Question 1

To say that individuals maximize is illustrated by saying:

Accepted Answer

A) they pick some objective and then seek to make the value of that objective as great as they can. 
B) a sprinter wants to be as fast as possible. 
C) a businessperson wants to earn the highest level of profit attainable. 
D) all of the above. 
A) they pick some objective and then seek to make the value of that objective as great as they can. 
B) a sprinter wants to be as fast as possible. 
C) a businessperson wants to earn the highest level of profit attainable. 
D) all of the above.

Question 2

-(Exhibit: Markets and Efficiency)A producer will produce additional apples:

Accepted Answer

A) as long as marginal benefit is less than marginal cost. 
B) as long as marginal benefit exceeds marginal cost. 
C) if marginal cost is decreasing and price is the same. 
D) if price does not cover costs. 
A) as long as marginal benefit is less than marginal cost. 
B) as long as marginal benefit exceeds marginal cost. 
C) if marginal cost is decreasing and price is the same. 
D) if price does not cover costs.

Question 3

An allocation of resources that achieves the maximum net benefit from all activities is:

Accepted Answer

A) inefficient. 
B) external. 
C) internal. 
D) efficient. 
A) inefficient. 
B) external. 
C) internal. 
D) efficient.

Question 4

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

A) 5 
B) 10 
C) 20 
D) 40 
A) 5 
B) 10 
C) 20 
D) 40

Question 5

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively.With 3 total hours of study time, your combined scores can reach a maximum of _______ points.

Accepted Answer

A) 145 
B) 150 
C) 155 
D) 165 
A) 145 
B) 150 
C) 155 
D) 165

Question 6

Economists assume that consumers attempt to maximize utility.

Accepted Answer

A) True 
 B)False

Question 7

The failure to achieve an efficient allocation of resources is called market failure.

Accepted Answer

A) True 
 B)False

Question 8

-(Exhibit: Market Failure 1)A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .

Accepted Answer

A) 0A; 0E 
B) 0A; 0G 
C) 0B; 0F 
D) 0C; 0E 
A) 0A; 0E 
B) 0A; 0G 
C) 0B; 0F 
D) 0C; 0E

Question 9

When the market does not result in an efficient allocation of scarce resources, economists call this:

Accepted Answer

A) market dropout. 
B) normative economics. 
C) market disincentives. 
D) market failure. 
A) market dropout. 
B) normative economics. 
C) market disincentives. 
D) market failure.

Question 10

A boundary that limits the range of choices an individual or a firm can make is:

Accepted Answer

A) a constraint. 
B) utility. 
C) a maximum. 
D) a minimum. 
A) a constraint. 
B) utility. 
C) a maximum. 
D) a minimum.

Question 11

The Case in Point on Preventing Oil Spills stated that an economist who studied the costs and benefits of preventing oil spills in coastal waters and rivers concluded that:

Accepted Answer

A) the marginal cost of preventing oil spills was greater than the marginal benefit and the U.S.Coast Guard could not justify its excessive prevention efforts. 
B) The marginal cost of preventing oil spills was less than the marginal benefit and that the U.S.Cost Guard could justify even greater efforts at preventing them. 
C) that oil spills are so terrible and have such a pervasively destructive impact on the coastal waters and rivers that they should be prevented entirely-no oil spills should be tolerated. 
D) both B and C were conclusions reached by the economist. 
A) the marginal cost of preventing oil spills was greater than the marginal benefit and the U.S.Coast Guard could not justify its excessive prevention efforts. 
B) The marginal cost of preventing oil spills was less than the marginal benefit and that the U.S.Cost Guard could justify even greater efforts at preventing them. 
C) that oil spills are so terrible and have such a pervasively destructive impact on the coastal waters and rivers that they should be prevented entirely-no oil spills should be tolerated. 
D) both B and C were conclusions reached by the economist.

Question 12

Common property resources have never been a serious problem in the efficient allocation of resources.

Accepted Answer

A) True 
 B)False

Question 13

The free-rider problem is most important for:

Accepted Answer

A) private goods. 
B) public goods. 
C) market goods. 
D) both private and market goods. 
A) private goods. 
B) public goods. 
C) market goods. 
D) both private and market goods.

Question 14

A characteristic of a competitive free market is that, if external costs exist, they:

Accepted Answer

A) enable the market to allocate resources efficiently. 
B) are reflected by the total market supply curve. 
C) are not reflected by the total market supply curve. 
D) are reflected by the total market demand curve. 
A) enable the market to allocate resources efficiently. 
B) are reflected by the total market supply curve. 
C) are not reflected by the total market supply curve. 
D) are reflected by the total market demand curve.

Question 15

To determine the quantity of any activity that will maximize net benefit, economists employ the ________ rule.

Accepted Answer

A) average decision 
B) total decision 
C) net decision 
D) marginal decision 
A) average decision 
B) total decision 
C) net decision 
D) marginal decision

Question 16

The amount by which an additional unit of an activity increases total cost is:

Accepted Answer

A) net benefit. 
B) marginal benefit. 
C) negative benefit. 
D) marginal cost. 
A) net benefit. 
B) marginal benefit. 
C) negative benefit. 
D) marginal cost.

Question 17

A set of rules that specify the ways in which the resource for which they are defined may be used are:

Accepted Answer

A) public goods. 
B) quasi-public goods. 
C) property rights. 
D) free-rider rights. 
A) public goods. 
B) quasi-public goods. 
C) property rights. 
D) free-rider rights.

Question 18

The _______ is the amount by which an additional unit of activity increases its cost.

Accepted Answer

A) marginal cost 
B) average cost 
C) average profit 
D) marginal benefit 
A) marginal cost 
B) average cost 
C) average profit 
D) marginal benefit

Question 19

An inefficient allocation of resources is one that does not maximize the net benefits of each activity.

Accepted Answer

A) True 
 B)False

Question 20

For markets to operate efficiently, it is necessary that private marginal cost:

Accepted Answer

A) be equal to output quantity. 
B) equal the cost of output. 
C) plus external cost be equal to output price. 
D) minus external cost be equal to output price. 
A) be equal to output quantity. 
B) equal the cost of output. 
C) plus external cost be equal to output price. 
D) minus external cost be equal to output price.

Exam 6: Measuring Total Output and Income

To say that individuals maximize is illustrated by saying:

-(Exhibit: Markets and Efficiency)A producer will produce additional apples:

An allocation of resources that achieves the maximum net benefit from all activities is:

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

Economists assume that consumers attempt to maximize utility.

The failure to achieve an efficient allocation of resources is called market failure.

-(Exhibit: Market Failure 1)A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .

When the market does not result in an efficient allocation of scarce resources, economists call this:

A boundary that limits the range of choices an individual or a firm can make is:

The Case in Point on Preventing Oil Spills stated that an economist who studied the costs and benefits of preventing oil spills in coastal waters and rivers concluded that:

Common property resources have never been a serious problem in the efficient allocation of resources.

The free-rider problem is most important for:

A characteristic of a competitive free market is that, if external costs exist, they:

To determine the quantity of any activity that will maximize net benefit, economists employ the ________ rule.

The amount by which an additional unit of an activity increases total cost is:

A set of rules that specify the ways in which the resource for which they are defined may be used are:

The _______ is the amount by which an additional unit of activity increases its cost.

An inefficient allocation of resources is one that does not maximize the net benefits of each activity.

For markets to operate efficiently, it is necessary that private marginal cost:

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro Inflation and Unemployment

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

-(Exhibit: Market Failure 1)A competitive market, free of market failures, will achieve an equilibrium price _ and an equilibrium quantity _ .