Question 1

Give an example of government intervention that is intended to improve equality.

Accepted Answer

The income

Question 2

Scenario 1-5
Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-5. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo

Question 3

Which of the following is correct concerning opportunity cost?

Accepted Answer

A)  Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. 
B)  To compute opportunity costs, you should subtract benefits from costs. 
C)  Opportunity costs and the idea of trade-offs are not closely related. 
D)  Rational people should compare various options without considering opportunity costs. 
A)  Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. 
B)  To compute opportunity costs, you should subtract benefits from costs. 
C)  Opportunity costs and the idea of trade-offs are not closely related. 
D)  Rational people should compare various options without considering opportunity costs.

Question 4

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

Accepted Answer

A)  $50. 
B)  $500. 
C)  $50,000. 
D)  This cannot be determined from the information given. 
A)  $50. 
B)  $500. 
C)  $50,000. 
D)  This cannot be determined from the information given.

Question 5

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Zack quits his job at a consulting...

Question 6

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited. 
A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited.

Question 7

Which of the following can lead to market failure?

Accepted Answer

A)  externalities and market power 
B)  externalities but not market power 
C)  market power but not externalities 
D)  neither externalities nor market power 
A)  externalities and market power 
B)  externalities but not market power 
C)  market power but not externalities 
D)  neither externalities nor market power

Question 8

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Accepted Answer

A) True 
 B)False

Question 9

To improve living standards, policymakers should

Accepted Answer

A)  impose restrictions on foreign competition. 
B)  formulate policies designed to increase productivity. 
C)  impose tougher immigration policies. 
D)  provide tax breaks for the middle class. 
A)  impose restrictions on foreign competition. 
B)  formulate policies designed to increase productivity. 
C)  impose tougher immigration policies. 
D)  provide tax breaks for the middle class.

Question 10

Tuition is the single-largest cost of attending college for most students.

Accepted Answer

A) True 
 B)False

Question 11

What is the main difference between a centrally planned economy and a market economy?

Accepted Answer

In a market economy, decisions

Question 12

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Accepted Answer

A)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Maureen's incentive to attend college. 
B)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Maureen's incentive to attend college. 
C)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college. 
D)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen's incentive to attend college. 
A)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Maureen's incentive to attend college. 
B)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Maureen's incentive to attend college. 
C)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college. 
D)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen's incentive to attend college.

Question 13

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Accepted Answer

A)  market power caused by a change in the country's standard of living. 
B)  market power caused by a single firm controlling the newspaper production. 
C)  inflation caused by increased productivity in the economy. 
D)  inflation caused by an increase in the quantity of money in the economy. 
A)  market power caused by a change in the country's standard of living. 
B)  market power caused by a single firm controlling the newspaper production. 
C)  inflation caused by increased productivity in the economy. 
D)  inflation caused by an increase in the quantity of money in the economy.

Question 14

Irregular fluctuations in economic activity are known as the

Accepted Answer

A)  business cycle. 
B)  broken window fallacy. 
C)  tradeoff between inflation and unemployment. 
D)  ten principles of economics. 
A)  business cycle. 
B)  broken window fallacy. 
C)  tradeoff between inflation and unemployment. 
D)  ten principles of economics.

Question 15

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity. 
A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity.

Question 16

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A)  inflation 
B)  unemployment 
C)  both inflation and unemployment 
D)  neither inflation nor unemployment 
A)  inflation 
B)  unemployment 
C)  both inflation and unemployment 
D)  neither inflation nor unemployment

Question 17

What does the term "marginal change" mean?

Accepted Answer

A small incremental

Question 18

Government policies resulting in reduced efficiency include i) the welfare system
Ii) unemployment insurance
Iii) progressive income tax

Accepted Answer

A)  i) only 
B)  ii) only 
C)  i) and ii) only 
D)  i), ii), and iii) 
A)  i) only 
B)  ii) only 
C)  i) and ii) only 
D)  i), ii), and iii)

Question 19

Which of these activities will most likely impose an external cost?

Accepted Answer

A)  Betty plants flowers in her garden. 
B)  Bonnie gets a flu vaccine. 
C)  Bridget drives her car after having too much alcohol to drink. 
D)  Becky buys a new flat screen television. 
A)  Betty plants flowers in her garden. 
B)  Bonnie gets a flu vaccine. 
C)  Bridget drives her car after having too much alcohol to drink. 
D)  Becky buys a new flat screen television.

Question 20

A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

Accepted Answer

A)  U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. 
B)  There is little demand for cotton cloth in Vietnam and great demand in the U.S. 
C)  Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Vietnam has a low-wage policy to make its textile industry more competitive in world markets. 
A)  U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. 
B)  There is little demand for cotton cloth in Vietnam and great demand in the U.S. 
C)  Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Vietnam has a low-wage policy to make its textile industry more competitive in world markets.

Exam 1: Ten Principles of Economics

Give an example of government intervention that is intended to improve equality.

Which of the following is correct concerning opportunity cost?

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

The phenomenon of scarcity stems from the fact that

Which of the following can lead to market failure?

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

To improve living standards, policymakers should

Tuition is the single-largest cost of attending college for most students.

What is the main difference between a centrally planned economy and a market economy?

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Irregular fluctuations in economic activity are known as the

The historical rise in living standards of American workers is primarily a result of

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

What does the term "marginal change" mean?

Government policies resulting in reduced efficiency include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

Which of these activities will most likely impose an external cost?

A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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