Question 1

Scenario 1-1
You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo...

Question 2

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Accepted Answer

A)   not emit any pollution so as to avoid the entire cost of the pollution.
B)   emit lower levels of pollution.
C)   emit an acceptable level of pollution.
D)   emit too much pollution.

Question 3

The principle that trade can make everyone better off applies to

Accepted Answer

A)   individuals.
B)   families.
C)   countries.
D)   All of the above

Question 4

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Accepted Answer

A) True 
 B)False

Question 5

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 6

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Accepted Answer

A)   to produce good quality products so that society would benefit from the resources used
B)   to conserve on costs, so as to maintain efficiency in the economy
C)   to produce enough to meet the output target, without regard for quality or cost
D)   to produce those products that society desires most

Question 7

The property of society getting the most it can from its scarce resources is called

Accepted Answer

A)   efficiency.
B)   equality.
C)   externality.
D)   productivity.

Question 8

High-school athletes who skip college to become professional athletes

Accepted Answer

A)   obviously do not understand the value of a college education.
B)   usually do so because they cannot get into college.
C)   understand that the opportunity cost of attending college is very high.
D)   are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.

Question 9

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.

Question 10

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the minimum price the company will charge for the 701th calculator?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 11

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.

Question 12

A rational decisionmaker takes an action if and only if

Accepted Answer

A)   the marginal benefit of the action exceeds the marginal cost of the action.
B)   the marginal cost of the action exceeds the marginal benefit of the action.
C)   the marginal cost of the action is zero.
D)   the opportunity cost of the action is zero.

Question 13

A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately.

Accepted Answer

A)   Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality.
B)   Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency.
C)   Both representatives' arguments are based primarily on efficiency.
D)   Both representatives' arguments are based primarily on equality.

Question 14

An example of an externality is the impact of

Accepted Answer

A)   bad weather on the income of farmers.
B)   the personal income tax on a person's ability to purchase goods and services.
C)   pollution from a factory on the health of people in the vicinity of the factory.
D)   increases in health care costs on the health of individuals in society.

Question 15

The "invisible hand" works to promote general well­being in the economy primarily through

Accepted Answer

A)   government intervention.
B)   the political process.
C)   people's pursuit of self­interest.
D)   altruism.

Question 16

Government policies designed to equalize the distribution of economic well-being include i)  the welfare system
Ii)  unemployment insurance
Iii)  progressive income tax

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and ii)  only
D)   i) , ii) , and iii)

Question 17

What is the most important factor that explains differences in living standards across countries?

Accepted Answer

A)   the quantity of money
B)   the level of unemployment
C)   productivity
D)   equality

Question 18

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Accepted Answer

A)   decreased by 1.7 percent between 1998 and 2008.
B)   remained unchanged between 1998 and 2008.
C)   increased by 4.75 percent between 1998 and 2008.
D)   increased by 6.25 percent between 1998 and 2008.

Question 19

When government policies are enacted,

Accepted Answer

A)   equality can usually be enhanced without an efficiency loss, but efficiency can never be enhanced without a reduction in equality.
B)   efficiency can usually be enhanced without a reduction in equality, but equality can never be enhanced without an efficiency loss.
C)   it is always the case that either efficiency and equality are both enhanced, or efficiency and equality are both diminished.
D)   None of the above are correct.

Question 20

A society allocates its scarce resources to various jobs. These scarce resources include

Accepted Answer

A)   land.
B)   people.
C)   machines.
D)   All of the above are correct.

Exam 1: Ten Principles of Economics

Correct Answer
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The enjoyment you wo...
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Economics is the study of

Correct Answer
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In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Correct Answer
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The property of society getting the most it can from its scarce resources is called

Correct Answer
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The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Correct Answer
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Correct Answer
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An example of an externality is the impact of

Correct Answer
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Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

Correct Answer
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A society allocates its scarce resources to various jobs. These scarce resources include

Correct Answer
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A rational decisionmaker takes an action if and only if

Correct Answer
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The "invisible hand" works to promote general wellbeing in the economy primarily through

Correct Answer
verified

Correct Answer
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What is the most important factor that explains differences in living standards across countries?

Correct Answer
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High-school athletes who skip college to become professional athletes

Correct Answer
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The principle that trade can make everyone better off applies to

Correct Answer
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Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Correct Answer
verified

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Correct Answer
verified

When government policies are enacted,

Correct Answer
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In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Correct Answer
verified

Communist countries worked under the premise that

Correct Answer
verified

Exam 1: Ten Principles of Economics

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

Economics is the study of

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In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Correct AnswerverifiedShow Answer

The property of society getting the most it can from its scarce resources is called

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The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of an externality is the impact of

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Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

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A society allocates its scarce resources to various jobs. These scarce resources include

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A rational decisionmaker takes an action if and only if

Correct AnswerverifiedShow Answer

The "invisible hand" works to promote general well­being in the economy primarily through

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the most important factor that explains differences in living standards across countries?

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High-school athletes who skip college to become professional athletes

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The principle that trade can make everyone better off applies to

Correct AnswerverifiedShow Answer

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Correct AnswerverifiedShow Answer

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Correct AnswerverifiedShow Answer

When government policies are enacted,

Correct AnswerverifiedShow Answer

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

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Communist countries worked under the premise that

Correct AnswerverifiedShow Answer

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The enjoyment you wo...
View 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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The "invisible hand" works to promote general wellbeing in the economy primarily through

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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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