Question 1

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) B) and C)
F) A) and B)

Question 2

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 3

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Accepted Answer

A)   increase efficiency and increase equality.
B)   increase efficiency but decrease equality.
C)   decrease efficiency but increase equality.
D)   decrease efficiency and decrease equality.E) A) and C)
F) C) and D)

Question 4

Evidence indicates that seat belt laws have led to

Accepted Answer

A)   fewer pedestrian deaths.
B)   fewer automobile accidents.
C)   fewer deaths per automobile accident.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 5

Which of the following claims is consistent with the views of mainstream economists?

Accepted Answer

A)   If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
B)   If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
C)   If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
D)   If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.E) A) and C)
F) C) and D)

Question 6

You go to the movieplex where movies ordinarily cost $10. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Accepted Answer

A)   the amount you value the first movie + $3
B)   the amount you value the first movie + $10
C)   $3
D)   $10E) B) and C)
F) All of the above

Question 7

In the short-run, society faces a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 8

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Accepted Answer

A)   For the first 25 houses, the average cost per house was $288,000.
B)   The marginal cost of the 26th house, if it is built, will be equal to the average cost per house.
C)   If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 9

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Accepted Answer

A) True 
 B)False

Question 10

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) B) and C)

Question 11

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Accepted Answer

A)   This loss of jobs has been detrimental to our economy.
B)   The government should provide subsidies to encourage more people to become farmers.
C)   This reduction in the number of farmers explains the increase in the price of food.
D)   This is progress because freed-up labor that is used to produce other goods.E) A) and B)
F) A) and C)

Question 12

To increase living standards, public policy should

Accepted Answer

A)   ensure that workers are well educated and have the necessary tools and technology.
B)   make unemployment benefits more generous.
C)   move workers into jobs directly from high school.
D)   ensure a greater degree of equality, taking all income-earners into account.E) B) and C)
F) A) and B)

Question 13

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Accepted Answer

A)   rent the room because the marginal benefit exceeds the marginal cost.
B)   rent the room because the marginal benefit exceeds the average cost.
C)   not rent the room because the marginal benefit is less than the marginal cost.
D)   not rent the room because the marginal benefit is less than the average cost.E) B) and C)
F) A) and D)

Question 14

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Accepted Answer

A)   15 years.
B)   25 years.
C)   35 years.
D)   45 years.E) B) and D)
F) A) and B)

Question 15

Which of the following can lead to market failure?

Accepted Answer

A)   externalities and market power
B)   externalities but not market power
C)   market power but not externalities
D)   neither externalities nor market powerE) A) and B)
F) A) and C)

Question 16

A rationale for government involvement in a market economy is

Accepted Answer

A)   markets sometimes fail to produce a fair distribution of economic well-being.
B)   markets sometimes fail to produce an efficient allocation of resources.
C)   property rights have to be enforced.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 17

Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?

Accepted Answer

A)   He should sell the car now for $3800.
B)   He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $5800.
C)   He should complete the additional work and sell the car for $5800.
D)   It does not matter which action he takes since the outcome will be the same either way.E) B) and C)
F) All of the above

Question 18

Economists study how people make decisions.

Accepted Answer

A) True 
 B)False

Question 19

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Accepted Answer

A) True 
 B)False

Question 20

If the price of visiting a doctor were fixed below the current price, then we would expect

Accepted Answer

A)   an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
B)   an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.
C)   a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
D)   a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.E) B) and D)
F) A) and B)

Exam 1: Ten Principles of Economics

Which of the following claims is consistent with the views of mainstream economists?

Correct Answer
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Correct Answer
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Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Correct Answer
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In the early 1920s,

Correct Answer
verified

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Correct Answer
verified

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct Answer
verified

To increase living standards, public policy should

Correct Answer
verified

Evidence indicates that seat belt laws have led to

Correct Answer
verified

Correct Answer
verified

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Correct Answer
verified

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct Answer
verified

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Correct Answer
verified

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

Correct Answer
verified

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26^th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Correct Answer
verified

Economists study how people make decisions.

Correct Answer
verified

A rationale for government involvement in a market economy is

Correct Answer
verified

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

Correct Answer
verified

If the price of visiting a doctor were fixed below the current price, then we would expect

Correct Answer
verified

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct Answer
verified

Which of the following can lead to market failure?

Correct Answer
verified

Exam 1: Ten Principles of Economics

Which of the following claims is consistent with the views of mainstream economists?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Correct AnswerverifiedShow Answer

In the early 1920s,

Correct AnswerverifiedShow Answer

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Correct AnswerverifiedShow Answer

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct AnswerverifiedShow Answer

To increase living standards, public policy should

Correct AnswerverifiedShow Answer

Evidence indicates that seat belt laws have led to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Correct AnswerverifiedShow Answer

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct AnswerverifiedShow Answer

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Economists study how people make decisions.

Correct AnswerverifiedShow Answer

A rationale for government involvement in a market economy is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price of visiting a doctor were fixed below the current price, then we would expect

Correct AnswerverifiedShow Answer

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct AnswerverifiedShow Answer

Which of the following can lead to market failure?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26^th house, its total cost will increase to $7.5 million. Which of the following statements is correct?

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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Correct Answer
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