Question 1

Nara has gone to three movies this week. She has some extra money, so she decides to go to another. 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)  There are gains from trade. 
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)  There are gains from trade.

Question 2

If equilibrium exists:

Accepted Answer

A)  all individuals must have an equal amount of income. 
B)  the price in that market will not fluctuate by more than 5%. 
C)  there will be no remaining opportunities for individuals to make themselves better off. 
D)  the number of buyers will equal the number of sellers. 
A)  all individuals must have an equal amount of income. 
B)  the price in that market will not fluctuate by more than 5%. 
C)  there will be no remaining opportunities for individuals to make themselves better off. 
D)  the number of buyers will equal the number of sellers.

Question 3

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

Accepted Answer

A)  marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero. 
B)  opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference. 
C)  efficiency: If their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt. 
D)  equity: it is unfair that some people are still paying off their mortgage. 
A)  marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero. 
B)  opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference. 
C)  efficiency: If their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt. 
D)  equity: it is unfair that some people are still paying off their mortgage.

Question 4

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

Accepted Answer

A)  opportunity-cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision making. 
A)  opportunity-cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision making.

Question 5

The concept of the margin deals with:

Accepted Answer

A)  making incremental choices. 
B)  all or none of something. 
C)  engaging in unethical activities. 
D)  making difficult choices. 
A)  making incremental choices. 
B)  all or none of something. 
C)  engaging in unethical activities. 
D)  making difficult choices.

Question 6

The study of a single firm and how it determines prices falls under the study of:

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  economic growth. 
D)  fiscal policy. 
A)  macroeconomics. 
B)  microeconomics. 
C)  economic growth. 
D)  fiscal policy.

Question 7

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following can best be considered to be a resource used in the production of computers?

Accepted Answer

A)  money from investors 
B)  wages of computer engineers 
C)  computer engineers 
D)  taxes on the profits from the sale of the computers 
A)  money from investors 
B)  wages of computer engineers 
C)  computer engineers 
D)  taxes on the profits from the sale of the computers

Question 9

Which of the following is a question of marginal analysis?

Accepted Answer

A)  What additional output does a family business produce when it hires one more worker? 
B)  How do tax cuts change the growth rate of median income? 
C)  When a large corporation lays off workers, how do profits change if sales remain constant? 
D)  Should a commuter take the bus to work rather than driving. 
A)  What additional output does a family business produce when it hires one more worker? 
B)  How do tax cuts change the growth rate of median income? 
C)  When a large corporation lays off workers, how do profits change if sales remain constant? 
D)  Should a commuter take the bus to work rather than driving.

Question 10

The problem of determining what goods and services society should produce:

Accepted Answer

A)  exists because we can produce more than we need or want. 
B)  exists because there are not enough resources to provide all of the goods and services that people want. 
C)  would not exist if all goods and services were scarce. 
D)  would not exist if government owned all of the resources. 
A)  exists because we can produce more than we need or want. 
B)  exists because there are not enough resources to provide all of the goods and services that people want. 
C)  would not exist if all goods and services were scarce. 
D)  would not exist if government owned all of the resources.

Question 11

A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7; she could work at the college library at a wage of $6; or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

Accepted Answer

A)  $7. 
B)  $6. 
C)  $13. 
D)  $0. 
A)  $7. 
B)  $6. 
C)  $13. 
D)  $0.

Question 12

Which is NOT an example of a resource?

Accepted Answer

A)  land 
B)  labor 
C)  capital 
D)  production 
A)  land 
B)  labor 
C)  capital 
D)  production

Question 13

You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time. 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 14

Which of the following methods of encouraging recycling is likely to be MOST effective because people usually exploit opportunities to make themselves better off?

Accepted Answer

A)  appealing to consumers to be a good citizen 
B)  publicizing the advantages of recycling 
C)  imposing a tax per unit of garbage generated 
D)  All three methods are equally effective. 
A)  appealing to consumers to be a good citizen 
B)  publicizing the advantages of recycling 
C)  imposing a tax per unit of garbage generated 
D)  All three methods are equally effective.

Question 15

Economists believe that resources should be used as efficiently as possible to:

Accepted Answer

A)  achieve society's goals. 
B)  eliminate scarcity. 
C)  reduce inequity. 
D)  maximize profits. 
A)  achieve society's goals. 
B)  eliminate scarcity. 
C)  reduce inequity. 
D)  maximize profits.

Question 16

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You decide to have a burger today, but if they were out of burgers, you would have bought a bagel. Your opportunity cost of buying a burger is your enjoyment of the:

Accepted Answer

A)  burger. 
B)  bagel. 
C)  burrito. 
D)  bagel and the burrito. 
A)  burger. 
B)  bagel. 
C)  burrito. 
D)  bagel and the burrito.

Question 17

A friend comes up to you and offers you a free ticket to a professional baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game?

Accepted Answer

A)  The cost is zero-the ticket is free. 
B)  $65 
C)  $40 
D)  $55 
A)  The cost is zero-the ticket is free. 
B)  $65 
C)  $40 
D)  $55

Question 18

Market failure occurs when:

Accepted Answer

A)  prices of essential goods such as gas become very high. 
B)  individual actions have side effects that are not properly taken into account. 
C)  mutually beneficial trades take place. 
D)  a business declares bankruptcy. 
A)  prices of essential goods such as gas become very high. 
B)  individual actions have side effects that are not properly taken into account. 
C)  mutually beneficial trades take place. 
D)  a business declares bankruptcy.

Question 19

When markets fail:

Accepted Answer

A)  government intervention may help. 
B)  the market realizes the maximum possible gains from trade given the available resources. 
C)  there may still be an efficient allocation of resources. 
D)  no goods and services are produced. 
A)  government intervention may help. 
B)  the market realizes the maximum possible gains from trade given the available resources. 
C)  there may still be an efficient allocation of resources. 
D)  no goods and services are produced.

Question 20

The BEST example of making a choice at the margin is whether to:

Accepted Answer

A)  buy a new computer. 
B)  quit your job. 
C)  eat another slice of pizza. 
D)  attend college. 
A)  buy a new computer. 
B)  quit your job. 
C)  eat another slice of pizza. 
D)  attend college.

Nara has gone to three movies this week. She has some extra money, so she decides to go to another. This statement best represents this economic concept:

If equilibrium exists:

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

The concept of the margin deals with:

The study of a single firm and how it determines prices falls under the study of:

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

Which of the following can best be considered to be a resource used in the production of computers?

Which of the following is a question of marginal analysis?

The problem of determining what goods and services society should produce:

Which is NOT an example of a resource?

You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time. This statement best represents this economic concept:

Which of the following methods of encouraging recycling is likely to be MOST effective because people usually exploit opportunities to make themselves better off?

Economists believe that resources should be used as efficiently as possible to:

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You decide to have a burger today, but if they were out of burgers, you would have bought a bagel. Your opportunity cost of buying a burger is your enjoyment of the:

Market failure occurs when:

When markets fail:

The BEST example of making a choice at the margin is whether to:

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

Nara has gone to three movies this week. She has some extra money, so she decides to go to another. This statement best represents this economic concept:

If equilibrium exists:

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

The concept of the margin deals with:

The study of a single firm and how it determines prices falls under the study of:

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

Which of the following can best be considered to be a resource used in the production of computers?

Which of the following is a question of marginal analysis?

The problem of determining what goods and services society should produce:

Which is NOT an example of a resource?

You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time. This statement best represents this economic concept:

Which of the following methods of encouraging recycling is likely to be MOST effective because people usually exploit opportunities to make themselves better off?

Economists believe that resources should be used as efficiently as possible to:

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You decide to have a burger today, but if they were out of burgers, you would have bought a bagel. Your opportunity cost of buying a burger is your enjoyment of the:

Market failure occurs when:

When markets fail:

The BEST example of making a choice at the margin is whether to:

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