Question 1

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:

Accepted Answer

A) achieves an efficient outcome because profits increase. 
B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C) fails because there is no longer an efficient allocation of resources. 
D) fails because there is no longer an equitable allocation of resources. 
A) achieves an efficient outcome because profits increase. 
B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C) fails because there is no longer an efficient allocation of resources. 
D) fails because there is no longer an equitable allocation of resources.

Question 2

Manny is attending college and majoring in economics.By doing so,Manny is improving his:

Accepted Answer

A) land. 
B) labor. 
C) capital. 
D) human capital. 
A) land. 
B) labor. 
C) capital. 
D) human capital.

Question 3

You are analyzing a trade-off when you compare the _____ and _____ of doing something.

Accepted Answer

A) direct costs;opportunity costs 
B) marginal benefits;total benefits 
C) costs;benefits 
D) direct costs;total costs 
A) direct costs;opportunity costs 
B) marginal benefits;total benefits 
C) costs;benefits 
D) direct costs;total costs

Question 4

Which principle underlies the interaction of individual choices?

Accepted Answer

A) Choices are necessary because resources are scarce. 
B) There are gains from trade. 
C) "How Much" is a decision at the margin 
D) People usually respond to incentives,exploiting opportunities to make themselves better off. 
A) Choices are necessary because resources are scarce. 
B) There are gains from trade. 
C) "How Much" is a decision at the margin 
D) People usually respond to incentives,exploiting opportunities to make themselves better off.

Question 5

If resources are scarce,it means that they:

Accepted Answer

A) are insufficient to provide enough goods and services to satisfy all human material wants and needs. 
B) have no opportunity cost. 
C) are probably not valued by consumers. 
D) have an unlimited supply. 
A) are insufficient to provide enough goods and services to satisfy all human material wants and needs. 
B) have no opportunity cost. 
C) are probably not valued by consumers. 
D) have an unlimited supply.

Question 6

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities.As a result,many of these spaces are vacant quite often when they could be used by able-bodied individuals.Such a situation illustrates the:

Accepted Answer

A) trade-off between efficiency and equity. 
B) trade-off between efficiency and specialization. 
C) ability of markets to provide efficient and equitable outcomes. 
D) power of the market to provide for equilibrium outcomes. 
A) trade-off between efficiency and equity. 
B) trade-off between efficiency and specialization. 
C) ability of markets to provide efficient and equitable outcomes. 
D) power of the market to provide for equilibrium outcomes.

Question 7

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted.This means that:

Accepted Answer

A) people usually are not selfish enough to exploit opportunities to make themselves better off. 
B) markets move toward equilibrium. 
C) resources should be used as efficiently as possible to achieve society's goals. 
D) markets usually lead to efficiency. 
A) people usually are not selfish enough to exploit opportunities to make themselves better off. 
B) markets move toward equilibrium. 
C) resources should be used as efficiently as possible to achieve society's goals. 
D) markets usually lead to efficiency.

Question 8

Lena and Jess are roommates.Lena hates to clean the bathroom.Jess will agree to clean the bathroom only if Lena vacuums the living room.Which economic concept does this statement BEST represent?

Accepted Answer

A) When markets don't achieve efficiency,government intervention can improve society's welfare. 
B) "How much" is a decision at the margin. 
C) One person's spending is another person's income. 
D) There are gains from trade. 
A) When markets don't achieve efficiency,government intervention can improve society's welfare. 
B) "How much" is a decision at the margin. 
C) One person's spending is another person's income. 
D) There are gains from trade.

Question 9

When the San Francisco city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities,he responds that the $1 million improvement will not happen because "that money could be spent building 70 curb ramps." Which economic principle does this statement BEST represent?

Accepted Answer

A) Markets move toward equilibrium. 
B) The true cost of something is its opportunity cost . 
C) "How much" is a decision at the margin. 
D) When markets don't achieve efficiency,government intervention can improve society's welfare. 
A) Markets move toward equilibrium. 
B) The true cost of something is its opportunity cost . 
C) "How much" is a decision at the margin. 
D) When markets don't achieve efficiency,government intervention can improve society's welfare.

Question 10

During the Great Depression,consumers and producers in the United States dramatically reduced their spending relative to the quantity of goods and services available at the time.Which economic principle does this statement BEST represent?

Accepted Answer

A) Choices are necessary because resources are scarce. 
B) When markets don't achieve efficiency,government intervention can improve society's welfare. 
C) Overall spending sometimes gets out of line with the economy's productive capacity. 
D) Government policies can change spending. 
A) Choices are necessary because resources are scarce. 
B) When markets don't achieve efficiency,government intervention can improve society's welfare. 
C) Overall spending sometimes gets out of line with the economy's productive capacity. 
D) Government policies can change spending.

Question 11

For which decision would marginal analysis be MOST relevant?

Accepted Answer

A) Should I go to college or work after graduating from high school? 
B) Should I eat another doughnut? 
C) Should I use $20,000 as a down payment on a house or to buy a car? 
D) Should I get married? 
A) Should I go to college or work after graduating from high school? 
B) Should I eat another doughnut? 
C) Should I use $20,000 as a down payment on a house or to buy a car? 
D) Should I get married?

Question 12

Because of the opportunity cost,if the United States spends $87 billion in the rebuilding of Iraq,it has to forgo the opportunity to spend $87 billion on some other program.

Accepted Answer

A) True 
 B)False

Question 13

A college student is faced with a difficult decision of how to spend one hour tonight.She could babysit her professor's child at an hourly wage of $7;she could work at the college library at a wage of $6;or she could finish her economics homework assignment.If she chooses to complete her homework assignment,she has incurred an opportunity cost equal to:

Accepted Answer

A) $7. 
B) $6. 
C) $13. 
D) $0. 
A) $7. 
B) $6. 
C) $13. 
D) $0.

Question 14

The phrase gains from trade refers to the:

Accepted Answer

A) profits obtained from sales of a good or service. 
B) increase in total output that is realized when individuals specialize in particular tasks and trade with each other. 
C) gains that one obtains by taking advantage of an uninformed buyer and selling at a higher than average price. 
D) gains that one obtains by taking advantage of a temporary discount,or sale price. 
A) profits obtained from sales of a good or service. 
B) increase in total output that is realized when individuals specialize in particular tasks and trade with each other. 
C) gains that one obtains by taking advantage of an uninformed buyer and selling at a higher than average price. 
D) gains that one obtains by taking advantage of a temporary discount,or sale price.

Question 15

If the state government allocates additional spending on education programs,the opportunity cost is:

Accepted Answer

A) zero. 
B) the dollar amount of the additional spending. 
C) considered only if taxes have to be raised to fund the spending. 
D) measured in terms of the best alternative uses for that money. 
A) zero. 
B) the dollar amount of the additional spending. 
C) considered only if taxes have to be raised to fund the spending. 
D) measured in terms of the best alternative uses for that money.

Question 16

When a chef prepares a dinner for a customer,which factor is physical capital?

Accepted Answer

A) the chef 
B) the oven 
C) the food ingredients 
D) the chef's training and experience 
A) the chef 
B) the oven 
C) the food ingredients 
D) the chef's training and experience

Question 17

Margo spends $30,000 on one year's college tuition.The opportunity cost of spending one year in college for Margo is:

Accepted Answer

A) $30,000. 
B) whatever she would have purchased with the $30,000 instead. 
C) whatever she would have earned had she not been in college. 
D) whatever she would have purchased with the $30,000 plus whatever she would have earned had she not been in college. 
A) $30,000. 
B) whatever she would have purchased with the $30,000 instead. 
C) whatever she would have earned had she not been in college. 
D) whatever she would have purchased with the $30,000 plus whatever she would have earned had she not been in college.

Question 18

One person's spending is another person's:

Accepted Answer

A) loss. 
B) income. 
C) physical capital. 
D) opportunity cost. 
A) loss. 
B) income. 
C) physical capital. 
D) opportunity cost.

Question 19

Sometimes the government varies its spending,depending on the needs of the country.Which economic principle does this statement BEST represent?

Accepted Answer

A) Resources should be used efficiently to achieve society's goals. 
B) When markets don't achieve efficiency,government intervention can improve society's welfare. 
C) The true cost of something is its opportunity cost. 
D) Government policies can change spending. 
A) Resources should be used efficiently to achieve society's goals. 
B) When markets don't achieve efficiency,government intervention can improve society's welfare. 
C) The true cost of something is its opportunity cost. 
D) Government policies can change spending.

Question 20

We are forced to make choices because of:

Accepted Answer

A) exploitation. 
B) efficiency. 
C) scarcity. 
D) the margin. 
A) exploitation. 
B) efficiency. 
C) scarcity. 
D) the margin.

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:

Manny is attending college and majoring in economics.By doing so,Manny is improving his:

You are analyzing a trade-off when you compare the _ and _ of doing something.

Which principle underlies the interaction of individual choices?

If resources are scarce,it means that they:

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities.As a result,many of these spaces are vacant quite often when they could be used by able-bodied individuals.Such a situation illustrates the:

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted.This means that:

Lena and Jess are roommates.Lena hates to clean the bathroom.Jess will agree to clean the bathroom only if Lena vacuums the living room.Which economic concept does this statement BEST represent?

During the Great Depression,consumers and producers in the United States dramatically reduced their spending relative to the quantity of goods and services available at the time.Which economic principle does this statement BEST represent?

For which decision would marginal analysis be MOST relevant?

Because of the opportunity cost,if the United States spends $87 billion in the rebuilding of Iraq,it has to forgo the opportunity to spend $87 billion on some other program.

The phrase gains from trade refers to the:

If the state government allocates additional spending on education programs,the opportunity cost is:

When a chef prepares a dinner for a customer,which factor is physical capital?

Margo spends $30,000 on one year's college tuition.The opportunity cost of spending one year in college for Margo is:

One person's spending is another person's:

Sometimes the government varies its spending,depending on the needs of the country.Which economic principle does this statement BEST represent?

We are forced to make choices because of:

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

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:

Manny is attending college and majoring in economics.By doing so,Manny is improving his:

You are analyzing a trade-off when you compare the _____ and _____ of doing something.

Which principle underlies the interaction of individual choices?

If resources are scarce,it means that they:

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities.As a result,many of these spaces are vacant quite often when they could be used by able-bodied individuals.Such a situation illustrates the:

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted.This means that:

Lena and Jess are roommates.Lena hates to clean the bathroom.Jess will agree to clean the bathroom only if Lena vacuums the living room.Which economic concept does this statement BEST represent?

During the Great Depression,consumers and producers in the United States dramatically reduced their spending relative to the quantity of goods and services available at the time.Which economic principle does this statement BEST represent?

For which decision would marginal analysis be MOST relevant?

Because of the opportunity cost,if the United States spends $87 billion in the rebuilding of Iraq,it has to forgo the opportunity to spend $87 billion on some other program.

The phrase gains from trade refers to the:

If the state government allocates additional spending on education programs,the opportunity cost is:

When a chef prepares a dinner for a customer,which factor is physical capital?

Margo spends $30,000 on one year's college tuition.The opportunity cost of spending one year in college for Margo is:

One person's spending is another person's:

Sometimes the government varies its spending,depending on the needs of the country.Which economic principle does this statement BEST represent?

We are forced to make choices because of:

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

You are analyzing a trade-off when you compare the _ and _ of doing something.