Question 1

When the United States trades with China,

Accepted Answer

A)  both countries will likely benefit. 
B)  only United States will benefit. 
C)  only China will benefit. 
D)  neither country will benefit. 
A)  both countries will likely benefit. 
B)  only United States will benefit. 
C)  only China will benefit. 
D)  neither country will benefit.

Question 2

When computing the opportunity cost of attending a basketball game you should include

Accepted Answer

A)  the price you pay for the ticket and the value of your time. 
B)  the price you pay for the ticket, but not the value of your time. 
C)  the value of your time, but not the price you pay for the ticket. 
D)  neither the price of the ticket nor the value of your time. 
A)  the price you pay for the ticket and the value of your time. 
B)  the price you pay for the ticket, but not the value of your time. 
C)  the value of your time, but not the price you pay for the ticket. 
D)  neither the price of the ticket nor the value of your time.

Question 3

To promote good economic outcomes, policymakers should strive to enact policies that

Accepted Answer

A)  enhance productivity. 
B)  enhance individuals' market power. 
C)  result in a rapidly-growing quantity of money. 
D)  All of the above are correct. 
A)  enhance productivity. 
B)  enhance individuals' market power. 
C)  result in a rapidly-growing quantity of money. 
D)  All of the above are correct.

Question 4

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

Accepted Answer

A)  government actions that distort prices. 
B)  increased competition in markets. 
C)  enforcement of property rights. 
D)  too much attention paid to efficiency. 
A)  government actions that distort prices. 
B)  increased competition in markets. 
C)  enforcement of property rights. 
D)  too much attention paid to efficiency.

Question 5

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 6

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.

Accepted Answer

A) True 
 B)False

Question 7

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Accepted Answer

A)  the pie gets larger, and there will be more pie overall. 
B)  the pie gets smaller, and there will be less pie overall. 
C)  it increases the reward for working hard, resulting in people producing more goods and services. 
D)  those who earn more income pay less in taxes. 
A)  the pie gets larger, and there will be more pie overall. 
B)  the pie gets smaller, and there will be less pie overall. 
C)  it increases the reward for working hard, resulting in people producing more goods and services. 
D)  those who earn more income pay less in taxes.

Question 8

In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  increased by 2 percent between 1999 and 2009. 
B)  increased by 5 percent between 1999 and 2009. 
C)  remained unchanged between 1999 and 2009. 
D)  decreased by 3 percent between 1999 and 2009. 
A)  increased by 2 percent between 1999 and 2009. 
B)  increased by 5 percent between 1999 and 2009. 
C)  remained unchanged between 1999 and 2009. 
D)  decreased by 3 percent between 1999 and 2009.

Question 9

The opportunity cost of going to college is

Accepted Answer

A)  the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. 
B)  the value of the best opportunity a student gives up to attend college. 
C)  zero for students who are fortunate enough to have all of their college expenses paid by someone else. 
D)  zero, since a college education will allow a student to earn a larger income after graduation. 
A)  the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. 
B)  the value of the best opportunity a student gives up to attend college. 
C)  zero for students who are fortunate enough to have all of their college expenses paid by someone else. 
D)  zero, since a college education will allow a student to earn a larger income after graduation.

Question 10

The term refers to the size of the economic pie, and the term refers to how the pie is divided.

Accepted Answer

efficiency

Question 11

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Accepted Answer

A)  the invisible hand. 
B)  market power. 
C)  government intervention. 
D)  oikonomos. 
A)  the invisible hand. 
B)  market power. 
C)  government intervention. 
D)  oikonomos.

Question 12

Congressman Dearmark justified spending $3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As a student of economics, you know that

Accepted Answer

A)  this is a case of the "broken window fallacy." 
B)  this is a great use of taxpayer dollars. 
C)  this policy diverts money from spending somewhere else in the economy. 
D)  Both a and c are correct. 
A)  this is a case of the "broken window fallacy." 
B)  this is a great use of taxpayer dollars. 
C)  this policy diverts money from spending somewhere else in the economy. 
D)  Both a and c are correct.

Question 13

Which of the following statements about market economies is correct?

Accepted Answer

A)  In a market economy, no one is looking out for the economic well-being of society as a whole. 
B)  Market economies are characterized by decentralized decision making and self-interested decision makers. 
C)  Market economies have proven remarkably successful in promoting overall economic well-being. 
D)  All of the above are correct. 
A)  In a market economy, no one is looking out for the economic well-being of society as a whole. 
B)  Market economies are characterized by decentralized decision making and self-interested decision makers. 
C)  Market economies have proven remarkably successful in promoting overall economic well-being. 
D)  All of the above are correct.

Question 14

In economics, the cost of something is

Accepted Answer

A)  the dollar amount of obtaining it. 
B)  always measured in units of time given up to get it. 
C)  what you give up to get it. 
D)  often impossible to quantify, even in principle. 
A)  the dollar amount of obtaining it. 
B)  always measured in units of time given up to get it. 
C)  what you give up to get it. 
D)  often impossible to quantify, even in principle.

Question 15

Market economies are distinguished from other types of economies largely on the basis of

Accepted Answer

A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers. 
A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers.

Question 16

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Accepted Answer

A) True 
 B)False

Question 17

Rational people make decisions "at the margin" by comparing

Accepted Answer

A)  average costs and benefits. 
B)  total costs and benefits. 
C)  additional costs and benefits. 
D)  opportunity costs and benefits. 
A)  average costs and benefits. 
B)  total costs and benefits. 
C)  additional costs and benefits. 
D)  opportunity costs and benefits.

Question 18

Trade

Accepted Answer

A)  allows specialization, which increases costs. 
B)  allows specialization, which reduces costs. 
C)  reduces specialization, which increases costs. 
D)  reduces specialization, which reduces costs. 
A)  allows specialization, which increases costs. 
B)  allows specialization, which reduces costs. 
C)  reduces specialization, which increases costs. 
D)  reduces specialization, which reduces costs.

Question 19

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient. 
A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient.

Question 20

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Accepted Answer

A)  $32,000. 
B)  $42,000. 
C)  $50,000. 
D)  $58,000. 
A)  $32,000. 
B)  $42,000. 
C)  $50,000. 
D)  $58,000.

Exam 1: Ten Principles of Economics

When the United States trades with China,

When computing the opportunity cost of attending a basketball game you should include

To promote good economic outcomes, policymakers should strive to enact policies that

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

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

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.

As a result of a successful attempt by government to cut the economic pie into more equal slices,

In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. In that country, the productivity of the average worker

The opportunity cost of going to college is

The term refers to the size of the economic pie, and the term refers to how the pie is divided.

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Congressman Dearmark justified spending $3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As a student of economics, you know that

Which of the following statements about market economies is correct?

In economics, the cost of something is

Market economies are distinguished from other types of economies largely on the basis of

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Rational people make decisions "at the margin" by comparing

Trade

One advantage market economies have over centrally-planned economies is that market economies

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

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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