Question 1

Evidence indicates that seat belt laws have led to

Accepted Answer

A)  fewer pedestrian deaths. 
B)  fewer automobile accidents. 
C)  fewer deaths per automobile accident. 
D)  All of the above are correct. 
A)  fewer pedestrian deaths. 
B)  fewer automobile accidents. 
C)  fewer deaths per automobile accident. 
D)  All of the above are correct.

Question 2

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 3

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Accepted Answer

A)  should be counted in full, regardless of the costs of eating and sleeping elsewhere. 
B)  should be counted only to the extent that they are more expensive at college than elsewhere. 
C)  usually exceed the opportunity cost of going to college. 
D)  plus the cost of tuition, equals the opportunity cost of going to college. 
A)  should be counted in full, regardless of the costs of eating and sleeping elsewhere. 
B)  should be counted only to the extent that they are more expensive at college than elsewhere. 
C)  usually exceed the opportunity cost of going to college. 
D)  plus the cost of tuition, equals the opportunity cost of going to college.

Question 4

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Accepted Answer

A)  an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide. 
B)  an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide. 
C)  a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide. 
D)  a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide. 
A)  an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide. 
B)  an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide. 
C)  a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide. 
D)  a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.

Question 5

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Accepted Answer

In Germany. Almost all variati

Question 6

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Accepted Answer

A)  worried about inflation. 
B)  worried about unemployment. 
C)  hoping to increase the demand for goods and services. 
D)  worried that the economy is growing too slowly. 
A)  worried about inflation. 
B)  worried about unemployment. 
C)  hoping to increase the demand for goods and services. 
D)  worried that the economy is growing too slowly.

Question 7

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Accepted Answer

A)  For the first 30 houses, the average cost per house was $250,000. 
B)  The marginal cost of the 31st house, if it is built, will be $260,000. 
C)  If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it. 
D)  All of the above are correct. 
A)  For the first 30 houses, the average cost per house was $250,000. 
B)  The marginal cost of the 31st house, if it is built, will be $260,000. 
C)  If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it. 
D)  All of the above are correct.

Question 8

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 9

The "invisible hand" directs economic activity through

Accepted Answer

A)  advertising. 
B)  prices. 
C)  central planning. 
D)  government regulations. 
A)  advertising. 
B)  prices. 
C)  central planning. 
D)  government regulations.

Question 10

High-school athletes who skip college to become professional athletes

Accepted Answer

A)  obviously do not understand the value of a college education. 
B)  usually do so because they cannot get into college. 
C)  understand that the opportunity cost of attending college is very high. 
D)  are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes. 
A)  obviously do not understand the value of a college education. 
B)  usually do so because they cannot get into college. 
C)  understand that the opportunity cost of attending college is very high. 
D)  are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.

Question 11

Use the following Scenario to answer the question scenario 1-4 :
You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points.
-Refer to Scenario 1-4. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo

Question 12

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)  enhance equality. 
B)  enhance efficiency. 
C)  increase the reward for working hard. 
D)  All of the above are correct. 
A)  enhance equality. 
B)  enhance efficiency. 
C)  increase the reward for working hard. 
D)  All of the above are correct.

Question 13

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager 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 15

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Accepted Answer

A)  the value of the knowledge she would have received had she attended class. 
B)  the $24 she could have earned if she had worked at her job for those two hours. 
C)  the value of her nap minus the value of attending class. 
D)  nothing, since she valued sleep more than attendance at class. 
A)  the value of the knowledge she would have received had she attended class. 
B)  the $24 she could have earned if she had worked at her job for those two hours. 
C)  the value of her nap minus the value of attending class. 
D)  nothing, since she valued sleep more than attendance at class.

Question 16

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Accepted Answer

A) True 
 B)False

Question 17

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)  resources are scarce. 
B)  goods and services are not scarce. 
C)  incomes fluctuate with business cycles. 
D)  people, by nature, tend to disagree. 
A)  resources are scarce. 
B)  goods and services are not scarce. 
C)  incomes fluctuate with business cycles. 
D)  people, by nature, tend to disagree.

Question 18

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Accepted Answer

A)  scarcity. 
B)  surpluses. 
C)  inefficiencies. 
D)  inequalities. 
A)  scarcity. 
B)  surpluses. 
C)  inefficiencies. 
D)  inequalities.

Question 19

What is the most important factor that explains differences in living standards among countries?

Accepted Answer

A)  labor unions 
B)  minimum wage laws 
C)  productivity 
D)  efficiency 
A)  labor unions 
B)  minimum wage laws 
C)  productivity 
D)  efficiency

Question 20

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Evidence indicates that seat belt laws have led to

The invisible hand ensures that economic prosperity is distributed equally.

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Trade between countries tends to

The "invisible hand" directs economic activity through

High-school athletes who skip college to become professional athletes

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Market failure refers to a situation in which the market does not allocate resources efficiently.

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

The overriding reason why households and societies face many decisions is that

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

What is the most important factor that explains differences in living standards among countries?

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

Filters

Exam 1: Ten Principles of Economics

Evidence indicates that seat belt laws have led to

The invisible hand ensures that economic prosperity is distributed equally.

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Trade between countries tends to

The "invisible hand" directs economic activity through

High-school athletes who skip college to become professional athletes

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Market failure refers to a situation in which the market does not allocate resources efficiently.

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

The overriding reason why households and societies face many decisions is that

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

What is the most important factor that explains differences in living standards among countries?

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

Filters