Question 1

Which of the following is NOT one of the four principles for understanding individual choice?

Accepted Answer

A)  Resources are scarce. 
B)  Overall spending sometimes gets out of line with the economy's productive capacity. 
C)  "How much" is a decision at the margin. 
D)  People usually take advantage of opportunities to make themselves better off. 
A)  Resources are scarce. 
B)  Overall spending sometimes gets out of line with the economy's productive capacity. 
C)  "How much" is a decision at the margin. 
D)  People usually take advantage of opportunities to make themselves better off.

Question 2

How people choose among the alternatives available to them is:

Accepted Answer

A)  not part of the study of economics. 
B)  impossible to describe. 
C)  the study of microeconomics. 
D)  not important in the study of microeconomics. 
A)  not part of the study of economics. 
B)  impossible to describe. 
C)  the study of microeconomics. 
D)  not important in the study of microeconomics.

Question 3

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

Accepted Answer

A)  be more helpful to customers than if he or she chose plan A. 
B)  not be thinking wisely in choosing this plan. 
C)  be less helpful to customers than if he or she chose plan A. 
D)  not alter his or her behavior. 
A)  be more helpful to customers than if he or she chose plan A. 
B)  not be thinking wisely in choosing this plan. 
C)  be less helpful to customers than if he or she chose plan A. 
D)  not alter his or her behavior.

Question 4

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

Accepted Answer

A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity. 
A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity.

Question 5

In baseball, when one manager decides to send in a pinch hitter, the other manager often changes pitchers. This sometimes causes the first manager to send in a new pinch hitter. Once both managers decide that no more player substitutions will benefit their team, the situation has reached:

Accepted Answer

A)  efficiency. 
B)  equilibrium. 
C)  equity. 
D)  the market. 
A)  efficiency. 
B)  equilibrium. 
C)  equity. 
D)  the market.

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 picks up the rooms, and they make it to the football game on time. This statement best represents this economic concept:

Accepted Answer

A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  Markets usually lead to efficiency. 
D)  One person's spending is another person's income. 
A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  Markets usually lead to efficiency. 
D)  One person's spending is another person's income.

Question 7

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Accepted Answer

A)  The real cost of something is what you must give up to get it. 
B)  People usually exploit opportunities to make themselves better off. 
C)  There are gains from trade. 
D)  Markets move toward equilibrium. 
A)  The real cost of something is what you must give up to get it. 
B)  People usually exploit opportunities to make themselves better off. 
C)  There are gains from trade. 
D)  Markets move toward equilibrium.

Question 8

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

Accepted Answer

A)  scarcity. 
B)  efficiency. 
C)  opportunity cost. 
D)  marginal analysis. 
A)  scarcity. 
B)  efficiency. 
C)  opportunity cost. 
D)  marginal analysis.

Question 9

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 10

A market failure occurs when:

Accepted Answer

A)  some people are able to buy many more goods than other people are. 
B)  the individual's pursuit of self-interest means some people will not be able to buy all of the goods they need. 
C)  the individual's pursuit of self-interest makes the society worse off. 
D)  while pursuing their self-interest, some people may make a mistake-for example, they may regret buying a particular car. 
A)  some people are able to buy many more goods than other people are. 
B)  the individual's pursuit of self-interest means some people will not be able to buy all of the goods they need. 
C)  the individual's pursuit of self-interest makes the society worse off. 
D)  while pursuing their self-interest, some people may make a mistake-for example, they may regret buying a particular car.

Question 11

The principle that people will exploit opportunities to do what is best for others is the basis of all predictions by economists about individual behavior.

Accepted Answer

A) True 
 B)False

Question 12

An apartment complex included a fixed price of water in the monthly rent. One day the city decided to attach a water meter to each individual apartment and charge the tenant for actual water usage. As a result, water usage in the apartment complex went way down. Explain this situation using a principle of economics.

Accepted Answer

By charging each person for actual water

Question 13

Which of the following is studied in macroeconomics?

Accepted Answer

A)  the change in automobile sales due to a change in the price of automobiles 
B)  the effect of a tax reduction on the profits of an individual business 
C)  recessions 
D)  the unemployment of workers displaced by technological change in the typesetting industry 
A)  the change in automobile sales due to a change in the price of automobiles 
B)  the effect of a tax reduction on the profits of an individual business 
C)  recessions 
D)  the unemployment of workers displaced by technological change in the typesetting industry

Question 14

An economy has achieved _____ if it _____ pass up any opportunities to make some people better off without making others worse off.

Accepted Answer

A)  efficiency; does not 
B)  equity; does 
C)  efficiency; does 
D)  equity; does not 
A)  efficiency; does not 
B)  equity; does 
C)  efficiency; does 
D)  equity; does not

Question 15

Market failure occurs when the pursuit of self-interest leads to bad results.

Accepted Answer

A) True 
 B)False

Question 16

A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why?

Accepted Answer

For the attorney, the opportunity cost o

Question 17

One person's spending is another person's:

Accepted Answer

A)  loss. 
B)  income. 
C)  physical capital. 
D)  opportunity cost. 
A)  loss. 
B)  income. 
C)  physical capital. 
D)  opportunity cost.

Question 18

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 19

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Accepted Answer

A) True 
 B)False

Question 20

Many college freshmen describe themselves as pre-med, but a very small percentage of these freshmen will ever attend medical school. After the first course in biology or chemistry, many decide to major in something other than the natural sciences. Which of the 12 principles is at work here?

Accepted Answer

Resources are scarce. The scarce resourc

Which of the following is NOT one of the four principles for understanding individual choice?

How people choose among the alternatives available to them is:

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

In baseball, when one manager decides to send in a pinch hitter, the other manager often changes pitchers. This sometimes causes the first manager to send in a new pinch hitter. Once both managers decide that no more player substitutions will benefit their team, the situation has reached:

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 picks up the rooms, and they make it to the football game on time. This statement best represents this economic concept:

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

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.

A market failure occurs when:

The principle that people will exploit opportunities to do what is best for others is the basis of all predictions by economists about individual behavior.

Which of the following is studied in macroeconomics?

An economy has achieved _ if it _ pass up any opportunities to make some people better off without making others worse off.

Market failure occurs when the pursuit of self-interest leads to bad results.

A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why?

One person's spending is another person's:

Equity means that:

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Many college freshmen describe themselves as pre-med, but a very small percentage of these freshmen will ever attend medical school. After the first course in biology or chemistry, many decide to major in something other than the natural sciences. Which of the 12 principles is at work here?

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

Which of the following is NOT one of the four principles for understanding individual choice?

How people choose among the alternatives available to them is:

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

In baseball, when one manager decides to send in a pinch hitter, the other manager often changes pitchers. This sometimes causes the first manager to send in a new pinch hitter. Once both managers decide that no more player substitutions will benefit their team, the situation has reached:

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 picks up the rooms, and they make it to the football game on time. This statement best represents this economic concept:

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

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.

A market failure occurs when:

The principle that people will exploit opportunities to do what is best for others is the basis of all predictions by economists about individual behavior.

Which of the following is studied in macroeconomics?

An economy has achieved _____ if it _____ pass up any opportunities to make some people better off without making others worse off.

Market failure occurs when the pursuit of self-interest leads to bad results.

A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why?

One person's spending is another person's:

Equity means that:

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Many college freshmen describe themselves as pre-med, but a very small percentage of these freshmen will ever attend medical school. After the first course in biology or chemistry, many decide to major in something other than the natural sciences. Which of the 12 principles is at work here?

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

An economy has achieved _ if it _ pass up any opportunities to make some people better off without making others worse off.