Question 1

The basic concern of microeconomics is to:

Accepted Answer

A) keep business firms from losing money. 
B) prove that capitalism is better than socialism. 
C) study the choices people make. 
D) use unlimited resources to produce goods and services to satisfy limited wants. 
A) keep business firms from losing money. 
B) prove that capitalism is better than socialism. 
C) study the choices people make. 
D) use unlimited resources to produce goods and services to satisfy limited wants.

Question 2

In baseball,when one manager decides to send in a pinch hitter,the other manager often changes pitchers.This sometimes causes the first manager to send in a new pinch hitter.Once both managers decide that no more player substitutions will benefit their team,the situation has reached:

Accepted Answer

A) efficiency. 
B) equilibrium. 
C) equity. 
D) the market. 
A) efficiency. 
B) equilibrium. 
C) equity. 
D) the market.

Question 3

The BEST example of making a choice at the margin is whether to:

Accepted Answer

A) buy a new computer. 
B) quit your job. 
C) eat another slice of pizza. 
D) attend college. 
A) buy a new computer. 
B) quit your job. 
C) eat another slice of pizza. 
D) attend college.

Question 4

A popular train station has free parking for commuters who take the train.This often results in many people being unable to find a parking spot and missing their train.To solve this problem,all commuters should be:

Accepted Answer

A) given a parking pass along with their ticket. 
B) required to pay for parking. 
C) barred from parking at the station. 
D) exempt from parking lot fees. 
A) given a parking pass along with their ticket. 
B) required to pay for parking. 
C) barred from parking at the station. 
D) exempt from parking lot fees.

Question 5

Market failure occurs when the pursuit of self-interest leads to bad results for society.

Accepted Answer

A) True 
 B)False

Question 6

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping,this will:

Accepted Answer

A) hurt Allison's community because Allison's spending will be income for people in the large city. 
B) hurt the city because Allison will take the goods that she purchases back home to her small town. 
C) help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D) help the city because people from small towns usually buy things that people in big cities don't want. 
A) hurt Allison's community because Allison's spending will be income for people in the large city. 
B) hurt the city because Allison will take the goods that she purchases back home to her small town. 
C) help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D) help the city because people from small towns usually buy things that people in big cities don't want.

Question 7

Specialization and trade usually lead to:

Accepted Answer

A) lower economic growth. 
B) the exchange of goods and services in markets. 
C) lower living standards. 
D) higher prices. 
A) lower economic growth. 
B) the exchange of goods and services in markets. 
C) lower living standards. 
D) higher prices.

Question 8

We have to make choices because:

Accepted Answer

A) we have unlimited income. 
B) resources are scarce. 
C) resources are infinite. 
D) with good planning,trade-offs can be avoided. 
A) we have unlimited income. 
B) resources are scarce. 
C) resources are infinite. 
D) with good planning,trade-offs can be avoided.

Question 9

Because one person's spending is another person's income,if one group in the economy spends more,the incomes of other groups will increase.

Accepted Answer

A) True 
 B)False

Question 10

If every individual were required to be self-sufficient:

Accepted Answer

A) living standards would fall. 
B) living standards for some individuals would fall,but for others they would rise. 
C) living standards would rise. 
D) it's impossible to say how living standards would change. 
A) living standards would fall. 
B) living standards for some individuals would fall,but for others they would rise. 
C) living standards would rise. 
D) it's impossible to say how living standards would change.

Question 11

Marla will make $10 by tutoring for an additional hour,but she will lose an hour of studying for her economics test.Marla decides to study,rather than tutor.Marla's choice indicates that she:

Accepted Answer

A) values an additional hour of studying more than the $10 she would earn tutoring. 
B) values an hour of studying less than the $10 she would earn tutoring. 
C) does not understand that there is no benefit from studying. 
D) doesn't need the money. 
A) values an additional hour of studying more than the $10 she would earn tutoring. 
B) values an hour of studying less than the $10 she would earn tutoring. 
C) does not understand that there is no benefit from studying. 
D) doesn't need the money.

Question 12

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic.These fans are:

Accepted Answer

A) not considering that they have already paid for their tickets. 
B) making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C) thinking only about the benefits of avoiding traffic. 
D) underestimating the value of staying for the rest of the game. 
A) not considering that they have already paid for their tickets. 
B) making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C) thinking only about the benefits of avoiding traffic. 
D) underestimating the value of staying for the rest of the game.

Question 13

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips is:

Accepted Answer

A) $1 plus the enjoyment you would have received from the candy bar. 
B) $2 minus the enjoyment you received from the bag of chips. 
C) $1. 
D) the enjoyment you would have received from the candy bar. 
A) $1 plus the enjoyment you would have received from the candy bar. 
B) $2 minus the enjoyment you received from the bag of chips. 
C) $1. 
D) the enjoyment you would have received from the candy bar.

Question 14

Scarcity exists when:

Accepted Answer

A) making choices among two or more alternatives is not necessary. 
B) individuals can have more of any good without giving up anything. 
C) individuals can have more of one good but only by giving up something else. 
D) resources are unlimited. 
A) making choices among two or more alternatives is not necessary. 
B) individuals can have more of any good without giving up anything. 
C) individuals can have more of one good but only by giving up something else. 
D) resources are unlimited.

Question 15

People who live in large cities decide to spend less in their day-to-day activities.This will MOST likely lead to:

Accepted Answer

A) less income for other people 
B) more income for other people. 
C) no impact on other people. 
D) inflation. 
A) less income for other people 
B) more income for other people. 
C) no impact on other people. 
D) inflation.

Question 16

It is cheaper to produce corn in Kansas than in Death Valley,California,because corn needs a lot of water and moderate temperatures.Which economic concept does this statement BEST represent?

Accepted Answer

A) Government policies can change spending. 
B) Markets move toward equilibrium. 
C) Resources should be used as efficiently as possible to achieve society's goals. 
D) One person's spending is another person's income. 
A) Government policies can change spending. 
B) Markets move toward equilibrium. 
C) Resources should be used as efficiently as possible to achieve society's goals. 
D) One person's spending is another person's income.

Question 17

A choice made _____ is a choice whether to do a little more or a little less of an activity.

Accepted Answer

A) at the front end 
B) in the beginning 
C) at the margin 
D) ceteris paribus 
A) at the front end 
B) in the beginning 
C) at the margin 
D) ceteris paribus

Question 18

Which factor is NOT an example of a resource?

Accepted Answer

A) land 
B) labor 
C) capital 
D) production 
A) land 
B) labor 
C) capital 
D) production

Question 19

Trade theoretically allows people to get more of what they want.

Accepted Answer

A) True 
 B)False

Question 20

Which method of encouraging recycling is likely to be MOST effective given that people usually exploit opportunities to make themselves better off?

Accepted Answer

A) appealing to consumers to be a good citizen 
B) publicizing the advantages of recycling 
C) imposing a tax per unit of garbage generated 
D) advertising different ways of recycling 
A) appealing to consumers to be a good citizen 
B) publicizing the advantages of recycling 
C) imposing a tax per unit of garbage generated 
D) advertising different ways of recycling

Exam 1: First Principles

The basic concern of microeconomics is to:

In baseball,when one manager decides to send in a pinch hitter,the other manager often changes pitchers.This sometimes causes the first manager to send in a new pinch hitter.Once both managers decide that no more player substitutions will benefit their team,the situation has reached:

The BEST example of making a choice at the margin is whether to:

A popular train station has free parking for commuters who take the train.This often results in many people being unable to find a parking spot and missing their train.To solve this problem,all commuters should be:

Market failure occurs when the pursuit of self-interest leads to bad results for society.

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping,this will:

Specialization and trade usually lead to:

We have to make choices because:

Because one person's spending is another person's income,if one group in the economy spends more,the incomes of other groups will increase.

If every individual were required to be self-sufficient:

Marla will make $10 by tutoring for an additional hour,but she will lose an hour of studying for her economics test.Marla decides to study,rather than tutor.Marla's choice indicates that she:

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic.These fans are:

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips is:

Scarcity exists when:

People who live in large cities decide to spend less in their day-to-day activities.This will MOST likely lead to:

It is cheaper to produce corn in Kansas than in Death Valley,California,because corn needs a lot of water and moderate temperatures.Which economic concept does this statement BEST represent?

A choice made _____ is a choice whether to do a little more or a little less of an activity.

Which factor is NOT an example of a resource?

Trade theoretically allows people to get more of what they want.

Which method of encouraging recycling is likely to be MOST effective given that people usually exploit opportunities to make themselves better off?

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