Question 1

Because the United States is a rich nation,free health care can be provided for all citizens without considering the issue of scarcity.

Accepted Answer

A) True 
 B)False

Question 2

You decide whether to eat one more slice of pizza based on how hungry you feel.Which economic principle does this statement BEST represent?

Accepted Answer

A) Choices are necessary because resources are scarce. 
B) The true cost of something is its opportunity cost. 
C) "How much" is a decision at the margin. 
D) There are gains from trade. 
A) Choices are necessary because resources are scarce. 
B) The true cost of something is its opportunity cost. 
C) "How much" is a decision at the margin. 
D) There are gains from trade.

Question 3

Equity is the same as efficiency.

Accepted Answer

A) True 
 B)False

Question 4

The student center on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You decide to have a burger today,but if they were out of burgers,you would have bought a bagel.Your opportunity cost of buying a burger is your enjoyment of the:

Accepted Answer

A) burger. 
B) bagel. 
C) burrito. 
D) bagel and the burrito. 
A) burger. 
B) bagel. 
C) burrito. 
D) bagel and the burrito.

Question 5

An economy has achieved _____ if it _____ pass up any opportunities to make some people better off without making others worse off.

Accepted Answer

A) efficiency;does not 
B) equity;does 
C) efficiency;does 
D) equity;does not 
A) efficiency;does not 
B) equity;does 
C) efficiency;does 
D) equity;does not

Question 6

Too little spending in an economy often leads to:

Accepted Answer

A) a recession. 
B) inflation. 
C) equilibrium. 
D) efficiency. 
A) a recession. 
B) inflation. 
C) equilibrium. 
D) efficiency.

Question 7

Because people usually exploit opportunities to make themselves better off,if the price of gasoline falls and stays low for an extended period,we expect people to:

Accepted Answer

A) reduce their reliance on gasoline-powered cars. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride bicycles. 
A) reduce their reliance on gasoline-powered cars. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride bicycles.

Question 8

Which statement is FALSE?

Accepted Answer

A) Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B) If an economy is efficient,it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C) Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D) Free markets usually lead to efficiency,but not necessarily equity. 
A) Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B) If an economy is efficient,it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C) Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D) Free markets usually lead to efficiency,but not necessarily equity.

Question 9

Gains from trade arise because of:

Accepted Answer

A) specialization in production. 
B) specialization in consumption. 
C) marginal analysis. 
D) individual choice. 
A) specialization in production. 
B) specialization in consumption. 
C) marginal analysis. 
D) individual choice.

Question 10

Which topic is studied in macroeconomics?

Accepted Answer

A) the change in automobile sales due to a change in the price of automobiles 
B) the effect of a tax reduction on the profits of an individual business 
C) recessions 
D) the unemployment of workers displaced by technological change in the typesetting industry 
A) the change in automobile sales due to a change in the price of automobiles 
B) the effect of a tax reduction on the profits of an individual business 
C) recessions 
D) the unemployment of workers displaced by technological change in the typesetting industry

Question 11

When a market is in equilibrium:

Accepted Answer

A) a person could do better if he or she did something different. 
B) people have exploited all opportunities to make themselves better off. 
C) the government has wrongly interfered in this market. 
D) markets are not working efficiently. 
A) a person could do better if he or she did something different. 
B) people have exploited all opportunities to make themselves better off. 
C) the government has wrongly interfered in this market. 
D) markets are not working efficiently.

Question 12

Thinking in economic terms,when Mary Sweet-Tooth is deciding whether to eat another brownie,she:

Accepted Answer

A) considers only the price of the brownie. 
B) considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie. 
C) compares all of the benefits and costs of eating another brownie. 
D) considers whether she can do so without anyone else noticing. 
A) considers only the price of the brownie. 
B) considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie. 
C) compares all of the benefits and costs of eating another brownie. 
D) considers whether she can do so without anyone else noticing.

Question 13

Which principle underlies the economics of individual choices?

Accepted Answer

A) There are gains from trade. 
B) Markets move toward equilibrium. 
C) People usually respond to incentives,exploiting opportunities to make themselves better off. 
D) Resources should be used as efficiently as possible to achieve society's goals. 
A) There are gains from trade. 
B) Markets move toward equilibrium. 
C) People usually respond to incentives,exploiting opportunities to make themselves better off. 
D) Resources should be used as efficiently as possible to achieve society's goals.

Question 14

When people want more goods and services than are available,the economy undergoes inflation.Which economic principle does this statement BEST represent?

Accepted Answer

A) There are gains from trade. 
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) There are gains from trade. 
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 15

Freshwater is considered a scarce good because:

Accepted Answer

A) not enough of it is available for all needs. 
B) it does not have any uses. 
C) scarce goods are not expensive. 
D) not enough of it is available for all needs and because it is not expensive. 
A) not enough of it is available for all needs. 
B) it does not have any uses. 
C) scarce goods are not expensive. 
D) not enough of it is available for all needs and because it is not expensive.

Question 16

The economic way of thinking entails:

Accepted Answer

A) the analysis of benefits but not costs. 
B) the analysis of costs but not benefits. 
C) making choices at the margin. 
D) making the distinction between microeconomics and macroeconomics. 
A) the analysis of benefits but not costs. 
B) the analysis of costs but not benefits. 
C) making choices at the margin. 
D) making the distinction between microeconomics and macroeconomics.

Question 17

Katherine has a physics exam tomorrow.However,a free lecture by one of her favorite authors is taking place this evening.Katherine decides to attend the lecture instead of studying for her exam.Katherine's opportunity cost of attending the lecture is:

Accepted Answer

A) the time spent listening to the lecture. 
B) not relevant since no money is involved. 
C) the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D) the time spent getting to the lecture. 
A) the time spent listening to the lecture. 
B) not relevant since no money is involved. 
C) the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D) the time spent getting to the lecture.

Question 18

Suppose small business owners decide to spend less.How will this affect an economy?

Accepted Answer

A) It will have no impact since this group makes up a small portion of any economy. 
B) It will decrease the level of income of other people since one person's spending is someone else's income. 
C) It will cause prices for many goods to increase. 
D) It will increase the level of income in the economy since other groups will spend more. 
A) It will have no impact since this group makes up a small portion of any economy. 
B) It will decrease the level of income of other people since one person's spending is someone else's income. 
C) It will cause prices for many goods to increase. 
D) It will increase the level of income in the economy since other groups will spend more.

Question 19

How people choose among the alternatives available to them is:

Accepted Answer

A) not part of the study of economics. 
B) impossible to describe. 
C) the study of microeconomics. 
D) not important in the study of microeconomics. 
A) not part of the study of economics. 
B) impossible to describe. 
C) the study of microeconomics. 
D) not important in the study of microeconomics.

Question 20

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour.You should:

Accepted Answer

A) compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study. 
A) compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.

Exam 1: First Principles

Because the United States is a rich nation,free health care can be provided for all citizens without considering the issue of scarcity.

You decide whether to eat one more slice of pizza based on how hungry you feel.Which economic principle does this statement BEST represent?

Equity is the same as efficiency.

The student center on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You decide to have a burger today,but if they were out of burgers,you would have bought a bagel.Your opportunity cost of buying a burger is your enjoyment of the:

An economy has achieved _____ if it _____ pass up any opportunities to make some people better off without making others worse off.

Too little spending in an economy often leads to:

Because people usually exploit opportunities to make themselves better off,if the price of gasoline falls and stays low for an extended period,we expect people to:

Which statement is FALSE?

Gains from trade arise because of:

Which topic is studied in macroeconomics?

When a market is in equilibrium:

Thinking in economic terms,when Mary Sweet-Tooth is deciding whether to eat another brownie,she:

Which principle underlies the economics of individual choices?

When people want more goods and services than are available,the economy undergoes inflation.Which economic principle does this statement BEST represent?

Freshwater is considered a scarce good because:

The economic way of thinking entails:

Katherine has a physics exam tomorrow.However,a free lecture by one of her favorite authors is taking place this evening.Katherine decides to attend the lecture instead of studying for her exam.Katherine's opportunity cost of attending the lecture is:

Suppose small business owners decide to spend less.How will this affect an economy?

How people choose among the alternatives available to them is:

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour.You should:

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

An economy has achieved _ if it _ pass up any opportunities to make some people better off without making others worse off.