Question 1

For most students, the earnings they give up to attend college are

Accepted Answer

A)  a minor cost when compared to the costs of tuition, room and board, and the like. 
B)  the single largest cost of their education. 
C)  about equal to the costs of room and board at college. 
D)  not considered true costs by an economist. 
A)  a minor cost when compared to the costs of tuition, room and board, and the like. 
B)  the single largest cost of their education. 
C)  about equal to the costs of room and board at college. 
D)  not considered true costs by an economist.

Question 2

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Accepted Answer

A)  the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. 
B)  the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. 
C)  the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. 
D)  the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs. 
A)  the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. 
B)  the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. 
C)  the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. 
D)  the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.

Question 3

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 4

The U.S. president who referred to inflation as "public enemy number one" was

Accepted Answer

A)  Richard Nixon. 
B)  Gerald Ford. 
C)  Jimmy Carter. 
D)  Ronald Reagan. 
A)  Richard Nixon. 
B)  Gerald Ford. 
C)  Jimmy Carter. 
D)  Ronald Reagan.

Question 5

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of going to the movies?

Accepted Answer

The answer of Scenario 1-2
Suppose that you have a choice...

Question 6

The opportunity cost of an item is

Accepted Answer

A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item. 
A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item.

Question 7

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 8

Market failure can be caused by

Accepted Answer

A)  low consumer demand. 
B)  equilibrium prices. 
C)  externalities and market power. 
D)  high prices and foreign competition. 
A)  low consumer demand. 
B)  equilibrium prices. 
C)  externalities and market power. 
D)  high prices and foreign competition.

Question 9

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Debbie quits her job, which pays $30,000...

Question 10

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor

Question 11

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

Low rates of inflation are generally associated with

Accepted Answer

A)  low rates of government spending. 
B)  small or nonexistent government budget deficits. 
C)  low rates of productivity growth. 
D)  low rates of growth of the quantity of money. 
A)  low rates of government spending. 
B)  small or nonexistent government budget deficits. 
C)  low rates of productivity growth. 
D)  low rates of growth of the quantity of money.

Question 13

Which of the following is an example of an externality?

Accepted Answer

A)  Annie purchases a new dress. 
B)  Antonio's dog barks loudly during the night, waking his neighbors. 
C)  Harold sells a book to Cathy, who reads the book and then gives it to James as a gift. 
D)  Gloria watches a scary movie. 
A)  Annie purchases a new dress. 
B)  Antonio's dog barks loudly during the night, waking his neighbors. 
C)  Harold sells a book to Cathy, who reads the book and then gives it to James as a gift. 
D)  Gloria watches a scary movie.

Question 14

Which of the following could reduce economic efficiency?

Accepted Answer

A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct 
A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct

Question 15

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Accepted Answer

The answer of In the short run, an increase in...

Question 16

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)  efficiency. 
B)  equality. 
C)  externalities. 
D)  productivity. 
A)  efficiency. 
B)  equality. 
C)  externalities. 
D)  productivity.

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

In a market economy,

Accepted Answer

A)  households decide which firms to work for and what to buy with their incomes. 
B)  firms decide whom to hire and what to make. 
C)  a central planner makes decisions about production and consumption. 
D)  Both a and b are correct. 
A)  households decide which firms to work for and what to buy with their incomes. 
B)  firms decide whom to hire and what to make. 
C)  a central planner makes decisions about production and consumption. 
D)  Both a and b are correct.

Question 19

The principle that "people face tradeoffs" applies to

Accepted Answer

A)  individuals. 
B)  families. 
C)  societies. 
D)  All of the above are correct. 
A)  individuals. 
B)  families. 
C)  societies. 
D)  All of the above are correct.

Question 20

Efficiency means that

Accepted Answer

A)  society is conserving resources in order to save them for the future. 
B)  society's goods and services are distributed equally among society's members. 
C)  society's goods and services are distributed fairly, though not necessarily equally, among society's members. 
D)  society is getting the maximum benefits from its scarce resources. 
A)  society is conserving resources in order to save them for the future. 
B)  society's goods and services are distributed equally among society's members. 
C)  society's goods and services are distributed fairly, though not necessarily equally, among society's members. 
D)  society is getting the maximum benefits from its scarce resources.

Exam 1: Ten Principles of Economics

For most students, the earnings they give up to attend college are

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

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

The U.S. president who referred to inflation as "public enemy number one" was

The opportunity cost of an item is

The business cycle refers to fluctuations in economic activity such as employment and production.

Market failure can be caused by

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Low rates of inflation are generally associated with

Which of the following is an example of an externality?

Which of the following could reduce economic efficiency?

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

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

In a market economy,

The principle that "people face tradeoffs" applies to

Efficiency means that

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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