Question 1

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)  studies show that individuals with higher levels of income pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  employing individuals to clean up pollution causes increases in employment and income. 
A)  studies show that individuals with higher levels of income pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  employing individuals to clean up pollution causes increases in employment and income.

Question 2

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 3

Over the past century, the average income in the United States has risen about

Accepted Answer

A)  twofold. 
B)  fivefold. 
C)  eightfold. 
D)  tenfold. 
A)  twofold. 
B)  fivefold. 
C)  eightfold. 
D)  tenfold.

Question 4

In the early 1920s,

Accepted Answer

A)  Germany experienced a very high rate of inflation. 
B)  the quantity of German money was declining rapidly. 
C)  the value of German money remained almost constant. 
D)  All of the above are correct. 
A)  Germany experienced a very high rate of inflation. 
B)  the quantity of German money was declining rapidly. 
C)  the value of German money remained almost constant. 
D)  All of the above are correct.

Question 5

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 6

Explain how trade with other countries is beneficial.

Accepted Answer

Trade allows countri

Question 7

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)  goods are scarce. 
B)  people face tradeoffs. 
C)  income must be earned. 
D)  households face many decisions. 
A)  goods are scarce. 
B)  people face tradeoffs. 
C)  income must be earned. 
D)  households face many decisions.

Question 8

What is another word for "marginal"?

Accepted Answer

incrementa

Question 9

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Accepted Answer

A)  more than $200. 
B)  more than $300. 
C)  more than $500. 
D)  This cannot be determined from the information given. 
A)  more than $200. 
B)  more than $300. 
C)  more than $500. 
D)  This cannot be determined from the information given.

Question 10

A company that formerly produced music CDs went out of business because too many potential customers bought illegally-produced copies of the CDs instead of buying the product directly from the company. This instance serves as an example of

Accepted Answer

A)  market power. 
B)  inefficient trade. 
C)  inadequate enforcement of property rights. 
D)  the invisible hand at work. 
A)  market power. 
B)  inefficient trade. 
C)  inadequate enforcement of property rights. 
D)  the invisible hand at work.

Question 11

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)  The marginal benefit of going to Cancun increases. 
B)  The marginal cost of going to Cancun decreases. 
C)  The marginal benefit of going to Ft. Lauderdale decreases. 
D)  The marginal cost of going to Ft. Lauderdale decreases. 
A)  The marginal benefit of going to Cancun increases. 
B)  The marginal cost of going to Cancun decreases. 
C)  The marginal benefit of going to Ft. Lauderdale decreases. 
D)  The marginal cost of going to Ft. Lauderdale decreases.

Question 12

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)  is a basic principle regarding individual decisionmaking. 
B)  amounts to a denial of one of the basic principles regarding interactions among people. 
C)  supports the idea that the "invisible hand" should guide economic activity. 
D)  was promoted by the economist Adam Smith in a well-known 1776 book. 
A)  is a basic principle regarding individual decisionmaking. 
B)  amounts to a denial of one of the basic principles regarding interactions among people. 
C)  supports the idea that the "invisible hand" should guide economic activity. 
D)  was promoted by the economist Adam Smith in a well-known 1776 book.

Question 13

The short-run tradeoff between inflation and unemployment implies that, in the short run,

Accepted Answer

A)  a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B)  an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C)  policymakers are able to reduce the inflation rate and, at the same time, reduce the unemployment rate. 
D)  policymakers can influence the inflation rate, but not the unemployment rate. 
A)  a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B)  an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C)  policymakers are able to reduce the inflation rate and, at the same time, reduce the unemployment rate. 
D)  policymakers can influence the inflation rate, but not the unemployment rate.

Question 14

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

Accepted Answer

A)  its average cost is greater than its marginal cost. 
B)  its average cost and its marginal cost are equal. 
C)  its average cost is less than its marginal cost. 
D)  there is insufficient information to compute average and marginal costs. 
A)  its average cost is greater than its marginal cost. 
B)  its average cost and its marginal cost are equal. 
C)  its average cost is less than its marginal cost. 
D)  there is insufficient information to compute average and marginal costs.

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

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A)  Average income in the US is higher than the average income in Ghana. 
B)  The US has a higher standard of living than Ghana. 
C)  Productivity in the US is higher than productivity in Ghana. 
D)  All of the above are correct. 
A)  Average income in the US is higher than the average income in Ghana. 
B)  The US has a higher standard of living than Ghana. 
C)  Productivity in the US is higher than productivity in Ghana. 
D)  All of the above are correct.

Question 17

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)  market. 
B)  consumer. 
C)  producer. 
D)  economy. 
A)  market. 
B)  consumer. 
C)  producer. 
D)  economy.

Question 18

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A)  create a more fair distribution of income. 
B)  change the way in which the economic pie is divided. 
C)  enlarge the economic pie. 
D)  All of the above are correct. 
A)  create a more fair distribution of income. 
B)  change the way in which the economic pie is divided. 
C)  enlarge the economic pie. 
D)  All of the above are correct.

Question 19

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

The answer of Invisible hand is a term used by...

Question 20

U.S. laws requiring that drivers wear seat belts have resulted in

Accepted Answer

A)  a reduction in both driver deaths and pedestrian deaths. 
B)  fewer accidents and fewer deaths per accident. 
C)  fewer driver deaths, fewer accidents and fewer pedestrian deaths. 
D)  little change in the number of driver deaths, but more accidents and more pedestrian deaths. 
A)  a reduction in both driver deaths and pedestrian deaths. 
B)  fewer accidents and fewer deaths per accident. 
C)  fewer driver deaths, fewer accidents and fewer pedestrian deaths. 
D)  little change in the number of driver deaths, but more accidents and more pedestrian deaths.

Exam 1: Ten Principles of Economics

A tradeoff exists between a clean environment and a higher level of income in that

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?

Over the past century, the average income in the United States has risen about

In the early 1920s,

The invisible hand ensures that economic prosperity is distributed equally.

Explain how trade with other countries is beneficial.

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

What is another word for "marginal"?

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

A company that formerly produced music CDs went out of business because too many potential customers bought illegally-produced copies of the CDs instead of buying the product directly from the company. This instance serves as an example of

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

The short-run tradeoff between inflation and unemployment implies that, in the short run,

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

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

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

The English word that comes from the Greek word for "one who manages a household" is

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

U.S. laws requiring that drivers wear seat belts have resulted in

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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