Question 1

Which of the following is an example of self-interest that attempts to promote the public interest?

Accepted Answer

A)   A mother prevents her children from becoming vaccinated against measles, mumps, and rubella because of fears of autism.
B)   The President of the United States restricts American consumers from buying foreign-made products.
C)   The New York Yankees beat the Boston Red Sox.
D)   An entrepreneur risks his life savings to open up a grocery store in an underserved area.E) C) and D)
F) A) and D)

Question 2

If North Korea and South Korea were both equally poor in 1950, why has South Korea developed so much faster since then?

Accepted Answer

A)   The two countries have different language, cultural, and historical backgrounds.
B)   North Korea has an economic system that develops incentives.
C)   South Korea has maintained a more market-based economic system.
D)   South Korea began with a higher per capita GDP.E) B) and C)
F) A) and D)

Question 3

Most people do not buy the safest car they can find. Why not?

Accepted Answer

A)   Other factors matter besides safety, such as comfort, cost, and fuel economy.
B)   People do not take the time to understand the safety features of cars.
C)   Consumers are unaware of the risks of different cars.
D)   The statement is false. People do buy the safest car they can find.E) B) and C)
F) None of the above

Question 4

An example of a marginal decision is deciding whether to:

Accepted Answer

A)   invest half your savings in Google or Microsoft.
B)   buy one more apple or one more banana.
C)   commit your life to economics or biology.
D)   study for 5 hours or for 10 hours.E) A) and B)
F) B) and D)

Question 5

South Korea is an example of a country that has adopted good institutions for promoting economic growth.

Accepted Answer

A) True 
 B)False

Question 6

Inflation makes it more difficult to figure out the real value of goods.

Accepted Answer

A) True 
 B)False

Question 7

During the middle ages, expensive castle-based warfare was the dominant method of conflict. Warfare was also the main function of government. Which reason best explains why few universities were built during this time?

Accepted Answer

A)   The lack of professors meant there was no incentive to create universities.
B)   The opportunity cost of building universities was fewer castles.
C)   There were no benefits to attending college at the time.
D)   Local rulers did not care about long-term growth.E) A) and B)
F) A) and C)

Question 8

Why is it less costly to attend college during a recession?

Accepted Answer

A)   Tuition is much lower during a recession.
B)   The opportunity cost is higher during a recession because there are more labor market opportunities.
C)   The opportunity cost is lower during a recession because there are fewer labor market opportunities.
D)   Colleges give out better grades during recessions, so the opportunity cost is lower.E) C) and D)
F) None of the above

Question 9

Research spearheaded by Dr. Norman Borlaug in the 1950s and 1960s helped develop high-yield wheat that is now in use all over the world. It was so successful that some credit Borlaug with saving more than one billion people from dying of starvation. What quality do ideas have that makes this claim so credible?

Accepted Answer

A)   They don't require many resources to develop, just careful thought.
B)   They create incentives, transform human behavior, and allow people to pursue their own self-interest.
C)   They are intangible, allowing them to easily be improved upon.
D)   They aren't depleted when they are used, allowing them to spread quickly and without limit.E) A) and B)
F) C) and D)

Question 10

Institutions that support economic growth are the ones that:

Accepted Answer

A)   encourage consumption and discourage savings.
B)   give the government more control over what is produced and how it is produced.
C)   require companies to act in the social interest.
D)   provide incentives for entrepreneurs to take risks and innovate.E) A) and D)
F) A) and C)

Question 11

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Accepted Answer

Opportunity cost is that which you must ...

Question 12

A dependable legal system and competitive, open markets help to:

Accepted Answer

A)   shape incentives that induce economic growth.
B)   reduce liberty and varied freedoms.
C)   bring about honest government and political stability.
D)   increase inefficiencies.E) None of the above
F) A) and C)

Question 13

The opportunity cost of a choice is:

Accepted Answer

A)   the opportunity of using the money to buy something else cheaper.
B)   the money cost that a person does not have to pay when doing something.
C)   the money that a buyer has to pay for an item.
D)   the value of the next best opportunity foregone.E) C) and D)
F) B) and C)

Question 14

An automobile gets 40 miles per gallon, and a gallon of fuel costs $4.00. What is the marginal fuel cost for a typical mile of driving with this vehicle?

Accepted Answer

A)   $0.05
B)   $0.10
C)   $0.15
D)   $0.20E) A) and C)
F) C) and D)

Question 15

Recall Chapter 1's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested:

Accepted Answer

A)   paying for each prisoner who walked off the ship in Australia.
B)   paying for food and water to reduce costs of caring for prisoners during the transit.
C)   doing nothing, since the suggested change would not matter.
D)   that new regulations be passed to require prisoner safety and health.E) A) and D)
F) None of the above

Question 16

The FDA faces societal trade-offs when it decides how safe drugs need to be before allowing patients to use them. For example, if the FDA raises the cost of testing for drug safety, some safe drugs will never be developed, and people will unnecessarily die.

Accepted Answer

A) True 
 B)False

Question 17

Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition, $900 for books, and $2,500 for food. The opportunity cost of attending college for the year is:

Accepted Answer

A)   $11,400.
B)   $8,900.
C)   $48,900.
D)   $51,400.E) C) and D)
F) B) and C)

Question 18

The average tax on a professor's income of $100,000 is 18 percent, and the marginal tax rate above $100,000 is 45 percent. If the professor teaches during the summer and earns an additional $10,000 (bringing her total earnings for the year to $110,000) , how much of the summer income does she keep after paying taxes?

Accepted Answer

A)   $4,500
B)   $1,800
C)   $6,300
D)   $5,500E) A) and D)
F) B) and D)

Question 19

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

Accepted Answer

A) True 
 B)False

Question 20

The opportunity cost of attending college is:

Accepted Answer

A)   tuition and books.
B)   travel expenses, tuition, and books.
C)   psychic costs of missing your family and friends while in school.
D)   lost wages from not working full time.E) B) and C)
F) All of the above

Exam 1: The Big Ideas

Correct Answer
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An example of a marginal decision is deciding whether to:

Correct Answer
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South Korea is an example of a country that has adopted good institutions for promoting economic growth.

Correct Answer
verified

Why is it less costly to attend college during a recession?

Correct Answer
verified

An automobile gets 40 miles per gallon, and a gallon of fuel costs $4.00. What is the marginal fuel cost for a typical mile of driving with this vehicle?

Correct Answer
verified

If North Korea and South Korea were both equally poor in 1950, why has South Korea developed so much faster since then?

Correct Answer
verified

Most people do not buy the safest car they can find. Why not?

Correct Answer
verified

The opportunity cost of a choice is:

Correct Answer
verified

The FDA faces societal trade-offs when it decides how safe drugs need to be before allowing patients to use them. For example, if the FDA raises the cost of testing for drug safety, some safe drugs will never be developed, and people will unnecessarily die.

Correct Answer
verified

Correct Answer
verified

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Correct Answer
verified
Opportunity cost is that which you must ...
View Answer

Institutions that support economic growth are the ones that:

Correct Answer
verified

The opportunity cost of attending college is:

Correct Answer
verified

A dependable legal system and competitive, open markets help to:

Correct Answer
verified

Recall Chapter 1's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested:

Correct Answer
verified

Inflation makes it more difficult to figure out the real value of goods.

Correct Answer
verified

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

Correct Answer
verified

Which of the following is an example of self-interest that attempts to promote the public interest?

Correct Answer
verified

During the middle ages, expensive castle-based warfare was the dominant method of conflict. Warfare was also the main function of government. Which reason best explains why few universities were built during this time?

Correct Answer
verified

Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition, $900 for books, and $2,500 for food. The opportunity cost of attending college for the year is:

Correct Answer
verified

Exam 1: The Big Ideas

Correct AnswerverifiedShow Answer

An example of a marginal decision is deciding whether to:

Correct AnswerverifiedShow Answer

South Korea is an example of a country that has adopted good institutions for promoting economic growth.

Correct AnswerverifiedShow Answer

Why is it less costly to attend college during a recession?

Correct AnswerverifiedShow Answer

An automobile gets 40 miles per gallon, and a gallon of fuel costs $4.00. What is the marginal fuel cost for a typical mile of driving with this vehicle?

Correct AnswerverifiedShow Answer

If North Korea and South Korea were both equally poor in 1950, why has South Korea developed so much faster since then?

Correct AnswerverifiedShow Answer

Most people do not buy the safest car they can find. Why not?

Correct AnswerverifiedShow Answer

The opportunity cost of a choice is:

Correct AnswerverifiedShow Answer

The FDA faces societal trade-offs when it decides how safe drugs need to be before allowing patients to use them. For example, if the FDA raises the cost of testing for drug safety, some safe drugs will never be developed, and people will unnecessarily die.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Correct AnswerverifiedOpportunity cost is that which you must ...View AnswerShow Answer

Institutions that support economic growth are the ones that:

Correct AnswerverifiedShow Answer

The opportunity cost of attending college is:

Correct AnswerverifiedShow Answer

A dependable legal system and competitive, open markets help to:

Correct AnswerverifiedShow Answer

Recall Chapter 1's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested:

Correct AnswerverifiedShow Answer

Inflation makes it more difficult to figure out the real value of goods.

Correct AnswerverifiedShow Answer

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

Correct AnswerverifiedShow Answer

Which of the following is an example of self-interest that attempts to promote the public interest?

Correct AnswerverifiedShow Answer

During the middle ages, expensive castle-based warfare was the dominant method of conflict. Warfare was also the main function of government. Which reason best explains why few universities were built during this time?

Correct AnswerverifiedShow Answer

Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition, $900 for books, and $2,500 for food. The opportunity cost of attending college for the year is:

Correct AnswerverifiedShow Answer

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Correct Answer
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Opportunity cost is that which you must ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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