Question 1

Which statement is NOT true?

Accepted Answer

A)  Resource scarcity is a major economic concern in the rich countries of the world. 
B)  Most opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Very talented individuals, who can do most things better than most people, may still benefit greatly from specializing in doing one thing. 
A)  Resource scarcity is a major economic concern in the rich countries of the world. 
B)  Most opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Very talented individuals, who can do most things better than most people, may still benefit greatly from specializing in doing one thing.

Question 2

Equity is the same as efficiency.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

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 6

Individuals gain from trade because:

Accepted Answer

A)  of specialization in production. 
B)  they can sell at a lower price than they can buy at. 
C)  self-sufficiency is efficient. 
D)  of the principle of absolute advantage. 
A)  of specialization in production. 
B)  they can sell at a lower price than they can buy at. 
C)  self-sufficiency is efficient. 
D)  of the principle of absolute advantage.

Question 7

A trade-off involves weighing costs and benefits.

Accepted Answer

A) True 
 B)False

Question 8

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 9

For an economist, the cost of something is:

Accepted Answer

A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it. 
A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it.

Question 10

Resources are being used efficiently when:

Accepted Answer

A)  scarcity is no longer an issue. 
B)  they are also used equitably. 
C)  every opportunity to make people better off without making others worse off has been seized. 
D)  gains from trade are still available. 
A)  scarcity is no longer an issue. 
B)  they are also used equitably. 
C)  every opportunity to make people better off without making others worse off has been seized. 
D)  gains from trade are still available.

Question 11

If an economy's resources are used efficiently, then it is guaranteed that the economy will also achieve equity.

Accepted Answer

A) True 
 B)False

Question 12

The opportunity cost of something is:

Accepted Answer

A)  larger during periods of rising prices. 
B)  equal to the monetary cost. 
C)  smaller during periods of falling prices. 
D)  what is given up to acquire it. 
A)  larger during periods of rising prices. 
B)  equal to the monetary cost. 
C)  smaller during periods of falling prices. 
D)  what is given up to acquire it.

Question 13

For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:

Accepted Answer

A)  tuition and the cost of housing. 
B)  tuition, the cost of housing, and the cost of books and other school materials. 
C)  tuition, the cost of books and other school materials, and forgone income. 
D)  forgone income only. 
A)  tuition and the cost of housing. 
B)  tuition, the cost of housing, and the cost of books and other school materials. 
C)  tuition, the cost of books and other school materials, and forgone income. 
D)  forgone income only.

Question 14

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 15

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 16

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 17

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 18

To encourage people to retire later, given that people usually exploit opportunities to make themselves better off, the government could:

Accepted Answer

A)  reduce Social Security benefits. 
B)  raise the tax rate on older, unretired individuals. 
C)  provide free housing to all retirees 
D)  increase Social Security benefits. 
A)  reduce Social Security benefits. 
B)  raise the tax rate on older, unretired individuals. 
C)  provide free housing to all retirees 
D)  increase Social Security benefits.

Question 19

If a market is in disequilibrium:

Accepted Answer

A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for some people to make themselves better off. 
D)  it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium. 
A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for some people to make themselves better off. 
D)  it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium.

Question 20

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Accepted Answer

A)  Molly; peppers; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly 
A)  Molly; peppers; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly

Which statement is NOT true?

Equity is the same as efficiency.

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

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.

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

Individuals gain from trade because:

A trade-off involves weighing costs and benefits.

Which principle underlies the economics of individual choices?

For an economist, the cost of something is:

Resources are being used efficiently when:

If an economy's resources are used efficiently, then it is guaranteed that the economy will also achieve equity.

The opportunity cost of something is:

For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:

Equity 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?

For which decision would marginal analysis be MOST relevant?

To encourage people to retire later, given that people usually exploit opportunities to make themselves better off, the government could:

If a market is in disequilibrium:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.

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

Which statement is NOT true?

Equity is the same as efficiency.

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

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.

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

Individuals gain from trade because:

A trade-off involves weighing costs and benefits.

Which principle underlies the economics of individual choices?

For an economist, the cost of something is:

Resources are being used efficiently when:

If an economy's resources are used efficiently, then it is guaranteed that the economy will also achieve equity.

The opportunity cost of something is:

For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:

Equity 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?

For which decision would marginal analysis be MOST relevant?

To encourage people to retire later, given that people usually exploit opportunities to make themselves better off, the government could:

If a market is in disequilibrium:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

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

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.