Question 1

The discipline of economics is largely based on encouraging individuals to engage in certain activities and discouraging them from engaging in others.Why is encouraging or discouraging individuals through incentives so important?

Accepted Answer

Economics as a discipline focuses on how...

Question 2

The trade-offs that are made because of scarcity:

Accepted Answer

A)  are important in developing economies,but they do not apply to developed economies.
B)  are important in developed economies,but they do not apply to developing economies.
C)  are different when they involve the wants of people,but they are similar when they involve the needs of people.
D)  can be accurately made to the extent that they can be quantified.
E)  depend on the decision-maker's value judgments about the relative importance of the alternatives.

Question 3

Economists believe that individuals compare the benefits and costs of various options when making a decision and in so doing act ________.

Accepted Answer

A)  fairly
B)  selfishly
C)  collectively
D)  unpredictably
E)  rationally

Question 4

A camera takes a picture of drivers who do not stop at a red light,and this practice is used to issue a traffic ticket.These red light cameras can be understood as serving as a(n) :

Accepted Answer

A)  positive incentive to encourage individuals to stop at a red light.
B)  negative incentive to discourage individuals from driving through a red light.
C)  indirect incentive to encourage individuals to stop at a red light.
D)  direct incentive to encourage individuals to stop at a red light.
E)  negative incentive to encourage individuals to drive through a red light.

Question 5

The government has been considering doing away with minting pennies because they are rarely used for purchases (with most people collecting them or throwing them away) .How would an economist best explain this?

Accepted Answer

A)  More people are using credit and debit cards,so they are not in the habit of using monetary change.
B)  Prices have increased over time,and it would take far too many pennies to buy anything of value.
C)  Prices have increased over time,and the opportunity cost of carrying around large quantities of pennies has become too large.
D)  Prices have increased over time,and the opportunity cost of carrying around pennies has fallen.
E)  People who use pennies probably aren't spending enough money; removing the penny will force people to spend more.

Question 6

What is the indirect incentive in the unemployment insurance program?

Accepted Answer

A)  Workers get paid when they are laid off.
B)  Workers face an incentive to find a new job as quickly as possible.
C)  Workers face no incentive to find a new job until the insurance runs out.
D)  Workers are paid only a portion of their wages by the unemployment insurance program.
E)  Workers on unemployment insurance are given training opportunities.

Question 7

The opportunity cost to free trade is:

Accepted Answer

A)  economic growth.
B)  government involvement.
C)  a gain of domestic jobs.
D)  lower prices.
E)  greater efficiency.

Question 8

The term ________ means "additional."

Accepted Answer

A)  "marginal"
B)  "comparative"
C)  "incentive"
D)  "opportunity cost"
E)  "trade-off"

Question 9

The opportunity cost of going to school rather than working is the cost of:

Accepted Answer

A)  food.
B)  housing.
C)  clothing.
D)  health care.
E)  potential wages.

Question 10

Microeconomics is the study of:

Accepted Answer

A)  how government activities affect the economy.
B)  individual decision-making units.
C)  collective decision-making.
D)  the operation of the economy as a whole.
E)  the interaction between the government and businesses.

Question 11

The opportunity cost of working rather than going to school is:

Accepted Answer

A)  the cost of food and housing.
B)  the cost of clothing and transportation.
C)  zero because the person is earning an income by working.
D)  the higher wages that come with additional education.
E)  the annual wages earned by working.

Question 12

More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ in growing oranges.

Accepted Answer

A)  comparative advantage
B)  public advantage
C)  revenue advantage
D)  producer advantage
E)  planning advantage

Question 13

A person has a comparative advantage in the production of a good when she or he can produce the product at a(n) ________ opportunity cost compared to another person.

Accepted Answer

A)  higher
B)  lower
C)  equal
D)  diminishing
E)  increasing

Question 14

I asked my neighbor to rake the leaves on his lawn because they are blowing into my yard.He responded that it wouldn't be rational for him to do so.Why would this be the case?

Accepted Answer

A)  My neighbor lacks the equipment to rake leaves and thinks it would take too long to do the job.
B)  My neighbor is a busy person and doesn't have time to rake leaves.
C)  My neighbor is getting revenge on me because I didn't rake the leaves on my lawn last year.
D)  My neighbor is a lawyer who values his time at $200 an hour and knows that he can hire a high school kid to rake leaves for $20 an hour.
E)  My neighbor is a high school teacher and values his time at $15 an hour,and he knows that he can hire one of his students to rake leaves for $20 an hour.

Question 15

Thomas Malthus's prediction of mass starvation failed to come true because of increases in:

Accepted Answer

A)  population.
B)  productivity.
C)  temperature.
D)  government involvement.
E)  income.

Question 16

In a growing number of cities,stores are required either not to make available plastic or paper bags or to do so only for an additional fee.What kind of incentive is this fee?

Accepted Answer

A)  a direct incentive
B)  an indirect incentive
C)  a neutral incentive
D)  a complementary incentive
E)  an unintended incentive

Question 17

Opportunity cost is the ________ alternative forfeited when a choice is made.

Accepted Answer

A)  least-valued
B)  highest-valued
C)  most recently considered
D)  most convenient
E)  first

Question 18

What is the opportunity cost of taking this exam?

Accepted Answer

A)  all of the things that you could have done by not studying
B)  each of the questions that you miss on the exam
C)  the highest valued alternative that you gave up to prepare for and attend the exam
D)  the money you spent purchasing the textbook and the other materials you study with
E)  the money you spent on tuition

Question 19

A car insurance company is willing to offer accident-free drivers a discount.This is an example of:

Accepted Answer

A)  a positive incentive.
B)  a negative incentive.
C)  an opportunity cost.
D)  a comparative advantage.
E)  scarcity.

Question 20

Because of scarcity:

Accepted Answer

A)  individuals and societies are allowed no choice about which wants and needs to satisfy.
B)  individuals and societies must choose which wants and needs to satisfy.
C)  all choices about wants and using resources must be made by the government.
D)  choices can be made about which wants to satisfy,but not about which resources to use.
E)  choices must be made about which resources to use,but not about which wants to satisfy.

Exam 1: The Five Foundations of Economics

The government has been considering doing away with minting pennies because they are rarely used for purchases (with most people collecting them or throwing them away) .How would an economist best explain this?

Correct AnswerverifiedShow Answer

Economists believe that individuals compare the benefits and costs of various options when making a decision and in so doing act ________.

Correct AnswerverifiedShow Answer

Opportunity cost is the ________ alternative forfeited when a choice is made.

Correct AnswerverifiedShow Answer

A camera takes a picture of drivers who do not stop at a red light,and this practice is used to issue a traffic ticket.These red light cameras can be understood as serving as a(n) :

Correct AnswerverifiedShow Answer

The opportunity cost to free trade is:

Correct AnswerverifiedShow Answer

Microeconomics is the study of:

Correct AnswerverifiedShow Answer

The opportunity cost of working rather than going to school is:

Correct AnswerverifiedShow Answer

Thomas Malthus's prediction of mass starvation failed to come true because of increases in:

Correct AnswerverifiedShow Answer

I asked my neighbor to rake the leaves on his lawn because they are blowing into my yard.He responded that it wouldn't be rational for him to do so.Why would this be the case?

Correct AnswerverifiedShow Answer

The opportunity cost of going to school rather than working is the cost of:

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What is the opportunity cost of taking this exam?

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What is the indirect incentive in the unemployment insurance program?

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A car insurance company is willing to offer accident-free drivers a discount.This is an example of:

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A person has a comparative advantage in the production of a good when she or he can produce the product at a(n) ________ opportunity cost compared to another person.

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The term ________ means "additional."

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The discipline of economics is largely based on encouraging individuals to engage in certain activities and discouraging them from engaging in others.Why is encouraging or discouraging individuals through incentives so important?

Correct AnswerverifiedEconomics as a discipline focuses on how...View AnswerShow Answer

The trade-offs that are made because of scarcity:

Correct AnswerverifiedShow Answer

Because of scarcity:

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More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ in growing oranges.

Correct AnswerverifiedShow Answer

In a growing number of cities,stores are required either not to make available plastic or paper bags or to do so only for an additional fee.What kind of incentive is this fee?

Correct AnswerverifiedShow Answer

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Economics as a discipline focuses on how...
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