Question 1

If the value of homes in University City increases and as a result the people of University City spend more, incomes in University City will:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected.

Question 2

When a chef prepares a dinner for a customer, which of the following is physical capital?

Accepted Answer

A)  the chef 
B)  the oven 
C)  the food ingredients 
D)  the chef's training and experience 
A)  the chef 
B)  the oven 
C)  the food ingredients 
D)  the chef's training and experience

Question 3

Market equilibrium will always be efficient even if it is not equitable.

Accepted Answer

A) True 
 B)False

Question 4

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. 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)  "How much" is a decision at the margin. 
C)  People usually exploit opportunities to make themselves better off. 
D)  There are gains from trade. 
A)  The real cost of something is what you must give up to get it. 
B)  "How much" is a decision at the margin. 
C)  People usually exploit opportunities to make themselves better off. 
D)  There are gains from trade.

Question 5

Which of the following is NOT a resource in the production of rice?

Accepted Answer

A)  fertile land 
B)  labor 
C)  capital equipment 
D)  money 
A)  fertile land 
B)  labor 
C)  capital equipment 
D)  money

Question 6

Because people usually exploit opportunities to make themselves better off, if the price of gasoline falls and stays low for an extended period, we expect people to:

Accepted Answer

A)  reduce their reliance on gasoline-powered cars. 
B)  buy larger and less fuel-efficient cars. 
C)  use more public transportation. 
D)  ride bicycles. 
A)  reduce their reliance on gasoline-powered cars. 
B)  buy larger and less fuel-efficient cars. 
C)  use more public transportation. 
D)  ride bicycles.

Question 7

If every individual were required to be self-sufficient:

Accepted Answer

A)  living standards would fall. 
B)  living standards for some individuals would fall, but for others they would rise. 
C)  living standards would rise. 
D)  it's impossible to say how living standards would change. 
A)  living standards would fall. 
B)  living standards for some individuals would fall, but for others they would rise. 
C)  living standards would rise. 
D)  it's impossible to say how living standards would change.

Question 8

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

Accepted Answer

A)  People usually exploit opportunities to make themselves better off. 
B)  Resources should be used as efficiently as possible to achieve society's goals. 
C)  When markets don't achieve efficiency, government intervention can improve society's welfare. 
D)  Government policies can change spending. 
A)  People usually exploit opportunities to make themselves better off. 
B)  Resources should be used as efficiently as possible to achieve society's goals. 
C)  When markets don't achieve efficiency, government intervention can improve society's welfare. 
D)  Government policies can change spending.

Question 9

For which of the following decisions would marginal analysis be MOST relevant?

Accepted Answer

A)  Should George accept a job with Delta Airlines or with Greenpeace? 
B)  Should Mary go to graduate school after graduating from college? 
C)  Should Vevik emigrate to the United States or stay in India? 
D)  Should Hong work an additional hour or take a short nap? 
A)  Should George accept a job with Delta Airlines or with Greenpeace? 
B)  Should Mary go to graduate school after graduating from college? 
C)  Should Vevik emigrate to the United States or stay in India? 
D)  Should Hong work an additional hour or take a short nap?

Question 10

Macroeconomics deals with:

Accepted Answer

A)  bits and pieces of the economy. 
B)  how a business unit should operate profitably. 
C)  the working of the entire economy or large sectors of it. 
D)  how individuals make decisions. 
A)  bits and pieces of the economy. 
B)  how a business unit should operate profitably. 
C)  the working of the entire economy or large sectors of it. 
D)  how individuals make decisions.

Question 11

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

Accepted Answer

A) True 
 B)False

Question 12

When the San Francisco city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities, he responds that the $1 million improvement will not happen because "that money could be spent building 70 curb ramps." 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)  "How much" is a decision at the margin. 
D)  When markets don't achieve efficiency, government intervention can improve society's welfare. 
A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  "How much" is a decision at the margin. 
D)  When markets don't achieve efficiency, government intervention can improve society's welfare.

Question 13

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Accepted Answer

A)  hurt Allison's community because Allison's spending will be income for people in the large city. 
B)  hurt the city because Allison will take the goods that she purchases back home to her small town. 
C)  help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D)  help the city because people from small towns usually buy things that people in big cities don't want. 
A)  hurt Allison's community because Allison's spending will be income for people in the large city. 
B)  hurt the city because Allison will take the goods that she purchases back home to her small town. 
C)  help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D)  help the city because people from small towns usually buy things that people in big cities don't want.

Question 14

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Accepted Answer

A)  Karl Marx 
B)  David Ricardo 
C)  Adam Smith 
D)  John Maynard Keynes 
A)  Karl Marx 
B)  David Ricardo 
C)  Adam Smith 
D)  John Maynard Keynes

Question 15

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

Accepted Answer

A)  $45,000 plus the three weeks of vacation 
B)  $45,000 per year 
C)  one week of vacation 
D)  two weeks of vacation 
A)  $45,000 plus the three weeks of vacation 
B)  $45,000 per year 
C)  one week of vacation 
D)  two weeks of vacation

Question 16

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Accepted Answer

A)  is efficient. 
B)  cannot be efficient, since efficiency requires a more nearly equal distribution of income. 
C)  may be efficient. 
D)  is neither efficient nor equitable. 
A)  is efficient. 
B)  cannot be efficient, since efficiency requires a more nearly equal distribution of income. 
C)  may be efficient. 
D)  is neither efficient nor equitable.

Question 17

Trade allows people to get more of what they want.

Accepted Answer

A) True 
 B)False

Question 18

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

Accepted Answer

A)  zero. 
B)  $260. 
C)  whatever else she would have done with the 48 hours. 
D)  The cost is impossible to determine. 
A)  zero. 
B)  $260. 
C)  whatever else she would have done with the 48 hours. 
D)  The cost is impossible to determine.

Question 19

You and your roommate are taking the same economics class. When it comes to doing homework assignments, your roommate draws beautifully precise graphs, while you are an extremely fast typist. Therefore, you and your roommate work on the assignments together. Which of the 12 principles is at work here?

Accepted Answer

There are gains from trade. Wh

Question 20

The trade-off between equity and efficiency occurs because:

Accepted Answer

A)  the efficient allocation of resources is bad for business and industry. 
B)  allocating resources fairly may cause inefficiency. 
C)  everyone must pay more tax to ensure equity. 
D)  efficiency is politically unpopular. 
A)  the efficient allocation of resources is bad for business and industry. 
B)  allocating resources fairly may cause inefficiency. 
C)  everyone must pay more tax to ensure equity. 
D)  efficiency is politically unpopular.

If the value of homes in University City increases and as a result the people of University City spend more, incomes in University City will:

When a chef prepares a dinner for a customer, which of the following is physical capital?

Market equilibrium will always be efficient even if it is not equitable.

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. This statement best represents this economic concept:

Which of the following is NOT a resource in the production of rice?

Because people usually exploit opportunities to make themselves better off, if the price of gasoline falls and stays low for an extended period, we expect people to:

If every individual were required to be self-sufficient:

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

For which of the following decisions would marginal analysis be MOST relevant?

Macroeconomics deals with:

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Trade allows people to get more of what they want.

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

The trade-off between equity and efficiency occurs because:

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

If the value of homes in University City increases and as a result the people of University City spend more, incomes in University City will:

When a chef prepares a dinner for a customer, which of the following is physical capital?

Market equilibrium will always be efficient even if it is not equitable.

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. This statement best represents this economic concept:

Which of the following is NOT a resource in the production of rice?

Because people usually exploit opportunities to make themselves better off, if the price of gasoline falls and stays low for an extended period, we expect people to:

If every individual were required to be self-sufficient:

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

For which of the following decisions would marginal analysis be MOST relevant?

Macroeconomics deals with:

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Trade allows people to get more of what they want.

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

The trade-off between equity and efficiency occurs because:

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