Question 1

Which of the following is true with regard to economic growth?

Accepted Answer

A) ​Real GDP could grow in a society at the same time that real per capita GDP did not. 
B) ​For a given population, real GDP growth implies real per capital GDP growth. 
C) ​If the population grew at the same rate as real GDP, real per capita GDP would not change. 
D) ​All of the above are true. 
A) ​Real GDP could grow in a society at the same time that real per capita GDP did not. 
B) ​For a given population, real GDP growth implies real per capital GDP growth. 
C) ​If the population grew at the same rate as real GDP, real per capita GDP would not change. 
D) ​All of the above are true.

Question 2

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

Accepted Answer

A) ​in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
B) ​the man is behaving irrationally. 
C) ​the smoker is unconcerned about his future health. 
D) ​in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost. 
A) ​in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
B) ​the man is behaving irrationally. 
C) ​the smoker is unconcerned about his future health. 
D) ​in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Question 3

Which of the following is false?

Accepted Answer

A) ​If a choice is rational for an individual, people would all agree that it was wise. 
B) ​Rational choices can be wrong. 
C) ​When circumstances or expectations change, what is rational for an individual could change. 
D) ​None of the above are false; all are true. 
A) ​If a choice is rational for an individual, people would all agree that it was wise. 
B) ​Rational choices can be wrong. 
C) ​When circumstances or expectations change, what is rational for an individual could change. 
D) ​None of the above are false; all are true.

Question 4

Which of the following best describes rational behavior?

Accepted Answer

A) ​analyzing the total expected costs of a decision 
B) ​analyzing the total expected benefits of a decision 
C) ​Continuing to undertake an activity until its total expected benefit no longer exceeds its total expected cost 
D) ​undertaking activities as long as the marginal expected benefit exceeds the marginal expected cost 
A) ​analyzing the total expected costs of a decision 
B) ​analyzing the total expected benefits of a decision 
C) ​Continuing to undertake an activity until its total expected benefit no longer exceeds its total expected cost 
D) ​undertaking activities as long as the marginal expected benefit exceeds the marginal expected cost

Question 5

Market failure occurs when:​

Accepted Answer

A) ​the stock markets tumble due to heavy selling. 
B) ​the market economy fails to allocate resources efficiently. 
C) ​demand shows signs of slowing down. 
D) ​a country cannot produce a particular good or service at a lower opportunity cost than other countries. 
A) ​the stock markets tumble due to heavy selling. 
B) ​the market economy fails to allocate resources efficiently. 
C) ​demand shows signs of slowing down. 
D) ​a country cannot produce a particular good or service at a lower opportunity cost than other countries.

Question 6

When the economy is getting the most from its scarce resources it is called:

Accepted Answer

A) ​equity. 
B) ​efficiency. 
C) ​equality. 
D) ​equal shares. 
A) ​equity. 
B) ​efficiency. 
C) ​equality. 
D) ​equal shares.

Question 7

Specialization:​

Accepted Answer

A) ​is a way for individuals to make the best use of resources by devoting themselves to one primary productive activity. 
B) ​is a way for society to become wealthier while not using their resources. 
C) ​is a way for people to avoid having to trade. 
D) ​increases one's opportunity cost of the activity they choose to specialize in. 
A) ​is a way for individuals to make the best use of resources by devoting themselves to one primary productive activity. 
B) ​is a way for society to become wealthier while not using their resources. 
C) ​is a way for people to avoid having to trade. 
D) ​increases one's opportunity cost of the activity they choose to specialize in.

Question 8

An example of an intangible good is:

Accepted Answer

A) ​an automobile. 
B) ​a new house. 
C) ​a snowplow. 
D) ​friendship. 
A) ​an automobile. 
B) ​a new house. 
C) ​a snowplow. 
D) ​friendship.

Question 9

Garbage is scarce because it is abundant.​

Accepted Answer

A) True 
 B)False

Question 10

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

Accepted Answer

A) ​equals $6.00. 
B) ​equals $4.00. 
C) ​equals $3.00. 
D) ​equals $2.00. 
A) ​equals $6.00. 
B) ​equals $4.00. 
C) ​equals $3.00. 
D) ​equals $2.00.

Question 11

Which of the following do not contribute to long-term economic growth?

Accepted Answer

A) ​substantial increases in the money supply 
B) ​increased productivity 
C) ​savings and investment 
D) ​new production technologies 
A) ​substantial increases in the money supply 
B) ​increased productivity 
C) ​savings and investment 
D) ​new production technologies

Question 12

Sustained economic growth occurs when workers' productivity rises.

Accepted Answer

A) True 
 B)False

Question 13

When government policies change it can:

Accepted Answer

A) ​alter incentives 
B) ​alter trade-offs 
C) ​change opportunity costs 
D) ​do all of the above. 
A) ​alter incentives 
B) ​alter trade-offs 
C) ​change opportunity costs 
D) ​do all of the above.

Question 14

Opportunity cost:​

Accepted Answer

A) ​Always refers to the dollar price paid for a good. 
B) ​Always equals the best alternative value of the time spent in going to a concert or sporting event. 
C) ​Of any good is zero for any good that is given away free, if you wait in a line to get it. 
D) ​Increases when the best foregone alternative becomes more valuable. 
A) ​Always refers to the dollar price paid for a good. 
B) ​Always equals the best alternative value of the time spent in going to a concert or sporting event. 
C) ​Of any good is zero for any good that is given away free, if you wait in a line to get it. 
D) ​Increases when the best foregone alternative becomes more valuable.

Question 15

In a market system, decisions about how to allocate resources are made:

Accepted Answer

A) ​by central planning boards in each industry. 
B) ​by a lottery system. 
C) ​by individuals and firms interacting in markets coordinated by market prices. 
D) ​by large conglomerates working cooperatively with the government. 
A) ​by central planning boards in each industry. 
B) ​by a lottery system. 
C) ​by individuals and firms interacting in markets coordinated by market prices. 
D) ​by large conglomerates working cooperatively with the government.

Question 16

Ted has decided to buy a burger and fries at a restaurant, but is considering whether to buy a drink as well. If the price of a burger is $2, fries are $1, drinks are $1, but a value meal with all three costs $3.80, the marginal cost to Ted of the drink is:​

Accepted Answer

A) ​$0.20 
B) ​$0.80 
C) ​$1.00 
D) ​$3.80 
A) ​$0.20 
B) ​$0.80 
C) ​$1.00 
D) ​$3.80

Question 17

Suppose you are managing a 100 room hotel that has 5 empty rooms for tonight. The cost of operating your 100 room hotel for a night is $10,000 and the average cost is $100 per room. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $50 for the night, you should

Accepted Answer

A) ​rent the room because the marginal benefit exceeds the marginal cost. 
B) ​rent the room because the marginal benefit exceeds the average cost. 
C) ​not rent the room because the marginal benefit is less than the marginal cost. 
D) ​not rent the room because the marginal benefit is less than the average cost. 
A) ​rent the room because the marginal benefit exceeds the marginal cost. 
B) ​rent the room because the marginal benefit exceeds the average cost. 
C) ​not rent the room because the marginal benefit is less than the marginal cost. 
D) ​not rent the room because the marginal benefit is less than the average cost.

Question 18

In order to not face tradeoffs, scarcity would have to be eliminated.

Accepted Answer

A) True 
 B)False

Question 19

An economy's resources:

Accepted Answer

A) ​include land, labor, capital, and entrepreneurial skills. 
B) ​are unlimited in a country like the United States. 
C) ​are always efficiently utilized in wealthy nations. 
D) ​consist of land, labor and capital, but not entrepreneurial skills. 
A) ​include land, labor, capital, and entrepreneurial skills. 
B) ​are unlimited in a country like the United States. 
C) ​are always efficiently utilized in wealthy nations. 
D) ​consist of land, labor and capital, but not entrepreneurial skills.

Question 20

The opportunity cost of attending a concert would include:

Accepted Answer

A) ​the price you paid for the ticket and the value of your time. 
B) ​the price you paid for the ticket, but not the value of your time. 
C) ​the value of your time, but not the price you paid for the ticket. 
D) ​neither the price of the ticket nor the value of your time. 
A) ​the price you paid for the ticket and the value of your time. 
B) ​the price you paid for the ticket, but not the value of your time. 
C) ​the value of your time, but not the price you paid for the ticket. 
D) ​neither the price of the ticket nor the value of your time.

Which of the following is true with regard to economic growth?

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

Which of the following is false?

Which of the following best describes rational behavior?

Market failure occurs when:

When the economy is getting the most from its scarce resources it is called:

Specialization:

An example of an intangible good is:

Garbage is scarce because it is abundant.

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

Which of the following do not contribute to long-term economic growth?

Sustained economic growth occurs when workers' productivity rises.

When government policies change it can:

Opportunity cost:

In a market system, decisions about how to allocate resources are made:

Ted has decided to buy a burger and fries at a restaurant, but is considering whether to buy a drink as well. If the price of a burger is $2, fries are $1, drinks are $1, but a value meal with all three costs $3.80, the marginal cost to Ted of the drink is:

In order to not face tradeoffs, scarcity would have to be eliminated.

An economy's resources:

The opportunity cost of attending a concert would include:

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 2: Eight Powerful Ideas

Which of the following is true with regard to economic growth?

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

Which of the following is false?

Which of the following best describes rational behavior?

Market failure occurs when:​

When the economy is getting the most from its scarce resources it is called:

Specialization:​

An example of an intangible good is:

Garbage is scarce because it is abundant.​

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

Which of the following do not contribute to long-term economic growth?

Sustained economic growth occurs when workers' productivity rises.

When government policies change it can:

Opportunity cost:​

In a market system, decisions about how to allocate resources are made:

Ted has decided to buy a burger and fries at a restaurant, but is considering whether to buy a drink as well. If the price of a burger is $2, fries are $1, drinks are $1, but a value meal with all three costs $3.80, the marginal cost to Ted of the drink is:​

In order to not face tradeoffs, scarcity would have to be eliminated.

An economy's resources:

The opportunity cost of attending a concert would include:

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Market failure occurs when:

Specialization:

Garbage is scarce because it is abundant.

Opportunity cost:

Ted has decided to buy a burger and fries at a restaurant, but is considering whether to buy a drink as well. If the price of a burger is $2, fries are $1, drinks are $1, but a value meal with all three costs $3.80, the marginal cost to Ted of the drink is: