example of a positive economic statement.

Who receives the most of what is produced in a market economy?

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

All of the following contributed to the downfall of the Soviet Union in 1991 except

Explain the economic assumption that "people are rational."

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

Which of the following is a result of a market economy?

Which of the following is a positive economic statement?

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

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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

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