Question 1

Opportunity cost is:

Accepted Answer

A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice. 
A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice.

Question 2

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 3

A college student stays up late writing a history paper and as a result sleeps through her morning economics class. What is the cost of sleeping through the class?

Accepted Answer

There is no monetary price, but there is

Question 4

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  People usually exploit opportunities to make themselves better off. 
D)  Marginal analysis. 
A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  People usually exploit opportunities to make themselves better off. 
D)  Marginal analysis.

Question 5

A trade-off between equity and efficiency may exist because of all of the following EXCEPT that:

Accepted Answer

A)  allocating resources fairly may cause efficiency. 
B)  an efficient allocation of resources may lead to an outcome that most people consider unfair. 
C)  policies that promote equity often come at a cost of decreased efficiency. 
D)  allocating resources fairly may cause inefficiency. 
A)  allocating resources fairly may cause efficiency. 
B)  an efficient allocation of resources may lead to an outcome that most people consider unfair. 
C)  policies that promote equity often come at a cost of decreased efficiency. 
D)  allocating resources fairly may cause inefficiency.

Question 6

Which of the following statements 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)  Some very talented, skilled individuals who can do some things better than most people should specialize in doing that 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)  Some very talented, skilled individuals who can do some things better than most people should specialize in doing that one thing.

Question 7

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Accepted Answer

A)  equity versus efficiency. 
B)  how one person's spending is another person's income. 
C)  economic incentives. 
D)  marginal analysis. 
A)  equity versus efficiency. 
B)  how one person's spending is another person's income. 
C)  economic incentives. 
D)  marginal analysis.

Question 8

Which of the following is NOT a reason that markets usually lead to efficiency?

Accepted Answer

A)  People are naturally efficient. 
B)  Individuals have incentives to offer what people want. 
C)  Trade encourages efficiency. 
D)  Inefficient firms will lose business. 
A)  People are naturally efficient. 
B)  Individuals have incentives to offer what people want. 
C)  Trade encourages efficiency. 
D)  Inefficient firms will lose business.

Question 9

In most cases, economic efficiency is achieved through:

Accepted Answer

A)  incentives built into a market economy. 
B)  regulation. 
C)  individuals seeking out opportunities that involve no risk. 
D)  maximizing equity. 
A)  incentives built into a market economy. 
B)  regulation. 
C)  individuals seeking out opportunities that involve no risk. 
D)  maximizing equity.

Question 10

You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:

Accepted Answer

A)  $100. 
B)  your enjoyment of the new CD player. 
C)  both the $100 and your enjoyment of the new CD player. 
D)  impossible to determine. 
A)  $100. 
B)  your enjoyment of the new CD player. 
C)  both the $100 and your enjoyment of the new CD player. 
D)  impossible to determine.

Question 11

Which of the following principles underlies the interaction of individual choices?

Accepted Answer

A)  Resources are scarce. 
B)  There are gains from trade. 
C)  Marginal analysis is used for "how much" decisions. 
D)  People usually exploit opportunities to make themselves better off. 
A)  Resources are scarce. 
B)  There are gains from trade. 
C)  Marginal analysis is used for "how much" decisions. 
D)  People usually exploit opportunities to make themselves better off.

Question 12

Owen had a typewriter shop, but he went out of business because no one buys typewriters anymore. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  People usually exploit opportunities to make themselves better off. 
C)  Markets move toward equilibrium. 
D)  One person's spending is another person's income. 
A)  Resources are scarce. 
B)  People usually exploit opportunities to make themselves better off. 
C)  Markets move toward equilibrium. 
D)  One person's spending is another person's income.

Question 13

Too little spending in an economy often leads to:

Accepted Answer

A)  a recession. 
B)  inflation. 
C)  equilibrium. 
D)  efficiency. 
A)  a recession. 
B)  inflation. 
C)  equilibrium. 
D)  efficiency.

Question 14

Which of the following principles underlies the gains from trade?

Accepted Answer

A)  Resources are scarce. 
B)  Marginal analysis is used for "how much" decisions. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  People usually exploit opportunities to make themselves better off. 
A)  Resources are scarce. 
B)  Marginal analysis is used for "how much" decisions. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  People usually exploit opportunities to make themselves better off.

Question 15

Overall, trade between China and the United States will:

Accepted Answer

A)  benefit the United States more than China. 
B)  benefit China more than the United States. 
C)  benefit both countries. 
D)  hurt both countries. 
A)  benefit the United States more than China. 
B)  benefit China more than the United States. 
C)  benefit both countries. 
D)  hurt both countries.

Question 16

The federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
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)  Resources are scarce. 
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 17

Because people usually exploit opportunities to make themselves better off, which of the following methods of reducing pollution is likely to be most effective?

Accepted Answer

A)  appealing to the polluter to be a good citizen 
B)  publicizing the harmful effects of pollution 
C)  imposing a tax per unit of pollution generated 
D)  All three methods are equally effective. 
A)  appealing to the polluter to be a good citizen 
B)  publicizing the harmful effects of pollution 
C)  imposing a tax per unit of pollution generated 
D)  All three methods are equally effective.

Question 18

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Accepted Answer

A) True 
 B)False

Question 19

When markets don't achieve efficiency:

Accepted Answer

A)  they must achieve equity. 
B)  government must be participating in the market. 
C)  government may intervene to improve society's welfare. 
D)  they should be closed. 
A)  they must achieve equity. 
B)  government must be participating in the market. 
C)  government may intervene to improve society's welfare. 
D)  they should be closed.

Question 20

One day, Martha wakes up and in frustration yells, "Decisions, decisions, decisions! Why do I have to make decisions about everything?" Martha's frustrations stem from the fact that:

Accepted Answer

A)  like all economic beings, she faces constraints and cannot have everything she wants. 
B)  she doesn't realize she can have everything she wants. 
C)  she is the only one who faces constraints in life. 
D)  she really doesn't want anything. 
A)  like all economic beings, she faces constraints and cannot have everything she wants. 
B)  she doesn't realize she can have everything she wants. 
C)  she is the only one who faces constraints in life. 
D)  she really doesn't want anything.

Opportunity cost is:

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

A college student stays up late writing a history paper and as a result sleeps through her morning economics class. What is the cost of sleeping through the class?

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

A trade-off between equity and efficiency may exist because of all of the following EXCEPT that:

Which of the following statements is NOT true?

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Which of the following is NOT a reason that markets usually lead to efficiency?

In most cases, economic efficiency is achieved through:

You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:

Which of the following principles underlies the interaction of individual choices?

Owen had a typewriter shop, but he went out of business because no one buys typewriters anymore. This statement best represents this economic concept:

Too little spending in an economy often leads to:

Which of the following principles underlies the gains from trade?

Overall, trade between China and the United States will:

The federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept:

Because people usually exploit opportunities to make themselves better off, which of the following methods of reducing pollution is likely to be most effective?

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

When markets don't achieve efficiency:

One day, Martha wakes up and in frustration yells, "Decisions, decisions, decisions! Why do I have to make decisions about everything?" Martha's frustrations stem from the fact that:

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

Opportunity cost is:

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

A college student stays up late writing a history paper and as a result sleeps through her morning economics class. What is the cost of sleeping through the class?

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

A trade-off between equity and efficiency may exist because of all of the following EXCEPT that:

Which of the following statements is NOT true?

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Which of the following is NOT a reason that markets usually lead to efficiency?

In most cases, economic efficiency is achieved through:

You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:

Which of the following principles underlies the interaction of individual choices?

Owen had a typewriter shop, but he went out of business because no one buys typewriters anymore. This statement best represents this economic concept:

Too little spending in an economy often leads to:

Which of the following principles underlies the gains from trade?

Overall, trade between China and the United States will:

The federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept:

Because people usually exploit opportunities to make themselves better off, which of the following methods of reducing pollution is likely to be most effective?

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

When markets don't achieve efficiency:

One day, Martha wakes up and in frustration yells, "Decisions, decisions, decisions! Why do I have to make decisions about everything?" Martha's frustrations stem from the fact that:

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