Question 1

Which of the following statements is most consistent with the rule of rational choice?​

Accepted Answer

A) ​"The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B) ​"When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C) ​"Police forces should be enlarged until virtually all crime is eliminated." 
D) ​"Manufacturers of automobiles should seek to make cars safer, no matter the costs involved." 
A) ​"The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B) ​"When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C) ​"Police forces should be enlarged until virtually all crime is eliminated." 
D) ​"Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

Question 2

Which of the following contribute to increases in productivity?​

Accepted Answer

A) ​incentives for innovation 
B) ​more physical capital 
C) ​an improved education system 
D) ​all of the above 
A) ​incentives for innovation 
B) ​more physical capital 
C) ​an improved education system 
D) ​all of the above

Question 3

Positive incentives do not:

Accepted Answer

A) ​increase benefits. 
B) ​result in an increased level of the related activity. 
C) ​reduce costs. 
D) ​discourage consumption. 
A) ​increase benefits. 
B) ​result in an increased level of the related activity. 
C) ​reduce costs. 
D) ​discourage consumption.

Question 4

Since it is possible to grow coffee in the United States, the U.S. would gain by creating a domestic coffee industry rather than importing coffee from Brazil.​

Accepted Answer

A) True 
 B)False

Question 5

If scarcity was not a fact,

Accepted Answer

A) ​people could have all they wanted of goods and services for free. 
B) ​it would no longer be necessary to make choices. 
C) ​poverty, defined as the lack of a minimum level of consumption would also be eliminated. 
D) ​all of the above would be true. 
A) ​people could have all they wanted of goods and services for free. 
B) ​it would no longer be necessary to make choices. 
C) ​poverty, defined as the lack of a minimum level of consumption would also be eliminated. 
D) ​all of the above would be true.

Question 6

Marginal cost is the additional cost incurred as a result of making an economic decision.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of a resource?

Accepted Answer

A) ​Land 
B) ​Capital 
C) ​Entrepreneurship 
D) ​All of the above are resources 
A) ​Land 
B) ​Capital 
C) ​Entrepreneurship 
D) ​All of the above are resources

Question 8

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why is Sergei unlikely to make his own clothes?​

Accepted Answer

A) ​He has already made all the clothes he will need for a few years. 
B) ​The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C) ​Sergei just can't find the material he likes in the United States. 
D) ​Sergei has a comparative advantage in tailoring clothes. 
A) ​He has already made all the clothes he will need for a few years. 
B) ​The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C) ​Sergei just can't find the material he likes in the United States. 
D) ​Sergei has a comparative advantage in tailoring clothes.

Question 9

Which of the following is false?

Accepted Answer

A) ​A resource is anything that can be used to produce anything else we value. 
B) ​Resources are costly because they have alternative uses. 
C) ​Losses mean resources are not being used efficiently. 
D) ​None of the above is false; all are true. 
A) ​A resource is anything that can be used to produce anything else we value. 
B) ​Resources are costly because they have alternative uses. 
C) ​Losses mean resources are not being used efficiently. 
D) ​None of the above is false; all are true.

Question 10

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time, his foregone income is part of the opportunity cost of going to college.

Accepted Answer

A) True 
 B)False

Question 11

Trade between countries tends to

Accepted Answer

A) ​reduce both competition and specialization. 
B) ​reduce competition and increase specialization. 
C) ​increase competition and reduce specialization. 
D) ​increase both competition and specialization. 
A) ​reduce both competition and specialization. 
B) ​reduce competition and increase specialization. 
C) ​increase competition and reduce specialization. 
D) ​increase both competition and specialization.

Question 12

Quarts of orange juice at a local grocery store are priced at one for $3.00, or two for $5.00. The marginal cost of buying a second quart of orange juice:

Accepted Answer

A) ​equals $2.00. 
B) ​equals $2.50. 
C) ​equals $3.00. 
D) ​equals $5.00. 
A) ​equals $2.00. 
B) ​equals $2.50. 
C) ​equals $3.00. 
D) ​equals $5.00.

Question 13

When a person possesses a comparative advantage in the production of one good or service, it:

Accepted Answer

A) ​means that the person's opportunity cost of producing that good or service is higher than for that of other goods. 
B) ​discourages specialization. 
C) ​promotes greater self-sufficiency. 
D) ​permits gains from trade to be realized due to a more efficient use of resources. 
A) ​means that the person's opportunity cost of producing that good or service is higher than for that of other goods. 
B) ​discourages specialization. 
C) ​promotes greater self-sufficiency. 
D) ​permits gains from trade to be realized due to a more efficient use of resources.

Question 14

An example of physical capital is:

Accepted Answer

A) ​a $100 bill. 
B) ​a stock certificate. 
C) ​a chainsaw. 
D) ​a cheeseburger. 
A) ​a $100 bill. 
B) ​a stock certificate. 
C) ​a chainsaw. 
D) ​a cheeseburger.

Question 15

If resources and goods are free to move across states and if Oregon producers choose to specialize in producing honey while California producers choose to specialize in growing almonds, then we could reasonable conclude that:

Accepted Answer

A) ​California has a comparative advantage in producing almonds. 
B) ​Oregon has a comparative advantage in producing honey. 
C) ​the opportunity cost of growing almonds is lower in California than in Oregon. 
D) ​all of the above are true. 
A) ​California has a comparative advantage in producing almonds. 
B) ​Oregon has a comparative advantage in producing honey. 
C) ​the opportunity cost of growing almonds is lower in California than in Oregon. 
D) ​all of the above are true.

Question 16

The function of an entrepreneur is to:​

Accepted Answer

A) ​bear business risks. 
B) ​organize the other factors of production. 
C) ​innovate. 
D) ​do all of the above. 
A) ​bear business risks. 
B) ​organize the other factors of production. 
C) ​innovate. 
D) ​do all of the above.

Question 17

Explain why each of the following is considered an economic issue:​
​
a.whether to spend Saturday afternoon at a football game
b.obtaining tickets to a U2 concert
c.your university considers your application for one of 25 available scholarships

Accepted Answer

Each of the following are economic issue

Question 18

Which of the following is not an example of a capital resource?

Accepted Answer

A) ​a drill press machine 
B) ​a pitch fork 
C) ​a commercial sewing machine 
D) ​100 acres of farmland in central California 
A) ​a drill press machine 
B) ​a pitch fork 
C) ​a commercial sewing machine 
D) ​100 acres of farmland in central California

Question 19

Almost everyone is affected directly or indirectly by high rates of employment or high and variable rates of inflation.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is the most critical signaling mechanism in markets?

Accepted Answer

A) ​quantity 
B) ​price 
C) ​cost 
D) ​government regulation 
A) ​quantity 
B) ​price 
C) ​cost 
D) ​government regulation

Exam 2: Eight Powerful Ideas

Which of the following statements is most consistent with the rule of rational choice?​

Which of the following contribute to increases in productivity?​

Positive incentives do not:

Since it is possible to grow coffee in the United States, the U.S. would gain by creating a domestic coffee industry rather than importing coffee from Brazil.​

If scarcity was not a fact,

Marginal cost is the additional cost incurred as a result of making an economic decision.

Which of the following is an example of a resource?

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why is Sergei unlikely to make his own clothes?​

Which of the following is false?

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time, his foregone income is part of the opportunity cost of going to college.

Trade between countries tends to

Quarts of orange juice at a local grocery store are priced at one for $3.00, or two for $5.00. The marginal cost of buying a second quart of orange juice:

When a person possesses a comparative advantage in the production of one good or service, it:

An example of physical capital is:

If resources and goods are free to move across states and if Oregon producers choose to specialize in producing honey while California producers choose to specialize in growing almonds, then we could reasonable conclude that:

The function of an entrepreneur is to:​

Explain why each of the following is considered an economic issue:​ ​ a.whether to spend Saturday afternoon at a football game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

Which of the following is not an example of a capital resource?

Almost everyone is affected directly or indirectly by high rates of employment or high and variable rates of inflation.

Which of the following is the most critical signaling mechanism in markets?

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

Which of the following statements is most consistent with the rule of rational choice?

Which of the following contribute to increases in productivity?

Since it is possible to grow coffee in the United States, the U.S. would gain by creating a domestic coffee industry rather than importing coffee from Brazil.

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why is Sergei unlikely to make his own clothes?

The function of an entrepreneur is to:

Explain why each of the following is considered an economic issue: a.whether to spend Saturday afternoon at a football game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships