Question 1

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

Accepted Answer

The government probably understands prin

Question 2

It is cheaper to produce corn in Kansas than in Death Valley, California, because corn needs a lot of water and moderate temperatures. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  Markets move toward equilibrium. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  Markets usually lead to efficiency. 
A)  Resources are scarce. 
B)  Markets move toward equilibrium. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  Markets usually lead to efficiency.

Question 3

The economic way of thinking entails:

Accepted Answer

A)  the analysis of benefits but not costs. 
B)  the analysis of costs but not benefits. 
C)  making choices at the margin. 
D)  making the distinction between microeconomics and macroeconomics. 
A)  the analysis of benefits but not costs. 
B)  the analysis of costs but not benefits. 
C)  making choices at the margin. 
D)  making the distinction between microeconomics and macroeconomics.

Question 4

Which of the following statements is CORRECT?

Accepted Answer

A)  Resource scarcity is not a major concern in the rich countries of the world. 
B)  Some opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Some very talented, skilled individuals who can do everything better than most people should not specialize in doing any one thing. 
A)  Resource scarcity is not a major concern in the rich countries of the world. 
B)  Some opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Some very talented, skilled individuals who can do everything better than most people should not specialize in doing any one thing.

Question 5

Marginal analysis:

Accepted Answer

A)  refers to decisions about whether to do a bit more or a bit less of an activity. 
B)  helps when making a "how much" choice. 
C)  involves trade-offs. 
D)  refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a "how much" choice, and involves trade-offs. 
A)  refers to decisions about whether to do a bit more or a bit less of an activity. 
B)  helps when making a "how much" choice. 
C)  involves trade-offs. 
D)  refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a "how much" choice, and involves trade-offs.

Question 6

Suppose a local community decides to give all of its citizens over age 60 a parking pass that will enable them to park in the front of parking lots. For people over 60, this policy is:

Accepted Answer

A)  equitable and efficient, since it applies to all citizens over 60. 
B)  equitable but not efficient, since it applies to all citizens over 60. 
C)  efficient but not equitable, since it applies to all citizens over 60. 
D)  neither equitable nor efficient. 
A)  equitable and efficient, since it applies to all citizens over 60. 
B)  equitable but not efficient, since it applies to all citizens over 60. 
C)  efficient but not equitable, since it applies to all citizens over 60. 
D)  neither equitable nor efficient.

Question 7

Equity is the same as efficiency.

Accepted Answer

A) True 
 B)False

Question 8

A resource is anything that:

Accepted Answer

A)  can be used in production. 
B)  you pay for. 
C)  is in scarce supply. 
D)  can be consumed. 
A)  can be used in production. 
B)  you pay for. 
C)  is in scarce supply. 
D)  can be consumed.

Question 9

Which of the following demonstrates how people respond to incentives to make themselves better off?

Accepted Answer

A)  More students major in economics when they hear that salaries for economists are rising. 
B)  Students are assigned dorm rooms through a lottery system. 
C)  Students are encouraged to donate blood because it is the right thing to do. 
D)  Students and faculty are encouraged to wear college apparel to support the college athletic teams. 
A)  More students major in economics when they hear that salaries for economists are rising. 
B)  Students are assigned dorm rooms through a lottery system. 
C)  Students are encouraged to donate blood because it is the right thing to do. 
D)  Students and faculty are encouraged to wear college apparel to support the college athletic teams.

Question 10

When people want more goods and services than are available, the economy undergoes inflation. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  When markets don't achieve efficiency, government intervention can improve society's welfare. 
C)  Overall spending sometimes gets out of line with the economy's productive capacity. 
D)  Government policies can change spending. 
A)  Resources are scarce. 
B)  When markets don't achieve efficiency, government intervention can improve society's welfare. 
C)  Overall spending sometimes gets out of line with the economy's productive capacity. 
D)  Government policies can change spending.

Question 11

Which book illustrates the advantages of specialization using an eighteenth-century pin factory?

Accepted Answer

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

Question 12

As long as individuals know that they can find the goods and services they want in the market, they are willing to forgo being self-sufficient and are willing to specialize.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is FALSE?

Accepted Answer

A)  Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B)  If an economy is efficient, it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C)  Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D)  Markets usually lead to efficiency. 
A)  Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B)  If an economy is efficient, it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C)  Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D)  Markets usually lead to efficiency.

Question 14

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

Accepted Answer

A)  equitable. 
B)  inefficient. 
C)  marginally optimal. 
D)  efficient. 
A)  equitable. 
B)  inefficient. 
C)  marginally optimal. 
D)  efficient.

Question 15

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 16

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 17

At most airports there are multiple security guards ready to screen passengers and their luggage through the X-ray and metal detector checkpoints. The length of the wait for each line is about the same. Why?

Accepted Answer

Passengers will always prefer a shorter

Question 18

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 19

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

Accepted Answer

A) True 
 B)False

Question 20

If government decided to increase taxes or decrease its spending, most likely this was to correct:

Accepted Answer

A)  a recession. 
B)  inflation. 
C)  high unemployment. 
D)  equilibrium. 
A)  a recession. 
B)  inflation. 
C)  high unemployment. 
D)  equilibrium.

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

It is cheaper to produce corn in Kansas than in Death Valley, California, because corn needs a lot of water and moderate temperatures. This statement best represents this economic concept:

The economic way of thinking entails:

Which of the following statements is CORRECT?

Marginal analysis:

Suppose a local community decides to give all of its citizens over age 60 a parking pass that will enable them to park in the front of parking lots. For people over 60, this policy is:

Equity is the same as efficiency.

A resource is anything that:

Which of the following demonstrates how people respond to incentives to make themselves better off?

When people want more goods and services than are available, the economy undergoes inflation. This statement best represents this economic concept:

Which book illustrates the advantages of specialization using an eighteenth-century pin factory?

As long as individuals know that they can find the goods and services they want in the market, they are willing to forgo being self-sufficient and are willing to specialize.

Which of the following statements is FALSE?

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

Specialization and trade usually lead to:

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:

At most airports there are multiple security guards ready to screen passengers and their luggage through the X-ray and metal detector checkpoints. The length of the wait for each line is about the same. Why?

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.

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

If government decided to increase taxes or decrease its spending, most likely this was to correct:

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 1: First Principles

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

It is cheaper to produce corn in Kansas than in Death Valley, California, because corn needs a lot of water and moderate temperatures. This statement best represents this economic concept:

The economic way of thinking entails:

Which of the following statements is CORRECT?

Marginal analysis:

Suppose a local community decides to give all of its citizens over age 60 a parking pass that will enable them to park in the front of parking lots. For people over 60, this policy is:

Equity is the same as efficiency.

A resource is anything that:

Which of the following demonstrates how people respond to incentives to make themselves better off?

When people want more goods and services than are available, the economy undergoes inflation. This statement best represents this economic concept:

Which book illustrates the advantages of specialization using an eighteenth-century pin factory?

As long as individuals know that they can find the goods and services they want in the market, they are willing to forgo being self-sufficient and are willing to specialize.

Which of the following statements is FALSE?

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

Specialization and trade usually lead to:

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:

At most airports there are multiple security guards ready to screen passengers and their luggage through the X-ray and metal detector checkpoints. The length of the wait for each line is about the same. Why?

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.

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

If government decided to increase taxes or decrease its spending, most likely this was to correct:

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters