Question 1

Prices usually reflect

Accepted Answer

A)  only the value of a good to society. 
B)  only the cost to society of making a good. 
C)  both the value of a good to society and the cost to society of making the good. 
D)  neither the value of a good to society nor the cost to society of making the good. 
A)  only the value of a good to society. 
B)  only the cost to society of making a good. 
C)  both the value of a good to society and the cost to society of making the good. 
D)  neither the value of a good to society nor the cost to society of making the good.

Question 2

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 3

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Accepted Answer

A)  create a more fair distribution of income. 
B)  change the ingredients that are used to "bake" the economic pie. 
C)  enlarge the economic pie. 
D)  All of the above are correct. 
A)  create a more fair distribution of income. 
B)  change the ingredients that are used to "bake" the economic pie. 
C)  enlarge the economic pie. 
D)  All of the above are correct.

Question 4

Which of the following is true?

Accepted Answer

A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B)  Government policies usually improve upon both equality and efficiency. 
C)  As long as the economic pie continually gets larger, no one will have to go hungry. 
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces. 
A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B)  Government policies usually improve upon both equality and efficiency. 
C)  As long as the economic pie continually gets larger, no one will have to go hungry. 
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

Question 5

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Accepted Answer

A)  trade can make everyone better off. 
B)  people face trade-offs. 
C)  rational people think at the margin. 
D)  people respond to incentives. 
A)  trade can make everyone better off. 
B)  people face trade-offs. 
C)  rational people think at the margin. 
D)  people respond to incentives.

Question 6

Economics deals primarily with the concept of

Accepted Answer

A)  scarcity. 
B)  money. 
C)  poverty. 
D)  banking. 
A)  scarcity. 
B)  money. 
C)  poverty. 
D)  banking.

Question 7

Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of bread on hand. Which of the following is correct?

Accepted Answer

A)  Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price. 
B)  Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. 
C)  Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. 
D)  Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day. 
A)  Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price. 
B)  Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. 
C)  Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. 
D)  Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day.

Question 8

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Accepted Answer

A)  the 1970's and the 1990's 
B)  the 1970's but not the 1990's 
C)  the 1990's but not the 1970's 
D)  neither the 1970's nor the 1990's 
A)  the 1970's and the 1990's 
B)  the 1970's but not the 1990's 
C)  the 1990's but not the 1970's 
D)  neither the 1970's nor the 1990's

Question 9

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

Accepted Answer

A)  cost of teaching increased. 
B)  benefit of teaching increased. 
C)  cost of a corporate job increased. 
D)  benefit of a corporate job decreased. 
A)  cost of teaching increased. 
B)  benefit of teaching increased. 
C)  cost of a corporate job increased. 
D)  benefit of a corporate job decreased.

Question 10

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 company's marginal cost?

Accepted Answer

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

Question 11

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Accepted Answer

A) True 
 B)False

Question 12

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

Accepted Answer

A)  productivity. 
B)  an externality. 
C)  market power. 
D)  property rights. 
A)  productivity. 
B)  an externality. 
C)  market power. 
D)  property rights.

Question 13

You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

Accepted Answer

A)  both the cost of driving the first 800 miles and the next 15 miles. 
B)  the cost of driving the first 800 miles, but not the cost of driving the next 15 miles. 
C)  the cost of driving the next 15 miles, but not the cost of driving the first 800 miles. 
D)  neither the cost of driving the first 800 miles nor the cost of driving the next 15 miles. 
A)  both the cost of driving the first 800 miles and the next 15 miles. 
B)  the cost of driving the first 800 miles, but not the cost of driving the next 15 miles. 
C)  the cost of driving the next 15 miles, but not the cost of driving the first 800 miles. 
D)  neither the cost of driving the first 800 miles nor the cost of driving the next 15 miles.

Question 14

Rational people make decisions "at the margin" by comparing .

Accepted Answer

marginal c

Question 15

Most economists believe that an increase in the quantity of money results in

Accepted Answer

A)  an increase in the demand for goods and services. 
B)  lower unemployment in the short run. 
C)  higher inflation in the long run. 
D)  All of the above are correct. 
A)  an increase in the demand for goods and services. 
B)  lower unemployment in the short run. 
C)  higher inflation in the long run. 
D)  All of the above are correct.

Question 16

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A)  opportunity cost. 
B)  productivity. 
C)  externality. 
D)  marginal benefit. 
A)  opportunity cost. 
B)  productivity. 
C)  externality. 
D)  marginal benefit.

Question 17

When society gets the most it can from its scarce resources, then the outcome is called

Accepted Answer

A)  equitable. 
B)  efficient. 
C)  normal. 
D)  efficacious. 
A)  equitable. 
B)  efficient. 
C)  normal. 
D)  efficacious.

Question 18

The word "economy" comes from the Greek word oikonomos, which means

Accepted Answer

A)  "environment." 
B)  "production." 
C)  "one who manages a household." 
D)  "one who makes decisions." 
A)  "environment." 
B)  "production." 
C)  "one who manages a household." 
D)  "one who makes decisions."

Question 19

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Accepted Answer

A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct. 
A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct.

Question 20

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

Exam 1: Ten Principles of Economics

Prices usually reflect

Trade can make everyone better off except in the case where one person is better at doing everything.

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Which of the following is true?

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

Economics deals primarily with the concept of

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

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 company's marginal cost?

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

Rational people make decisions "at the margin" by comparing .

Most economists believe that an increase in the quantity of money results in

The amount of goods and services produced from each unit of labor input is called

When society gets the most it can from its scarce resources, then the outcome is called

The word "economy" comes from the Greek word oikonomos, which means

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

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

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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