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 calculating the cost of college, which of the following should you probably not include?

Accepted Answer

A)  The cost of tuition 
B)  The cost of books required for college classes 
C)  The income you would have earned had you not gone to college 
D)  The cost of rent for your off-campus apartment. 
A)  The cost of tuition 
B)  The cost of books required for college classes 
C)  The income you would have earned had you not gone to college 
D)  The cost of rent for your off-campus apartment.

Question 3

A rational decision maker takes an action only if the

Accepted Answer

A)  marginal benefit is less than the marginal cost. 
B)  marginal benefit is greater than the marginal cost. 
C)  average benefit is greater than the average cost. 
D)  marginal benefit is greater than both the average cost and the marginal cost. 
A)  marginal benefit is less than the marginal cost. 
B)  marginal benefit is greater than the marginal cost. 
C)  average benefit is greater than the average cost. 
D)  marginal benefit is greater than both the average cost and the marginal cost.

Question 4

The opportunity cost of an item is

Accepted Answer

A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item. 
A)  the number of hours needed to earn money to buy the item. 
B)  what you give up to get that item. 
C)  usually less than the dollar value of the item. 
D)  the dollar value of the item.

Question 5

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Melinda quits her job at a bank,...

Question 6

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Accepted Answer

A)  the Federal Reserve is worried about inflation. 
B)  the Federal Reserve is worried about unemployment. 
C)  the Federal Reserve is hoping to reduce the demand for goods and services. 
D)  the Federal Reserve is worried that the economy is growing too quickly. 
A)  the Federal Reserve is worried about inflation. 
B)  the Federal Reserve is worried about unemployment. 
C)  the Federal Reserve is hoping to reduce the demand for goods and services. 
D)  the Federal Reserve is worried that the economy is growing too quickly.

Question 7

Equality refers to how the pie is divided, and efficiency refers to the size of the economic pie.

Accepted Answer

A) True 
 B)False

Question 8

If the United States decides to trade with Yemen, we know that

Accepted Answer

A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast. 
A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast.

Question 9

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  decreased by about 6 percent between 2000 and 2008. 
B)  remained unchanged between 2000 and 2008. 
C)  increased by about 9 percent between 2000 and 2008. 
D)  increased by about 18 percent between 2000 and 2008. 
A)  decreased by about 6 percent between 2000 and 2008. 
B)  remained unchanged between 2000 and 2008. 
C)  increased by about 9 percent between 2000 and 2008. 
D)  increased by about 18 percent between 2000 and 2008.

Question 10

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

Accepted Answer

A)  worker productivity in Bangladesh is higher than in India. 
B)  the standard of living will likely be higher in India than in Bangladesh. 
C)  productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D)  there will be no difference between the standard of living in India and Bangladesh. 
A)  worker productivity in Bangladesh is higher than in India. 
B)  the standard of living will likely be higher in India than in Bangladesh. 
C)  productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D)  there will be no difference between the standard of living in India and Bangladesh.

Question 11

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the minimum price that would induce this company to produce the 601st heart rate monitor?

Accepted Answer

The answer of Scenario 1-6
It costs a company $30,000 to...

Question 12

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Accepted Answer

A)  could be due to slower money supply growth. We would expect unemployment to be higher. 
B)  could be due to slower money supply growth. We would expect unemployment to be lower. 
C)  could be due to higher money supply growth. We would expect unemployment to be higher. 
D)  could be due to higher money supply growth. We would expect unemployment to be lower. 
A)  could be due to slower money supply growth. We would expect unemployment to be higher. 
B)  could be due to slower money supply growth. We would expect unemployment to be lower. 
C)  could be due to higher money supply growth. We would expect unemployment to be higher. 
D)  could be due to higher money supply growth. We would expect unemployment to be lower.

Question 13

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.

Question 14

Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points.
-The term refers to a small incremental adjustment to an existing plan of action.

Accepted Answer

The answer of Scenario 1-4 You have the afternoon free....

Question 15

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so

Question 16

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Accepted Answer

A)  the unexpected repairs and the increase in the price of gas 
B)  the unexpected increase for repairs, but not the increase in the price of gas 
C)  the increase in the price of gas, but not the unexpected repairs 
D)  neither the unexpected increase in the price of gas nor the unexpected repairs 
A)  the unexpected repairs and the increase in the price of gas 
B)  the unexpected increase for repairs, but not the increase in the price of gas 
C)  the increase in the price of gas, but not the unexpected repairs 
D)  neither the unexpected increase in the price of gas nor the unexpected repairs

Question 17

Efficiency

Accepted Answer

A)  and equality both refer to how much a society can produce with its resources. 
B)  and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C)  refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D)  refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources 
A)  and equality both refer to how much a society can produce with its resources. 
B)  and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C)  refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D)  refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources

Question 18

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor

Question 19

The mainstream view among economists is that

Accepted Answer

A)  society faces a tradeoff between unemployment and inflation, but only in the short run. 
B)  society faces a tradeoff between unemployment and inflation, but only in the long run. 
C)  society faces a tradeoff between unemployment and inflation, both in the short run and in the long run. 
D)  no tradeoff exists between unemployment and inflation, either in the short run or in the long run. 
A)  society faces a tradeoff between unemployment and inflation, but only in the short run. 
B)  society faces a tradeoff between unemployment and inflation, but only in the long run. 
C)  society faces a tradeoff between unemployment and inflation, both in the short run and in the long run. 
D)  no tradeoff exists between unemployment and inflation, either in the short run or in the long run.

Question 20

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)  Ted purchases a dilapidated house and cleans up the yard and exterior of the house. 
B)  Tim purchases an iPhone and downloads new apps. 
C)  Terri purchases a new SUV and drives it to work every day. 
D)  Thomas purchases a suit and wears it on his interviews. 
A)  Ted purchases a dilapidated house and cleans up the yard and exterior of the house. 
B)  Tim purchases an iPhone and downloads new apps. 
C)  Terri purchases a new SUV and drives it to work every day. 
D)  Thomas purchases a suit and wears it on his interviews.

Exam 1: Ten Principles of Economics

When the United States trades with China,

When calculating the cost of college, which of the following should you probably not include?

A rational decision maker takes an action only if the

The opportunity cost of an item is

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Equality refers to how the pie is divided, and efficiency refers to the size of the economic pie.

If the United States decides to trade with Yemen, we know that

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

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

How does the study of economics depend upon the phenomenon of scarcity?

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Efficiency

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

The mainstream view among economists is that

Which of these activities will most likely result in an external benefit?

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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