Question 1

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

High and persistent inflation is caused by

Accepted Answer

A)   unions increasing wages too much.
B)   OPEC raising the price of oil too much.
C)   governments increasing the quantity of money too much.
D)   regulations raising the cost of production too much.

Question 3

Government can improve market outcomes by

Accepted Answer

A)   directing labour to priority areas.
B)   printing money.
C)   using well designed policies to reduce firms' market power.
D)   taxing everyone equally.

Question 4

One trade-off society faces is between efficiency and equality. Define each term. If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Question 5

Suppose that Rebecca throws her cola bottle out of her car window and it smashes on the road. Shaun drives over the broken glass and gets a flat tyre. Rebecca's cola consumption has resulted in

Accepted Answer

A)   the production of a public good.
B)   an externality.
C)   monopoly power for Rebecca.
D)   greater efficiency in consumption.

Question 6

In the short run, a reduction in inflation tends to cause a reduction in unemployment.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following involve a trade-off?

Accepted Answer

A)   Taking a nap.
B)   All of these answers involve trade-offs.
C)   Watching a soccer game on Saturday afternoon.
D)   Going to university.
E)   Buying a new car.

Question 8

Productivity can be increased by

Accepted Answer

A)   improving the education of workers.
B)   raising union wages.
C)   raising minimum wages.
D)   restricting trade with foreign countries.

Question 9

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Accepted Answer

A)   fewer students will take degree courses in accounting and more will take education courses.
B)   fewer students will take degree courses in education and more will take accounting courses.
C)   fewer students will attend university.
D)   None of these answers.

Question 10

Raising taxes and increasing welfare payments

Accepted Answer

A)   reduces market power.
B)   proves that there is such a thing as a free lunch.
C)   improves efficiency at the expense of equity.
D)   None of these answers.
E)   improves equity at the expense of efficiency.

Question 11

High and persistent inflation is caused by excessive growth in the quantity of money in the economy.

Accepted Answer

A) True 
 B)False

Question 12

For which of the following individuals would the opportunity cost of going to university be highest?

Accepted Answer

A)   A promising young mathematician who will command a high salary once she earns her university degree.
B)   A student with average grades who has never held a job.
C)   A famous, highly-paid actor who wants to take time away from show business to finish university and earn a degree.
D)   A student who is the best player on his university rugby team, but who lacks the skills necessary to play professional rugby.

Question 13

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation, the government may c...

Question 14

Economics deals primarily with the concept of

Accepted Answer

A)   scarcity.
B)   money.
C)   poverty.
D)   banking.

Question 15

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so...

Question 16

The business cycle is the

Accepted Answer

A)   relationship between unemployment and inflation.
B)   irregular fluctuations in economic activity.
C)   positive relationship between the quantity of money in an economy and inflation.
D)   predictable changes in economic activity due to changes in government spending and taxes.

Question 17

Outline one example of the principle of 'thinking at the margin.'

Accepted Answer

Rational people think at the margin. The...

Exam 1: What Is Economics

Suppose that Rebecca throws her cola bottle out of her car window and it smashes on the road. Shaun drives over the broken glass and gets a flat tyre. Rebecca's cola consumption has resulted in

Correct Answer
verified

The business cycle is the

Correct Answer
verified

Which of the following involve a trade-off?

Correct Answer
verified

How does the study of economics depend upon the phenomenon of scarcity?

Correct Answer
verified
Because economics is the study of how so...
View Answer

Productivity can be increased by

Correct Answer
verified

For which of the following individuals would the opportunity cost of going to university be highest?

Correct Answer
verified

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Correct Answer
verified

High and persistent inflation is caused by

Correct Answer
verified

Outline one example of the principle of 'thinking at the margin.'

Correct Answer
verified
Rational people think at the margin. The...
View Answer

In the short run, a reduction in inflation tends to cause a reduction in unemployment.

Correct Answer
verified

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Correct Answer
verified

Government can improve market outcomes by

Correct Answer
verified

Raising taxes and increasing welfare payments

Correct Answer
verified

Economics deals primarily with the concept of

Correct Answer
verified

High and persistent inflation is caused by excessive growth in the quantity of money in the economy.

Correct Answer
verified

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct Answer
verified
To lower inflation, the government may c...
View Answer

One trade-off society faces is between efficiency and equality. Define each term. If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

Exam 1: What Is Economics

Suppose that Rebecca throws her cola bottle out of her car window and it smashes on the road. Shaun drives over the broken glass and gets a flat tyre. Rebecca's cola consumption has resulted in

Correct AnswerverifiedShow Answer

The business cycle is the

Correct AnswerverifiedShow Answer

Which of the following involve a trade-off?

Correct AnswerverifiedShow Answer

How does the study of economics depend upon the phenomenon of scarcity?

Correct AnswerverifiedBecause economics is the study of how so...View AnswerShow Answer

Productivity can be increased by

Correct AnswerverifiedShow Answer

For which of the following individuals would the opportunity cost of going to university be highest?

Correct AnswerverifiedShow Answer

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Correct AnswerverifiedShow Answer

High and persistent inflation is caused by

Correct AnswerverifiedShow Answer

Outline one example of the principle of 'thinking at the margin.'

Correct AnswerverifiedRational people think at the margin. The...View AnswerShow Answer

In the short run, a reduction in inflation tends to cause a reduction in unemployment.

Correct AnswerverifiedShow Answer

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Correct AnswerverifiedShow Answer

Government can improve market outcomes by

Correct AnswerverifiedShow Answer

Raising taxes and increasing welfare payments

Correct AnswerverifiedShow Answer

Economics deals primarily with the concept of

Correct AnswerverifiedShow Answer

High and persistent inflation is caused by excessive growth in the quantity of money in the economy.

Correct AnswerverifiedShow Answer

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct AnswerverifiedTo lower inflation, the government may c...View AnswerShow Answer

One trade-off society faces is between efficiency and equality. Define each term. If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
Because economics is the study of how so...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Rational people think at the margin. The...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
To lower inflation, the government may c...
View Answer

Correct Answer
verified
Efficiency is the property of society ge...
View Answer