Question 1

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 D

Question 2

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

Accepted Answer

marginal costs and marginal benefits

Question 3

England can benefit from trade

Accepted Answer

A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation. 
A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation. D

Question 4

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 5

For markets to work well, there must be

Accepted Answer

A)  market power. 
B)  a central planner. 
C)  property rights. 
D)  abundant, not scarce, resources. 
A)  market power. 
B)  a central planner. 
C)  property rights. 
D)  abundant, not scarce, resources.

Question 6

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 7

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.

Question 8

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 9

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 10

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 11

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 12

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Accepted Answer

A)  can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas. 
B)  determines Bridget's willingness to pay for the third soda. 
C)  is likely different from the marginal benefit provided to Bridget by the second soda. 
D)  All of the above are correct. 
A)  can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas. 
B)  determines Bridget's willingness to pay for the third soda. 
C)  is likely different from the marginal benefit provided to Bridget by the second soda. 
D)  All of the above are correct.

Question 13

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

Accepted Answer

A)  labor unions 
B)  minimum wage laws 
C)  productivity 
D)  efficiency 
A)  labor unions 
B)  minimum wage laws 
C)  productivity 
D)  efficiency

Question 14

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Accepted Answer

A)  1960s. 
B)  1970s. 
C)  1980s. 
D)  1990s. 
A)  1960s. 
B)  1970s. 
C)  1980s. 
D)  1990s.

Question 15

Economics is the study of how evenly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 16

In the United States, the overall level of prices more than doubled during the

Accepted Answer

A)  1950s. 
B)  1960s. 
C)  1970s. 
D)  1980s. 
A)  1950s. 
B)  1960s. 
C)  1970s. 
D)  1980s.

Question 17

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Accepted Answer

A)  An individual's probability of surviving an auto accident rose. 
B)  There was an increase in pedestrian deaths. 
C)  There was an increase in automobile accidents. 
D)  All of the above are correct. 
A)  An individual's probability of surviving an auto accident rose. 
B)  There was an increase in pedestrian deaths. 
C)  There was an increase in automobile accidents. 
D)  All of the above are correct.

Question 18

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 19

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

A)  inefficiency 
B)  inequality 
C)  scarcity 
D)  market failure 
A)  inefficiency 
B)  inequality 
C)  scarcity 
D)  market failure

Question 20

Water pollution from pulp and paper mills harms plants, animals, and humans. This is an example of

Accepted Answer

A)  a market failure caused by an externality. 
B)  a market failure caused by market power. 
C)  a market failure caused by equality. 
D)  There is no market failure in this case. 
A)  a market failure caused by an externality. 
B)  a market failure caused by market power. 
C)  a market failure caused by equality. 
D)  There is no market failure in this case.

Exam 1: Ten Principles of Economics

Which of the following could reduce economic efficiency?

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

England can benefit from trade

Market power and externalities are two possible causes of market failure.

For markets to work well, there must be

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

A rational decisionmaker takes an action if and only if

Low rates of inflation are generally associated with

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

In economics, the cost of something is

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

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

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Economics is the study of how evenly goods and services are distributed within society.

In the United States, the overall level of prices more than doubled during the

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

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

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Water pollution from pulp and paper mills harms plants, animals, and humans. This is an example of

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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