Question 1

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.E) C) and D)
F) B) and C)

Question 2

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 3

Economists use the term to refer to an increase in the overall level of prices in the economy.

Accepted Answer

The answer of Economists use the term to refer to...

Question 4

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Accepted Answer

A) True 
 B)False

Question 5

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)   the influence of labor unions in America.
B)   tariff protection imposed by the American government.
C)   the enactment of minimum-wage laws in America.
D)   the rise in American productivity.E) A) and D)
F) All of the above

Question 6

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Accepted Answer

A)   He should sell the boat as it is now for $400.
B)   He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900.
C)   He should complete the repairs and sell the boat for $900.
D)   It does not matter which action he takes; the outcome is the same either way.E) C) and D)
F) B) and C)

Question 7

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Accepted Answer

A)   Only Country A can benefit.
B)   Only Country B can benefit.
C)   Both Country A and Country B can benefit.
D)   Neither Country A nor Country B can benefit.E) C) and D)
F) A) and D)

Question 8

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 9

Government policies that improve equality usually increase efficiency at the same time.

Accepted Answer

A) True 
 B)False

Question 10

Communist countries worked under the premise that

Accepted Answer

A)   markets were the best way to organize economic activity.
B)   central planners were in the best position to determine the allocation of scarce resources in the economy.
C)   households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources.
D)   allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.E) All of the above
F) A) and B)

Question 11

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Accepted Answer

A)   equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
B)   equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
C)   equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
D)   equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.E) None of the above
F) B) and C)

Question 12

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)   most economies' production methods are not very good.
B)   in most economies, wealthy people consume disproportionate quantities of goods and services.
C)   governments restrict production of too many goods and services.
D)   resources are limited.E) All of the above
F) B) and C)

Question 13

Economics is the study of

Accepted Answer

A)   production methods.
B)   how society manages its scarce resources.
C)   how households decide who performs which tasks.
D)   the interaction of business and government.E) A) and C)
F) A) and D)

Question 14

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Accepted Answer

A)   The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
B)   The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
C)   Only half of the cost of the parking permit is part of the opportunity cost of attending college.
D)   The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.E) A) and B)
F) C) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not an example of scarcity?

Accepted Answer

A)   Only some people can afford to buy a BMW automobile.
B)   Every individual in society cannot attain the highest standard of living to which he or she might aspire.
C)   Miranda has an unlimited supply of oranges in her orchard.
D)   Each member of a household cannot get everything he or she wants.E) B) and C)
F) B) and D)

Question 17

Which of these activities will most likely impose an external cost?

Accepted Answer

A)   Betty plants flowers in her garden.
B)   Bonnie gets a flu vaccine.
C)   Bridget drives her car after having too much alcohol to drink.
D)   Becky buys a new flat screen television.E) None of the above
F) A) and C)

Question 18

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A)   only the values that society places on those products.
B)   only the costs to society of producing those products.
C)   both the values that society places on those products and the costs to society of producing those products.
D)   none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."E) B) and C)
F) A) and B)

Question 19

In a market economy, economic activity is guided by

Accepted Answer

A)   the government.
B)   corporations.
C)   central planners.
D)   self-interest and prices.E) None of the above
F) B) and C)

Question 20

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Accepted Answer

A)   compare the total cost of your education to the total benefits of your education.
B)   compare the total cost of your education to the benefits of staying one more semester.
C)   compare the cost of staying one more semester to the benefits of staying one more semester.
D)   compare the total benefits of your education to the cost of staying one more semester.E) None of the above
F) A) and D)

Exam 1: Ten Principles of Economics

Economics is the study of

Correct Answer
verified

Communist countries worked under the premise that

Correct Answer
verified

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Correct Answer
verified

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct Answer
verified

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct Answer
verified

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct Answer
verified

Which of these activities will most likely impose an external cost?

Correct Answer
verified

The phenomenon of scarcity stems from the fact that

Correct Answer
verified

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

Correct Answer
verified

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Correct Answer
verified

The historical rise in living standards of American workers is primarily a result of

Correct Answer
verified

Government policies that improve equality usually increase efficiency at the same time.

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

Economists use the term to refer to an increase in the overall level of prices in the economy.

Correct Answer
verified

Correct Answer
verified

When the "invisible hand" guides economic activity, prices of products reflect

Correct Answer
verified

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Correct Answer
verified

Which of the following is not an example of scarcity?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Ten Principles of Economics

Economics is the study of

Correct AnswerverifiedShow Answer

Communist countries worked under the premise that

Correct AnswerverifiedShow Answer

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Correct AnswerverifiedShow Answer

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct AnswerverifiedShow Answer

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct AnswerverifiedShow Answer

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct AnswerverifiedShow Answer

Which of these activities will most likely impose an external cost?

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Correct AnswerverifiedShow Answer

The historical rise in living standards of American workers is primarily a result of

Correct AnswerverifiedShow Answer

Government policies that improve equality usually increase efficiency at the same time.

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

Economists use the term to refer to an increase in the overall level of prices in the economy.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the "invisible hand" guides economic activity, prices of products reflect

Correct AnswerverifiedShow Answer

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Correct AnswerverifiedShow Answer

Which of the following is not an example of scarcity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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