Question 1

Although freshwater is very abundant in most places,it is scarce because:

Accepted Answer

A) it has no alternative uses. 
B) there is not enough of it to meet all needs. 
C) it is a free good. 
D) scarce goods in general are not all that costly. 
A) it has no alternative uses. 
B) there is not enough of it to meet all needs. 
C) it is a free good. 
D) scarce goods in general are not all that costly.

Question 2

Which factor can BEST be considered to be a resource used in the production of computers?

Accepted Answer

A) money from investors 
B) wages of computer engineers 
C) computer engineers 
D) taxes on the profits from the sale of the computers 
A) money from investors 
B) wages of computer engineers 
C) computer engineers 
D) taxes on the profits from the sale of the computers

Question 3

Economists believe that resources should be used as efficiently as possible to:

Accepted Answer

A) achieve society's goals. 
B) eliminate scarcity. 
C) reduce inequity. 
D) maximize profits. 
A) achieve society's goals. 
B) eliminate scarcity. 
C) reduce inequity. 
D) maximize profits.

Question 4

After swimming 100 laps at the pool,Erik decides to swim 10 more before lifting weights.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 5

You decide to join the economics club,but this means you can't join the accounting club because it meets at the same time.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

Increases in total output realized when individuals specialize in particular tasks and trade are known as:

Accepted Answer

A) the gains from trade. 
B) the profits obtained from sales of a good or service. 
C) marginal analysis. 
D) a trade-off. 
A) the gains from trade. 
B) the profits obtained from sales of a good or service. 
C) marginal analysis. 
D) a trade-off.

Question 7

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

Accepted Answer

A) increase the number of miles they drive. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride their bicycles less. 
A) increase the number of miles they drive. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride their bicycles less.

Question 8

Nate and Dylan are brothers.They have to mow the lawn and clean their rooms before they can go to the high school football game.Nate mows the lawn and Dylan cleans up the rooms,and they make it to the football game on time.Which economic concept does this statement BEST represent?

Accepted Answer

A) "How Much" is a decision at the margin. 
B) There are gains from trade. 
C) Markets usually lead to efficiency. 
D) One person's spending is another person's income. 
A) "How Much" is a decision at the margin. 
B) There are gains from trade. 
C) Markets usually lead to efficiency. 
D) One person's spending is another person's income.

Question 9

When someone says resources are scarce,this suggests that:

Accepted Answer

A) lower-income individuals must be especially careful about the choices they make. 
B) choices must be made to utilize resources in the best manner possible. 
C) additional resources could be found if there were additional funds allocated to the effort. 
D) we have enough resources to meet all of our needs and wants. 
A) lower-income individuals must be especially careful about the choices they make. 
B) choices must be made to utilize resources in the best manner possible. 
C) additional resources could be found if there were additional funds allocated to the effort. 
D) we have enough resources to meet all of our needs and wants.

Question 10

While buying refreshments for an upcoming party,you notice that a six-pack of Americana Beer costs $2 and a six-pack of Bavarian Beer costs $4.You buy the six-pack of Bavarian Beer,although you wonder if maybe two six-packs of Americana Beer would have been a better choice.The opportunity cost of the Bavarian Beer is:

Accepted Answer

A) $4. 
B) a six-pack of Americana Beer. 
C) two six-packs of Americana Beer. 
D) $4 and the six-pack of Americana Beer. 
A) $4. 
B) a six-pack of Americana Beer. 
C) two six-packs of Americana Beer. 
D) $4 and the six-pack of Americana Beer.

Question 11

Equity means that:

Accepted Answer

A) everyone gets an efficient share of the goods and services produced. 
B) everyone gets his or her fair share of the goods and services produced. 
C) more of some goods and services can be produced only if the production of others is reduced. 
D) more of all goods and services may be produced. 
A) everyone gets an efficient share of the goods and services produced. 
B) everyone gets his or her fair share of the goods and services produced. 
C) more of some goods and services can be produced only if the production of others is reduced. 
D) more of all goods and services may be produced.

Question 12

Because one person's spending is another person's income:

Accepted Answer

A) if one group in the economy spends more,the incomes of other groups will decrease. 
B) if one group in the economy spends less,the incomes of other groups will increase. 
C) if one group in the economy spends more,the incomes of other groups will increase. 
D) spending by one group does not influence the income of any other group. 
A) if one group in the economy spends more,the incomes of other groups will decrease. 
B) if one group in the economy spends less,the incomes of other groups will increase. 
C) if one group in the economy spends more,the incomes of other groups will increase. 
D) spending by one group does not influence the income of any other group.

Question 13

Economists make predictions about individual behavior based on the assumption that people exploit opportunities to make themselves better off.The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

Accepted Answer

A) True 
 B)False

Question 14

After eating three slices of pizza,you decide to eat one more piece.Your decision is an example of the economic concept called:

Accepted Answer

A) opportunity-cost decision. 
B) people responding to incentives. 
C) equity decision. 
D) marginal decision making. 
A) opportunity-cost decision. 
B) people responding to incentives. 
C) equity decision. 
D) marginal decision making.

Question 15

The student center on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You love burgers and bagels,but you decide to have a burger today.If they were out of burgers,you would have bought a bagel.Which economic principle 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) One person's spending is another person's income. 
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) One person's spending is another person's income. 
D) There are gains from trade.

Question 16

When a factory closes,why is it bad news for the local restaurants?

Accepted Answer

A) Sales taxes are likely to increase. 
B) Unemployed factory workers have lower incomes and are less likely to dine out. 
C) Unemployed factory workers are eligible for government unemployment benefits. 
D) The opportunity cost of dining out has fallen. 
A) Sales taxes are likely to increase. 
B) Unemployed factory workers have lower incomes and are less likely to dine out. 
C) Unemployed factory workers are eligible for government unemployment benefits. 
D) The opportunity cost of dining out has fallen.

Question 17

Intel finds it difficult to hire enough skilled computer engineers.Which economic concept does this statement BEST represent?

Accepted Answer

A) scarcity 
B) specialization 
C) ceteris paribus 
D) trade-off 
A) scarcity 
B) specialization 
C) ceteris paribus 
D) trade-off

Question 18

In an attempt to reduce shooting deaths,some cities have offered money to people who turn in illegal guns.This program is an example of the government using _____ to influence behavior.

Accepted Answer

A) financial incentives 
B) law 
C) marginal analysis 
D) the gains from trade 
A) financial incentives 
B) law 
C) marginal analysis 
D) the gains from trade

Question 19

Which statement is one of the four principles of individual choice?

Accepted Answer

A) Resources are usually renewable. 
B) The true cost of something is impossible to measure. 
C) People take advantage of opportunities to make themselves better off only if there is no risk involved. 
D) Choices are necessary because resources are scarce. 
A) Resources are usually renewable. 
B) The true cost of something is impossible to measure. 
C) People take advantage of opportunities to make themselves better off only if there is no risk involved. 
D) Choices are necessary because resources are scarce.

Question 20

In Colorado,there has been a drought,and rural communities are fighting with urban areas over water.Which economic concept does this statement BEST represent?

Accepted Answer

A) scarcity 
B) specialization 
C) incentive 
D) equilibrium 
A) scarcity 
B) specialization 
C) incentive 
D) equilibrium

Exam 1: First Principles

Although freshwater is very abundant in most places,it is scarce because:

Which factor can BEST be considered to be a resource used in the production of computers?

Economists believe that resources should be used as efficiently as possible to:

After swimming 100 laps at the pool,Erik decides to swim 10 more before lifting weights.Which economic principle does this statement BEST represent?

You decide to join the economics club,but this means you can't join the accounting club because it meets at the same time.Which economic prinicple does this statement BEST represent?

Increases in total output realized when individuals specialize in particular tasks and trade are known as:

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

Nate and Dylan are brothers.They have to mow the lawn and clean their rooms before they can go to the high school football game.Nate mows the lawn and Dylan cleans up the rooms,and they make it to the football game on time.Which economic concept does this statement BEST represent?

When someone says resources are scarce,this suggests that:

Equity means that:

Because one person's spending is another person's income:

Economists make predictions about individual behavior based on the assumption that people exploit opportunities to make themselves better off.The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

After eating three slices of pizza,you decide to eat one more piece.Your decision is an example of the economic concept called:

The student center on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You love burgers and bagels,but you decide to have a burger today.If they were out of burgers,you would have bought a bagel.Which economic principle does this statement BEST represent?

When a factory closes,why is it bad news for the local restaurants?

Intel finds it difficult to hire enough skilled computer engineers.Which economic concept does this statement BEST represent?

In an attempt to reduce shooting deaths,some cities have offered money to people who turn in illegal guns.This program is an example of the government using _____ to influence behavior.

Which statement is one of the four principles of individual choice?

In Colorado,there has been a drought,and rural communities are fighting with urban areas over water.Which economic concept does this statement BEST represent?

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