Question 1

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 2

Shane receives $100 as a birthday gift.In deciding how to spend the money,he narrows his options down to four choices: Option A,Option B,Option C,and Option D.Each option costs $100.Finally he decides on Option B.The opportunity cost of this decision is

Accepted Answer

A)   the value to Shane of the option he would have chosen had Option B not been available.
B)   the value to Shane of Options A, C and D combined.
C)   $50.
D)   $100.E) A) and B)
F) A) and C)

Question 3

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.If the marginal cost of operating one room for one night is $40,the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Accepted Answer

A)   more than $40, as the average benefit will exceed the marginal cost.
B)   more than $40, as the marginal benefit will exceed the marginal cost.
C)   more than $80, as the average benefit will exceed the marginal cost.
D)   more than $80, as the marginal benefit will exceed the marginal cost.E) A) and B)
F) A) and C)

Question 4

The term "productivity"

Accepted Answer

A)   means the same thing as "efficiency."
B)   is seldom used by economists, as its meaning is not precise.
C)   refers to the quantity of goods and services produced from each unit of labor input.
D)   refers to the variety of goods and services from which households can choose when they shop.E) A) and B)
F) All of the above

Question 5

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 6

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A)   create a more fair distribution of income.
B)   change the way in which the economic pie is divided.
C)   enlarge the economic pie.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 7

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor.Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Accepted Answer

A)   we should agree with Senator Brown.
B)   we should agree with Senator Johnson.
C)   a good decision requires that we recognize both viewpoints.
D)   there are no tradeoffs between equity and efficiency.E) A) and C)
F) A) and B)

Question 8

The term used to describe a situation in which markets do not allocate resources efficiently is

Accepted Answer

A)   economic meltdown.
B)   market failure.
C)   equilibrium.
D)   the effect of the invisible hand.E) C) and D)
F) B) and C)

Question 9

Max and Maddy charge people to park on their lawn while attending a nearby craft fair.At the current price of $10,seven people park on their lawn.If they raise the price to $15,they know that only five people will want to park on their lawn.Whether they have seven or five cars parked on their lawn does not affect their costs.From this information it follows that

Accepted Answer

A)   they should leave the price at $10.
B)   it does not matter if they charge $10 or $15.
C)   they would do better charging $15 than $10.
D)   they should raise the price even more.E) All of the above
F) None of the above

Question 10

For most students,the largest single cost of a college education is

Accepted Answer

A)   the wages given up to attend school.
B)   tuition, fees, and books.
C)   room and board.
D)   transportation, parking, and entertainment.E) A) and D)
F) A) and C)

Question 11

In the early 1920s,

Accepted Answer

A)   Germany experienced a very high rate of inflation.
B)   the quantity of German money was declining rapidly.
C)   the value of German money remained almost constant.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 12

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Accepted Answer

A)   People respond to incentives
B)   Rational people think at the margin
C)   Trade can make everyone better off
D)   Markets are usually a good way to organize economic activityE) B) and C)
F) A) and C)

Question 13

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.E) A) and D)
F) All of the above

Question 14

Almost all variation in living standards is attributable to differences in countries'

Accepted Answer

A)   population growth rates.
B)   productivity.
C)   systems of public education.
D)   taxes.E) C) and D)
F) None of the above

Question 15

Which of the following principles is not one of the four principles of individual decisionmaking?

Accepted Answer

A)   People face tradeoffs.
B)   Trade can make everyone better off.
C)   People respond to incentives.
D)   Rational people think at the margin.E) B) and D)
F) A) and B)

Question 16

Economics deals primarily with the concept of

Accepted Answer

A)   scarcity.
B)   money.
C)   poverty.
D)   banking.E) All of the above
F) A) and D)

Question 17

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)   an electric company
B)   a farmer
C)   a grocery store
D)   a local electronics retailerE) All of the above
F) C) and D)

Question 18

During the early 1920s in Germany,prices

Accepted Answer

A)   doubled annually.
B)   doubled monthly.
C)   tripled monthly.
D)   tripled annually.E) A) and B)
F) B) and D)

Question 19

One effect of the government-imposed seat belt law in the U.S.has been

Accepted Answer

A)   a dramatic decrease in the number of pedestrian deaths.
B)   safer driving.
C)   an increase in the number of accidents.
D)   a dramatic decrease in the number of driver deaths.E) All of the above
F) A) and C)

Question 20

Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market?

Accepted Answer

A)   to promote efficiency
B)   to promote equality
C)   to enforce property rights
D)   to protect an industry from foreign competitionE) All of the above
F) B) and D)

Exam 1: Ten Principles of Economics.

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor.Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Correct Answer
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Correct Answer
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Almost all variation in living standards is attributable to differences in countries'

Correct Answer
verified

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct Answer
verified

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

Correct Answer
verified

One effect of the government-imposed seat belt law in the U.S.has been

Correct Answer
verified

The invisible hand ensures that economic prosperity is distributed equally.

Correct Answer
verified

The term used to describe a situation in which markets do not allocate resources efficiently is

Correct Answer
verified

Shane receives $100 as a birthday gift.In deciding how to spend the money,he narrows his options down to four choices: Option A,Option B,Option C,and Option D.Each option costs $100.Finally he decides on Option B.The opportunity cost of this decision is

Correct Answer
verified

For most students,the largest single cost of a college education is

Correct Answer
verified

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Correct Answer
verified

Scarcity means that there is less of a good or resource available than people wish to have.

Correct Answer
verified

Which of the following firms is likely to have the greatest market power?

Correct Answer
verified

Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market?

Correct Answer
verified

In the early 1920s,

Correct Answer
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Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.If the marginal cost of operating one room for one night is $40,the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct Answer
verified

The term "productivity"

Correct Answer
verified

During the early 1920s in Germany,prices

Correct Answer
verified

Economics deals primarily with the concept of

Correct Answer
verified

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct Answer
verified

Exam 1: Ten Principles of Economics.

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor.Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Almost all variation in living standards is attributable to differences in countries'

Correct AnswerverifiedShow Answer

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One effect of the government-imposed seat belt law in the U.S.has been

Correct AnswerverifiedShow Answer

The invisible hand ensures that economic prosperity is distributed equally.

Correct AnswerverifiedShow Answer

The term used to describe a situation in which markets do not allocate resources efficiently is

Correct AnswerverifiedShow Answer

Shane receives $100 as a birthday gift.In deciding how to spend the money,he narrows his options down to four choices: Option A,Option B,Option C,and Option D.Each option costs $100.Finally he decides on Option B.The opportunity cost of this decision is

Correct AnswerverifiedShow Answer

For most students,the largest single cost of a college education is

Correct AnswerverifiedShow Answer

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Correct AnswerverifiedShow Answer

Scarcity means that there is less of a good or resource available than people wish to have.

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the greatest market power?

Correct AnswerverifiedShow Answer

Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market?

Correct AnswerverifiedShow Answer

In the early 1920s,

Correct AnswerverifiedShow Answer

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.If the marginal cost of operating one room for one night is $40,the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct AnswerverifiedShow Answer

The term "productivity"

Correct AnswerverifiedShow Answer

During the early 1920s in Germany,prices

Correct AnswerverifiedShow Answer

Economics deals primarily with the concept of

Correct AnswerverifiedShow Answer

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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