Question 1

An economy is efficient if it is:

Accepted Answer

A)  possible to produce more of all goods and services. 
B)  possible to produce more of one good without producing less of another. 
C)  not possible to produce more of one good without producing less of another good. 
D)  producing a combination of goods. 
A)  possible to produce more of all goods and services. 
B)  possible to produce more of one good without producing less of another. 
C)  not possible to produce more of one good without producing less of another good. 
D)  producing a combination of goods.

Question 2

Intel finds it difficult to hire enough skilled computer engineers. This statement best represents this economic concept:

Accepted Answer

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

Question 3

Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people usually exploit opportunities to make themselves better off?

Accepted Answer

A)  a limited number of free early-bird parking passes given only to those who arrive prior to 6 A.M. 
B)  a toll road that requires each car to pay a fee to enter the city center 
C)  an increase in the price of subway and bus fare to and from the city 
D)  asking citizens to carpool 
A)  a limited number of free early-bird parking passes given only to those who arrive prior to 6 A.M. 
B)  a toll road that requires each car to pay a fee to enter the city center 
C)  an increase in the price of subway and bus fare to and from the city 
D)  asking citizens to carpool

Question 4

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

Accepted Answer

A)  less income for other people. 
B)  more income for other people. 
C)  no impact on other people. 
D)  inflation. 
A)  less income for other people. 
B)  more income for other people. 
C)  no impact on other people. 
D)  inflation.

Question 5

According to the textbook, markets usually lead to efficiency.

Accepted Answer

A) True 
 B)False

Question 6

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. 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 7

Gains from trade arise because of:

Accepted Answer

A)  specialization in production. 
B)  specialization in consumption. 
C)  marginal analysis. 
D)  individual choice. 
A)  specialization in production. 
B)  specialization in consumption. 
C)  marginal analysis. 
D)  individual choice.

Question 8

Resources are being used efficiently when:

Accepted Answer

A)  scarcity is no longer an issue. 
B)  they are also used equitably. 
C)  every opportunity to make people better off without making others worse off has been seized. 
D)  gains from trade are still available. 
A)  scarcity is no longer an issue. 
B)  they are also used equitably. 
C)  every opportunity to make people better off without making others worse off has been seized. 
D)  gains from trade are still available.

Question 9

Which of the following is NOT true?

Accepted Answer

A)  Resources are scarce when they can satisfy everyone's wants. 
B)  The real cost of a choice is what you must give up to enjoy that choice. 
C)  People typically make choices that will make them better off. 
D)  Rational people use marginal analysis when making "how much" decisions. 
A)  Resources are scarce when they can satisfy everyone's wants. 
B)  The real cost of a choice is what you must give up to enjoy that choice. 
C)  People typically make choices that will make them better off. 
D)  Rational people use marginal analysis when making "how much" decisions.

Question 10

During the Great Depression, consumers and producers in the United States dramatically reduced their spending as compared to the quantity of goods and services available at the time. 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

Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of:

Accepted Answer

A)  marginal analysis. 
B)  benefit analysis. 
C)  cost analysis. 
D)  equilibrium analysis. 
A)  marginal analysis. 
B)  benefit analysis. 
C)  cost analysis. 
D)  equilibrium analysis.

Question 12

When a market is in equilibrium:

Accepted Answer

A)  a person could do better if he or she did something different. 
B)  people have exploited all opportunities to make themselves better off. 
C)  government has directed the market in such a way as to achieve this point. 
D)  markets are not working efficiently. 
A)  a person could do better if he or she did something different. 
B)  people have exploited all opportunities to make themselves better off. 
C)  government has directed the market in such a way as to achieve this point. 
D)  markets are not working efficiently.

Question 13

The opportunity cost of something is:

Accepted Answer

A)  greater during periods of rising prices. 
B)  equal to the money cost. 
C)  less during periods of falling prices. 
D)  what is given up to acquire it. 
A)  greater during periods of rising prices. 
B)  equal to the money cost. 
C)  less during periods of falling prices. 
D)  what is given up to acquire it.

Question 14

Because one person's spending is another person's income, if one group in the economy spends more, they increase their share of income and decrease the incomes of other groups.

Accepted Answer

A) True 
 B)False

Question 15

A two-year-old child is eating raisins one at a time from a large box. Even though the child doesn't understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Accepted Answer

The child stops eating when he

Question 16

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

Accepted Answer

A)  not considering that they have already paid for their tickets. 
B)  making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C)  thinking only about the benefits of avoiding traffic. 
D)  underestimating the value of staying for the rest of the game. 
A)  not considering that they have already paid for their tickets. 
B)  making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C)  thinking only about the benefits of avoiding traffic. 
D)  underestimating the value of staying for the rest of the game.

Question 17

The cost of leaving a championship soccer match before it ends is _____, while the cost of staying for the entire match is _____.

Accepted Answer

A)  the opportunity cost of not seeing the winning goal with two minutes to go; zero-the ticket to the match is already paid so there is no cost 
B)  the opportunity cost of not seeing the winning goal with two minutes to go; the opportunity cost of whatever else you could have done during that time 
C)  zero-you don't have to pay to leave; zero-the ticket to the match is already paid, so there is no cost 
D)  the cost of the ticket; the cost of the ticket 
A)  the opportunity cost of not seeing the winning goal with two minutes to go; zero-the ticket to the match is already paid so there is no cost 
B)  the opportunity cost of not seeing the winning goal with two minutes to go; the opportunity cost of whatever else you could have done during that time 
C)  zero-you don't have to pay to leave; zero-the ticket to the match is already paid, so there is no cost 
D)  the cost of the ticket; the cost of the ticket

Question 18

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

Accepted Answer

A)  compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B)  compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C)  compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D)  make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study. 
A)  compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B)  compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C)  compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D)  make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.

Question 19

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. 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 20

The existence of government intervention often suggests that:

Accepted Answer

A)  markets may not be able to provide for efficient results all of the time. 
B)  individual actions have no side effects. 
C)  equilibrium will be achieved through this intervention. 
D)  markets can efficiently manage the allocation of goods. 
A)  markets may not be able to provide for efficient results all of the time. 
B)  individual actions have no side effects. 
C)  equilibrium will be achieved through this intervention. 
D)  markets can efficiently manage the allocation of goods.

An economy is efficient if it is:

Intel finds it difficult to hire enough skilled computer engineers. This statement best represents this economic concept:

Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people usually exploit opportunities to make themselves better off?

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

According to the textbook, markets usually lead to efficiency.

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. This statement best represents this economic concept:

Gains from trade arise because of:

Resources are being used efficiently when:

Which of the following is NOT true?

During the Great Depression, consumers and producers in the United States dramatically reduced their spending as compared to the quantity of goods and services available at the time. This statement best represents this economic concept:

Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of:

When a market is in equilibrium:

The opportunity cost of something is:

Because one person's spending is another person's income, if one group in the economy spends more, they increase their share of income and decrease the incomes of other groups.

A two-year-old child is eating raisins one at a time from a large box. Even though the child doesn't understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

The cost of leaving a championship soccer match before it ends is _, while the cost of staying for the entire match is _.

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. This statement best represents this economic concept:

The existence of government intervention often suggests 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

An economy is efficient if it is:

Intel finds it difficult to hire enough skilled computer engineers. This statement best represents this economic concept:

Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people usually exploit opportunities to make themselves better off?

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

According to the textbook, markets usually lead to efficiency.

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. This statement best represents this economic concept:

Gains from trade arise because of:

Resources are being used efficiently when:

Which of the following is NOT true?

During the Great Depression, consumers and producers in the United States dramatically reduced their spending as compared to the quantity of goods and services available at the time. This statement best represents this economic concept:

Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of:

When a market is in equilibrium:

The opportunity cost of something is:

Because one person's spending is another person's income, if one group in the economy spends more, they increase their share of income and decrease the incomes of other groups.

A two-year-old child is eating raisins one at a time from a large box. Even though the child doesn't understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

The cost of leaving a championship soccer match before it ends is _____, while the cost of staying for the entire match is _____.

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. This statement best represents this economic concept:

The existence of government intervention often suggests 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

The cost of leaving a championship soccer match before it ends is _, while the cost of staying for the entire match is _.