Question 1

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Accepted Answer

A)  not emit any pollution so as to avoid the entire cost of the pollution. 
B)  emit lower levels of pollution. 
C)  emit an acceptable level of pollution. 
D)  emit too much pollution. 
A)  not emit any pollution so as to avoid the entire cost of the pollution. 
B)  emit lower levels of pollution. 
C)  emit an acceptable level of pollution. 
D)  emit too much pollution.

Question 2

The property of society getting the most it can from its scarce resources is called

Accepted Answer

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

Question 3

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  the quantity of money 
B)  the level of unemployment 
C)  productivity 
D)  equality 
A)  the quantity of money 
B)  the level of unemployment 
C)  productivity 
D)  equality

Question 5

Scenario 1-1
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 $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo

Question 6

Communist countries worked under the premise that

Accepted Answer

A)  markets were the best way to organize economic activity. 
B)  central planners were in the best position to determine the allocation of scarce resources in the economy. 
C)  households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources. 
D)  allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources. 
A)  markets were the best way to organize economic activity. 
B)  central planners were in the best position to determine the allocation of scarce resources in the economy. 
C)  households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources. 
D)  allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.

Question 7

When government policies are enacted,

Accepted Answer

A)  equality can usually be enhanced without an efficiency loss, but efficiency can never be enhanced without a reduction in equality. 
B)  efficiency can usually be enhanced without a reduction in equality, but equality can never be enhanced without an efficiency loss. 
C)  it is always the case that either efficiency and equality are both enhanced, or efficiency and equality are both diminished. 
D)  None of the above are correct. 
A)  equality can usually be enhanced without an efficiency loss, but efficiency can never be enhanced without a reduction in equality. 
B)  efficiency can usually be enhanced without a reduction in equality, but equality can never be enhanced without an efficiency loss. 
C)  it is always the case that either efficiency and equality are both enhanced, or efficiency and equality are both diminished. 
D)  None of the above are correct.

Question 8

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Accepted Answer

A)  to produce good quality products so that society would benefit from the resources used 
B)  to conserve on costs, so as to maintain efficiency in the economy 
C)  to produce enough to meet the output target, without regard for quality or cost 
D)  to produce those products that society desires most 
A)  to produce good quality products so that society would benefit from the resources used 
B)  to conserve on costs, so as to maintain efficiency in the economy 
C)  to produce enough to meet the output target, without regard for quality or cost 
D)  to produce those products that society desires most

Question 9

The principle that trade can make everyone better off applies to

Accepted Answer

A)  individuals. 
B)  families. 
C)  countries. 
D)  All of the above 
A)  individuals. 
B)  families. 
C)  countries. 
D)  All of the above

Question 10

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Accepted Answer

A) True 
 B)False

Question 11

A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately.

Accepted Answer

A)  Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality. 
B)  Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency. 
C)  Both representatives' arguments are based primarily on efficiency. 
D)  Both representatives' arguments are based primarily on equality. 
A)  Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality. 
B)  Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency. 
C)  Both representatives' arguments are based primarily on efficiency. 
D)  Both representatives' arguments are based primarily on equality.

Question 12

Economics is the study of

Accepted Answer

A)  production methods. 
B)  how society manages its scarce resources. 
C)  how households decide who performs which tasks. 
D)  the interaction of business and government. 
A)  production methods. 
B)  how society manages its scarce resources. 
C)  how households decide who performs which tasks. 
D)  the interaction of business and government.

Question 13

A society allocates its scarce resources to various jobs. These scarce resources include

Accepted Answer

A)  land. 
B)  people. 
C)  machines. 
D)  All of the above are correct. 
A)  land. 
B)  people. 
C)  machines. 
D)  All of the above are correct.

Question 14

An example of an externality is the impact of

Accepted Answer

A)  bad weather on the income of farmers. 
B)  the personal income tax on a person's ability to purchase goods and services. 
C)  pollution from a factory on the health of people in the vicinity of the factory. 
D)  increases in health care costs on the health of individuals in society. 
A)  bad weather on the income of farmers. 
B)  the personal income tax on a person's ability to purchase goods and services. 
C)  pollution from a factory on the health of people in the vicinity of the factory. 
D)  increases in health care costs on the health of individuals in society.

Question 15

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  decreased by 1.7 percent between 1998 and 2008. 
B)  remained unchanged between 1998 and 2008. 
C)  increased by 4.75 percent between 1998 and 2008. 
D)  increased by 6.25 percent between 1998 and 2008. 
A)  decreased by 1.7 percent between 1998 and 2008. 
B)  remained unchanged between 1998 and 2008. 
C)  increased by 4.75 percent between 1998 and 2008. 
D)  increased by 6.25 percent between 1998 and 2008.

Question 16

The "invisible hand" works to promote general well­being in the economy primarily through

Accepted Answer

A)  government intervention. 
B)  the political process. 
C)  people's pursuit of self­interest. 
D)  altruism. 
A)  government intervention. 
B)  the political process. 
C)  people's pursuit of self­interest. 
D)  altruism.

Question 17

Government policies designed to equalize the distribution of economic well-being 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 18

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 19

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the minimum price the company will charge for the 701th calculator?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 20

A rational decisionmaker takes an action if and only if

Accepted Answer

A)  the marginal benefit of the action exceeds the marginal cost of the action. 
B)  the marginal cost of the action exceeds the marginal benefit of the action. 
C)  the marginal cost of the action is zero. 
D)  the opportunity cost of the action is zero. 
A)  the marginal benefit of the action exceeds the marginal cost of the action. 
B)  the marginal cost of the action exceeds the marginal benefit of the action. 
C)  the marginal cost of the action is zero. 
D)  the opportunity cost of the action is zero.

Exam 1: Ten Principles of Economics

If an electric power plant does not bear the entire cost of the pollution it emits, it will

The property of society getting the most it can from its scarce resources is called

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

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

Communist countries worked under the premise that

When government policies are enacted,

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

The principle that trade can make everyone better off applies to

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Economics is the study of

A society allocates its scarce resources to various jobs. These scarce resources include

An example of an externality is the impact of

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

The "invisible hand" works to promote general well­being in the economy primarily through

Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

High-school athletes who skip college to become professional athletes

A rational decisionmaker takes an action if and only if

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

Filters

The "invisible hand" works to promote general wellbeing in the economy primarily through