Question 1

Khalil is offered a free ticket to the opera, which he cannot resell. His opportunity cost of going to the opera is:

Accepted Answer

A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera. 
A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera. C

Question 2

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Accepted Answer

A)  Karl Marx 
B)  David Ricardo 
C)  Adam Smith 
D)  John Maynard Keynes 
A)  Karl Marx 
B)  David Ricardo 
C)  Adam Smith 
D)  John Maynard Keynes C

Question 3

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. B

Question 4

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 5

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 6

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 7

If the value of homes in University City increases and, as a result, the people of University City spend more, incomes in University City will:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected.

Question 8

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 9

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. Which economic concept does this statement BEST represent?

Accepted Answer

A)  Scarcity 
B)  Equilibrium 
C)  Marginal Analysis 
D)  Specialization 
A)  Scarcity 
B)  Equilibrium 
C)  Marginal Analysis 
D)  Specialization

Question 10

Whenever a choice is made:

Accepted Answer

A)  the cost of that choice is the opportunity cost. 
B)  the cost is easy to measure in dollar terms. 
C)  efficiency is improved. 
D)  scarcity is not a problem. 
A)  the cost of that choice is the opportunity cost. 
B)  the cost is easy to measure in dollar terms. 
C)  efficiency is improved. 
D)  scarcity is not a problem.

Question 11

Specialization in production was the starting point for:

Accepted Answer

A)  The Wealth of Nations, by Adam Smith. 
B)  The General Theory, by John Maynard Keynes. 
C)  Das Kapital, by Karl Marx. 
D)  Free to Choose, by Milton Friedman. 
A)  The Wealth of Nations, by Adam Smith. 
B)  The General Theory, by John Maynard Keynes. 
C)  Das Kapital, by Karl Marx. 
D)  Free to Choose, by Milton Friedman.

Question 12

Which question is an example of marginal analysis?

Accepted Answer

A)  What additional output does a family business produce when it hires one more worker? 
B)  How do tax cuts change the growth rate of median income? 
C)  What is the impact of a trade embargo on labor cost? 
D)  Should a commuter take the bus to work instead of driving. 
A)  What additional output does a family business produce when it hires one more worker? 
B)  How do tax cuts change the growth rate of median income? 
C)  What is the impact of a trade embargo on labor cost? 
D)  Should a commuter take the bus to work instead of driving.

Question 13

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 14

Which resource is NOT one that pertains to the production of rice?

Accepted Answer

A)  fertile land 
B)  labor 
C)  capital equipment 
D)  money 
A)  fertile land 
B)  labor 
C)  capital equipment 
D)  money

Question 15

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 16

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 17

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

Accepted Answer

A)  markets move toward equilibrium. 
B)  government policies can change spending. 
C)  there are gains from trade. 
D)  markets usually lead to efficiency. 
A)  markets move toward equilibrium. 
B)  government policies can change spending. 
C)  there are gains from trade. 
D)  markets usually lead to efficiency.

Question 18

Equilibrium exists when:

Accepted Answer

A)  output is distributed equitably. 
B)  scarcity is eliminated. 
C)  an individual would be better off taking a different action. 
D)  no individual has an incentive to change his or her behavior. 
A)  output is distributed equitably. 
B)  scarcity is eliminated. 
C)  an individual would be better off taking a different action. 
D)  no individual has an incentive to change his or her behavior.

Question 19

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 20

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

Khalil is offered a free ticket to the opera, which he cannot resell. His opportunity cost of going to the opera is:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

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

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

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:

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?

If the value of homes in University City increases and, as a result, the people of University City spend more, incomes in University City will:

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

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. Which economic concept does this statement BEST represent?

Whenever a choice is made:

Specialization in production was the starting point for:

Which question is an example of marginal analysis?

Gains from trade arise because of:

Which resource is NOT one that pertains to the production of rice?

Which decision is an example of marginal analysis?

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

Equilibrium exists when:

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

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.

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 1: First Principles

Khalil is offered a free ticket to the opera, which he cannot resell. His opportunity cost of going to the opera is:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

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

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

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:

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?

If the value of homes in University City increases and, as a result, the people of University City spend more, incomes in University City will:

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

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. Which economic concept does this statement BEST represent?

Whenever a choice is made:

Specialization in production was the starting point for:

Which question is an example of marginal analysis?

Gains from trade arise because of:

Which resource is NOT one that pertains to the production of rice?

Which decision is an example of marginal analysis?

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

Equilibrium exists when:

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

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.

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters