Question 1

The principle that "trade can make everyone better off" applies to interactions and trade between

Accepted Answer

A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct. 
A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct.

Question 2

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 3

In a centrally-planned economy, economic activity is guided by .

Accepted Answer

The answer of In a centrally-planned economy, economic activity is...

Question 4

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 5

The relatively low inflation experienced in the United States in the 1990s is attributable to

Accepted Answer

A)  slow growth of U.S. productivity during the 1990s. 
B)  slow growth of the quantity of money in the U.S. in the 1990s. 
C)  low levels of government spending in the U.S. in the 1980s and 1990s. 
D)  the eight-year presidency of William Jefferson Clinton during the 1990s. 
A)  slow growth of U.S. productivity during the 1990s. 
B)  slow growth of the quantity of money in the U.S. in the 1990s. 
C)  low levels of government spending in the U.S. in the 1980s and 1990s. 
D)  the eight-year presidency of William Jefferson Clinton during the 1990s.

Question 6

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)  enhance equality. 
B)  reduce efficiency. 
C)  reduce the reward for working hard. 
D)  All of the above are correct. 
A)  enhance equality. 
B)  reduce efficiency. 
C)  reduce the reward for working hard. 
D)  All of the above are correct.

Question 7

The failure of communism in a large number of countries is at least partly explained by

Accepted Answer

A)  the fact that those countries relied absolutely on the invisible hand. 
B)  the fact that those countries did little or nothing to restrict trade with other countries. 
C)  the lack of information, on the part of central planners in those countries, about tastes and preferences in their economies. 
D)  the lack of information, on the part of central planners in those countries, about how much authority the government had in affecting economic outcomes. 
A)  the fact that those countries relied absolutely on the invisible hand. 
B)  the fact that those countries did little or nothing to restrict trade with other countries. 
C)  the lack of information, on the part of central planners in those countries, about tastes and preferences in their economies. 
D)  the lack of information, on the part of central planners in those countries, about how much authority the government had in affecting economic outcomes.

Question 8

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.

Question 9

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 10

The "broken window fallacy"

Accepted Answer

A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy. 
A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy.

Question 11

The ability of an individual to own and exercise control over scarce resources is called

Accepted Answer

A)  market failure. 
B)  property rights. 
C)  externality. 
D)  market power. 
A)  market failure. 
B)  property rights. 
C)  externality. 
D)  market power.

Question 12

A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

Accepted Answer

A)  U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. 
B)  There is little demand for cotton cloth in Vietnam and great demand in the U.S. 
C)  Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Vietnam has a low-wage policy to make its textile industry more competitive in world markets. 
A)  U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. 
B)  There is little demand for cotton cloth in Vietnam and great demand in the U.S. 
C)  Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D)  Vietnam has a low-wage policy to make its textile industry more competitive in world markets.

Question 13

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it

Accepted Answer

A)  charged any ticket price above $0 for the four remaining seats. 
B)  charged at least $11.25 for each of the four remaining seats. 
C)  charged at least $45 for each of the four remaining seats. 
D)  paid four people to occupy the four remaining seats. 
A)  charged any ticket price above $0 for the four remaining seats. 
B)  charged at least $11.25 for each of the four remaining seats. 
C)  charged at least $45 for each of the four remaining seats. 
D)  paid four people to occupy the four remaining seats.

Question 14

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

efficiency

Question 16

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

Accepted Answer

A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource. 
A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource.

Question 17

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 18

The basic principles of economics suggest that

Accepted Answer

A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct. 
A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct.

Question 19

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 20

The marginal benefit Susie gets from purchasing a third pair of gloves is

Accepted Answer

A)  the same as the total benefit she gets from purchasing three pairs of gloves. 
B)  more than the marginal cost of purchasing the third pair of gloves. 
C)  the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves. 
D)  the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves. 
A)  the same as the total benefit she gets from purchasing three pairs of gloves. 
B)  more than the marginal cost of purchasing the third pair of gloves. 
C)  the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves. 
D)  the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.

Exam 1: Ten Principles of Economics

The principle that "trade can make everyone better off" applies to interactions and trade between

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

In a centrally-planned economy, economic activity is guided by .

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

The relatively low inflation experienced in the United States in the 1990s is attributable to

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

The failure of communism in a large number of countries is at least partly explained by

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

Economics deals primarily with the concept of

The "broken window fallacy"

The ability of an individual to own and exercise control over scarce resources is called

A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it

With careful planning, we can usually get something that we like without having to give up something else that we like.

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

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

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

The basic principles of economics suggest that

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

The marginal benefit Susie gets from purchasing a third pair of gloves 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

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

Filters