Question 1

Inflation is an increase in the overall price level in the economy.

Accepted Answer

A) True 
 B)False

Question 2

In economics, which of the following is considered part of "land"?

Accepted Answer

A) ​A 500 acre forest. 
B) ​bauxite deposits. 
C) ​underground pools of crude oil. 
D) ​All of the above except a. are included in the category, "land." 
A) ​A 500 acre forest. 
B) ​bauxite deposits. 
C) ​underground pools of crude oil. 
D) ​All of the above except a. are included in the category, "land."

Question 3

The rule of rational choice:

Accepted Answer

A) ​requires the availability of complete information before decisions can be made. 
B) ​can only be applied in business decisions. 
C) ​involves "marginal thinking." 
D) ​is the basis on which only greedy people make decisions. 
A) ​requires the availability of complete information before decisions can be made. 
B) ​can only be applied in business decisions. 
C) ​involves "marginal thinking." 
D) ​is the basis on which only greedy people make decisions.

Question 4

Airlines that restrict members' ability to use frequent flyer miles during holiday periods likely do so because:

Accepted Answer

A) ​the opportunity cost to airlines of filling seats with frequent flyers is lower at these times. 
B) ​the opportunity cost to airlines of filling seats with frequent flyers is higher at these times. 
C) ​passengers have more transportation alternatives available to them at these times. 
D) ​airlines want to protect their most loyal customers from the discomfort of overcrowded airplanes. 
A) ​the opportunity cost to airlines of filling seats with frequent flyers is lower at these times. 
B) ​the opportunity cost to airlines of filling seats with frequent flyers is higher at these times. 
C) ​passengers have more transportation alternatives available to them at these times. 
D) ​airlines want to protect their most loyal customers from the discomfort of overcrowded airplanes.

Question 5

The price of a ticket to the latest Broadway musical is $80. You will purchase a ticket if:

Accepted Answer

A) ​you are acting irrationally 
B) ​you place a lower valuation on seeing the musical than $80 but are extremely bored. 
C) ​your expected marginal benefit from viewing the musical exceeds $80. 
D) ​your expected marginal cost from viewing the musical exceeds $80. 
A) ​you are acting irrationally 
B) ​you place a lower valuation on seeing the musical than $80 but are extremely bored. 
C) ​your expected marginal benefit from viewing the musical exceeds $80. 
D) ​your expected marginal cost from viewing the musical exceeds $80.

Question 6

An example of a capital resource is:​

Accepted Answer

A) ​stock in a computer software company. 
B) ​a bond issued by a company selling electric generators. 
C) ​a dump truck. 
D) ​an employee of a moving company. 
A) ​stock in a computer software company. 
B) ​a bond issued by a company selling electric generators. 
C) ​a dump truck. 
D) ​an employee of a moving company.

Question 7

Prices communicate information about the relative value of resources in the marketplace. Which of the following would cause the marginal value and, hence, the price, of oranges to rise?
​
a.A freeze wipes out half of the Florida citrus groves.
b.Orange juice is shown to reduce blood cholesterol levels.
c.The price of grape, cranberry, and pineapple juice falls dramatically.

Accepted Answer

a. and b. would result in higher orange

Question 8

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

Accepted Answer

A) ​as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction. 
B) ​until the total benefit from air pollution reduction just equals the total cost of pollution reduction. 
C) ​until air pollution levels reach near-zero levels. 
D) ​to the levels experienced in the 1950s when air was much cleaner near big cities. 
A) ​as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction. 
B) ​until the total benefit from air pollution reduction just equals the total cost of pollution reduction. 
C) ​until air pollution levels reach near-zero levels. 
D) ​to the levels experienced in the 1950s when air was much cleaner near big cities.

Question 9

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Accepted Answer

A) True 
 B)False

Question 10

Entrepreneurship is:​

Accepted Answer

A) ​human capital. 
B) ​another word for the financial capital that can be used to start a business. 
C) ​the resource that organizes the other factors of production in order to produce goods and/or services. 
D) ​another word for physical capital that is used to produce goods and services. 
A) ​human capital. 
B) ​another word for the financial capital that can be used to start a business. 
C) ​the resource that organizes the other factors of production in order to produce goods and/or services. 
D) ​another word for physical capital that is used to produce goods and services.

Question 11

The opportunity cost of an airplane flight:​

Accepted Answer

A) ​differs across passengers only to the extent that each traveler pays a different airfare. 
B) ​is identical for all passengers and equal to the number of hours a particular flight takes. 
C) ​differs across passengers to the extent that both airfares paid and the highest valued use of travel time vary. 
D) ​is equal to the cost of a bus ticket, the next best form of alternative transportation to flying. 
A) ​differs across passengers only to the extent that each traveler pays a different airfare. 
B) ​is identical for all passengers and equal to the number of hours a particular flight takes. 
C) ​differs across passengers to the extent that both airfares paid and the highest valued use of travel time vary. 
D) ​is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.

Question 12

All of the following are tangible goods except:

Accepted Answer

A) ​a skateboard. 
B) ​a desk. 
C) ​a train locomotive. 
D) ​fairness. 
A) ​a skateboard. 
B) ​a desk. 
C) ​a train locomotive. 
D) ​fairness.

Question 13

Economists believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, you would expect that:

Accepted Answer

A) ​families would have the same number of children, but wait longer to begin having them. 
B) ​more children would be born, but spaced further apart. 
C) ​more children would be adopted. 
D) ​fewer children would be born. 
A) ​families would have the same number of children, but wait longer to begin having them. 
B) ​more children would be born, but spaced further apart. 
C) ​more children would be adopted. 
D) ​fewer children would be born.

Question 14

Every choice has a cost

Accepted Answer

A) True 
 B)False

Question 15

If the government imposes price controls and prevents prices from adjusting naturally to supply and demand,​

Accepted Answer

A) ​it equates the amount buyers are willing and able to buy with the amount sellers are willing and able to supply. 
B) ​it adversely affects the allocation of resources. 
C) ​it improves both equality and efficiency. 
D) ​it improves efficiency. 
A) ​it equates the amount buyers are willing and able to buy with the amount sellers are willing and able to supply. 
B) ​it adversely affects the allocation of resources. 
C) ​it improves both equality and efficiency. 
D) ​it improves efficiency.

Question 16

Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than:

Accepted Answer

A) ​Elsie is the only one that gains from the trade. 
B) ​Elmer is the only one that gains from the trade. 
C) ​Elsie and Elmer are both made better off by the trade. 
D) ​Both Elmer and Elsie are made worse off by the trade. 
A) ​Elsie is the only one that gains from the trade. 
B) ​Elmer is the only one that gains from the trade. 
C) ​Elsie and Elmer are both made better off by the trade. 
D) ​Both Elmer and Elsie are made worse off by the trade.

Question 17

Which of the following is true?

Accepted Answer

A) ​Tangible goods are subject to economic analysis but intangible goods are not. 
B) ​Intangible goods are just an alternative term for services. 
C) ​Goods and services can be made costless by having the government give them away to citizens. 
D) ​All goods and services, whether tangible or intangible, are made from scarce resources and are subject to economic analysis. 
A) ​Tangible goods are subject to economic analysis but intangible goods are not. 
B) ​Intangible goods are just an alternative term for services. 
C) ​Goods and services can be made costless by having the government give them away to citizens. 
D) ​All goods and services, whether tangible or intangible, are made from scarce resources and are subject to economic analysis.

Question 18

Which of the following is true?

Accepted Answer

A) ​Even intangible goods can be subjected to economic analysis. 
B) ​Wealthy individuals who decide to donate money to charity face the constraints of scarcity. 
C) ​Increases in production would not enable us to eliminate scarcity. 
D) ​All of the above 
A) ​Even intangible goods can be subjected to economic analysis. 
B) ​Wealthy individuals who decide to donate money to charity face the constraints of scarcity. 
C) ​Increases in production would not enable us to eliminate scarcity. 
D) ​All of the above

Question 19

A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to:​

Accepted Answer

A) ​zero, since it is free to students who want to ride. 
B) ​the wages paid to the shuttle drivers. 
C) ​the wages paid to the shuttle drivers, plus the gasoline expenses. 
D) ​the highest valued alternative use of the resources devoted to the shuttle program. 
A) ​zero, since it is free to students who want to ride. 
B) ​the wages paid to the shuttle drivers. 
C) ​the wages paid to the shuttle drivers, plus the gasoline expenses. 
D) ​the highest valued alternative use of the resources devoted to the shuttle program.

Question 20

In markets, information about the relative value of resources is communicated through:

Accepted Answer

A) ​government agencies. 
B) ​planning committees. 
C) ​prices. 
D) ​unions. 
A) ​government agencies. 
B) ​planning committees. 
C) ​prices. 
D) ​unions.

Inflation is an increase in the overall price level in the economy.

In economics, which of the following is considered part of "land"?

The rule of rational choice:

Airlines that restrict members' ability to use frequent flyer miles during holiday periods likely do so because:

The price of a ticket to the latest Broadway musical is $80. You will purchase a ticket if:

An example of a capital resource is:

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Entrepreneurship is:

The opportunity cost of an airplane flight:

All of the following are tangible goods except:

Economists believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, you would expect that:

Every choice has a cost

If the government imposes price controls and prevents prices from adjusting naturally to supply and demand,

Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than:

Which of the following is true?

Which of the following is true?

A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to:

In markets, information about the relative value of resources is communicated through:

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

Inflation is an increase in the overall price level in the economy.

In economics, which of the following is considered part of "land"?

The rule of rational choice:

Airlines that restrict members' ability to use frequent flyer miles during holiday periods likely do so because:

The price of a ticket to the latest Broadway musical is $80. You will purchase a ticket if:

An example of a capital resource is:​

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Entrepreneurship is:​

The opportunity cost of an airplane flight:​

All of the following are tangible goods except:

Economists believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, you would expect that:

Every choice has a cost

If the government imposes price controls and prevents prices from adjusting naturally to supply and demand,​

Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than:

Which of the following is true?

Which of the following is true?

A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to:​

In markets, information about the relative value of resources is communicated through:

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

An example of a capital resource is:

Entrepreneurship is:

The opportunity cost of an airplane flight:

If the government imposes price controls and prevents prices from adjusting naturally to supply and demand,

A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to: