Question 1

Which statement is NOT one of the four principles of individual choice?

Accepted Answer

A) Choices are necessary because resources are scarce. 
B) Unpaid volunteer work is irrational since economic rationality dictates that individuals should only engage in work they are paid for. 
C) The true cost of something is its opportunity cost. 
D) "How Much" is a decision at the margin. 
A) Choices are necessary because resources are scarce. 
B) Unpaid volunteer work is irrational since economic rationality dictates that individuals should only engage in work they are paid for. 
C) The true cost of something is its opportunity cost. 
D) "How Much" is a decision at the margin.

Question 2

An economic situation is in equilibrium when no individual would be better off taking a different action.

Accepted Answer

A) True 
 B)False

Question 3

Julie is getting ready for final exams.She has three exams during the first three days of the exam period.To prepare,she has outlined a schedule that includes reviewing for her first exam on one day,her next exam on the following day,and her third exam on the third day.On each day,she has also allocated some time when she can watch TV or basically do nothing.Which statement BEST explains why Julie provides some time for leisure?

Accepted Answer

A) Julie is not that smart and cannot study that long. 
B) Julie is slacking off and will most likely fail all of her finals. 
C) Julie realizes that there are benefits to leisure time that outweigh the costs of constant studying. 
D) Julie does not understand the importance of studying. 
A) Julie is not that smart and cannot study that long. 
B) Julie is slacking off and will most likely fail all of her finals. 
C) Julie realizes that there are benefits to leisure time that outweigh the costs of constant studying. 
D) Julie does not understand the importance of studying.

Question 4

Because people usually exploit opportunities to make themselves better off,which method of reducing pollution is likely to be MOST effective?

Accepted Answer

A) appealing to the polluter to be a good citizen 
B) asking citizens to voluntarily reduce pollution 
C) imposing a tax per unit of pollution generated 
D) advertising the negative impact of pollution 
A) appealing to the polluter to be a good citizen 
B) asking citizens to voluntarily reduce pollution 
C) imposing a tax per unit of pollution generated 
D) advertising the negative impact of pollution

Question 5

Grades are low in your biology class,so your professor offers an optional 10-point extra-credit assignment.Most of the students turn in the assignment.Which economic prinicple does this statement BEST represent?

Accepted Answer

A) The true cost of something is its opportunity cost. 
B) "How much" is a decision at the margin. 
C) People usually respond to incentives,exploiting opportunities to make themselves better off. 
D) There are gains from trade. 
A) The true cost of something is its opportunity cost. 
B) "How much" is a decision at the margin. 
C) People usually respond to incentives,exploiting opportunities to make themselves better off. 
D) There are gains from trade.

Question 6

Everyone benefits from street lighting,yet the marginal benefit to any one individual usually falls short of the marginal cost.This is an example of:

Accepted Answer

A) individual actions whose side effects are not properly taken into account by the market. 
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself. 
C) the unsuitability of some goods for efficient management by markets. 
D) regulating self-interest. 
A) individual actions whose side effects are not properly taken into account by the market. 
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself. 
C) the unsuitability of some goods for efficient management by markets. 
D) regulating self-interest.

Question 7

The trade-off between equity and efficiency occurs because:

Accepted Answer

A) the efficient allocation of resources is bad for business and industry. 
B) allocating resources fairly may cause inefficiency. 
C) everyone must pay more tax to ensure equity. 
D) efficiency is politically unpopular. 
A) the efficient allocation of resources is bad for business and industry. 
B) allocating resources fairly may cause inefficiency. 
C) everyone must pay more tax to ensure equity. 
D) efficiency is politically unpopular.

Question 8

Which decision is an example of marginal analysis?

Accepted Answer

A) ordering a pizza,rather than eating leftover meatloaf 
B) deciding whether to eat one more slices of pizza 
C) using a coupon to save $2 on a pizza 
D) writing a check to pay for the pizza,rather than using a credit card 
A) ordering a pizza,rather than eating leftover meatloaf 
B) deciding whether to eat one more slices of pizza 
C) using a coupon to save $2 on a pizza 
D) writing a check to pay for the pizza,rather than using a credit card

Question 9

For an economist,the cost of something is:

Accepted Answer

A) the amount of money you paid for it. 
B) what you gave up to get it. 
C) always equal to its market value. 
D) the quantity of resources used to produce it. 
A) the amount of money you paid for it. 
B) what you gave up to get it. 
C) always equal to its market value. 
D) the quantity of resources used to produce it.

Question 10

The federal government regulates how much carbon dioxide a factory can emit.Which economic principle does this statement BEST represent?

Accepted Answer

A) There are gains from trade. 
B) "How much" is a decision at the margin. 
C) Markets usually lead to efficiency. 
D) When markets don't achieve efficiency,government intervention can improve society's welfare. 
A) There are gains from trade. 
B) "How much" is a decision at the margin. 
C) Markets usually lead to efficiency. 
D) When markets don't achieve efficiency,government intervention can improve society's welfare.

Question 11

An increase in efficiency means that an economy has:

Accepted Answer

A) reduced its opportunity costs. 
B) increased the equity of its distribution of goods and services. 
C) made more people better off without making others worse off. 
D) increased the incentives for its citizens to follow their own self-interest. 
A) reduced its opportunity costs. 
B) increased the equity of its distribution of goods and services. 
C) made more people better off without making others worse off. 
D) increased the incentives for its citizens to follow their own self-interest.

Question 12

An economy is efficient when:

Accepted Answer

A) the problem of scarcity is eliminated. 
B) output is distributed equitably. 
C) all opportunities to make some people better off without making other people worse off have been taken. 
D) all opportunities to make some people worse off without making other people better off have been taken. 
A) the problem of scarcity is eliminated. 
B) output is distributed equitably. 
C) all opportunities to make some people better off without making other people worse off have been taken. 
D) all opportunities to make some people worse off without making other people better off have been taken.

Question 13

A new fast-food restaurant offered a prize-a free meal (valued at $5)each week for a year-to its first 100 customers.Ramona camped out for 48 hours before the opening to be one of the first 100 customers,and she successfully obtained the prize.The cost to Ramona of obtaining the "free meal a week for a year" prize was:

Accepted Answer

A) zero. 
B) $260. 
C) whatever else she would have done with the 48 hours. 
D) The cost is impossible to determine. 
A) zero. 
B) $260. 
C) whatever else she would have done with the 48 hours. 
D) The cost is impossible to determine.

Question 14

For which decision would marginal analysis be MOST relevant?

Accepted Answer

A) Should George accept a job with Delta Airlines or with Greenpeace? 
B) Should Mary go to graduate school after graduating from college? 
C) Should Vivek emigrate to the United States or stay in India? 
D) Should Hong work an additional hour or take a short nap? 
A) Should George accept a job with Delta Airlines or with Greenpeace? 
B) Should Mary go to graduate school after graduating from college? 
C) Should Vivek emigrate to the United States or stay in India? 
D) Should Hong work an additional hour or take a short nap?

Question 15

Beth promises to do Alice's taxes,and in exchange,Alice will set up several spreadsheets for Beth's household budget.This trade will MOST likely:

Accepted Answer

A) be beneficial to both individuals. 
B) hurt both individuals. 
C) help Beth but hurt Alice. 
D) help Alice but hurt Beth. 
A) be beneficial to both individuals. 
B) hurt both individuals. 
C) help Beth but hurt Alice. 
D) help Alice but hurt Beth.

Question 16

The concept of the margin decision deals with:

Accepted Answer

A) making incremental choices. 
B) choosing all or none of something. 
C) engaging in unethical activities. 
D) making difficult choices. 
A) making incremental choices. 
B) choosing all or none of something. 
C) engaging in unethical activities. 
D) making difficult choices.

Question 17

Which statement is NOT a reason that markets usually lead to efficiency?

Accepted Answer

A) People are naturally efficient. 
B) Individuals have incentives to offer what people want. 
C) Trade encourages efficiency. 
D) Inefficient firms will lose business. 
A) People are naturally efficient. 
B) Individuals have incentives to offer what people want. 
C) Trade encourages efficiency. 
D) Inefficient firms will lose business.

Question 18

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Accepted Answer

A) True 
 B)False

Question 19

Specialization and trade should NOT lead to:

Accepted Answer

A) individuals learning specific skills and earning a salary. 
B) a decrease in total economic output. 
C) higher living standards. 
D) the exchange of goods and services in markets. 
A) individuals learning specific skills and earning a salary. 
B) a decrease in total economic output. 
C) higher living standards. 
D) the exchange of goods and services in markets.

Question 20

Economists tend to believe that to change people's behavior you must:

Accepted Answer

A) appeal to their concern for society. 
B) change their incentives. 
C) legislate the change. 
D) appeal to their religious values. 
A) appeal to their concern for society. 
B) change their incentives. 
C) legislate the change. 
D) appeal to their religious values.

Which statement is NOT one of the four principles of individual choice?

An economic situation is in equilibrium when no individual would be better off taking a different action.

Because people usually exploit opportunities to make themselves better off,which method of reducing pollution is likely to be MOST effective?

Grades are low in your biology class,so your professor offers an optional 10-point extra-credit assignment.Most of the students turn in the assignment.Which economic prinicple does this statement BEST represent?

Everyone benefits from street lighting,yet the marginal benefit to any one individual usually falls short of the marginal cost.This is an example of:

The trade-off between equity and efficiency occurs because:

Which decision is an example of marginal analysis?

For an economist,the cost of something is:

The federal government regulates how much carbon dioxide a factory can emit.Which economic principle does this statement BEST represent?

An increase in efficiency means that an economy has:

An economy is efficient when:

For which decision would marginal analysis be MOST relevant?

Beth promises to do Alice's taxes,and in exchange,Alice will set up several spreadsheets for Beth's household budget.This trade will MOST likely:

The concept of the margin decision deals with:

Which statement is NOT a reason that markets usually lead to efficiency?

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Specialization and trade should NOT lead to:

Economists tend to believe that to change people's behavior you must:

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 1: First Principles

Which statement is NOT one of the four principles of individual choice?

An economic situation is in equilibrium when no individual would be better off taking a different action.

Because people usually exploit opportunities to make themselves better off,which method of reducing pollution is likely to be MOST effective?

Grades are low in your biology class,so your professor offers an optional 10-point extra-credit assignment.Most of the students turn in the assignment.Which economic prinicple does this statement BEST represent?

Everyone benefits from street lighting,yet the marginal benefit to any one individual usually falls short of the marginal cost.This is an example of:

The trade-off between equity and efficiency occurs because:

Which decision is an example of marginal analysis?

For an economist,the cost of something is:

The federal government regulates how much carbon dioxide a factory can emit.Which economic principle does this statement BEST represent?

An increase in efficiency means that an economy has:

An economy is efficient when:

For which decision would marginal analysis be MOST relevant?

Beth promises to do Alice's taxes,and in exchange,Alice will set up several spreadsheets for Beth's household budget.This trade will MOST likely:

The concept of the margin decision deals with:

Which statement is NOT a reason that markets usually lead to efficiency?

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Specialization and trade should NOT lead to:

Economists tend to believe that to change people's behavior you must:

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters