Question 1

If an economy is efficient:

Accepted Answer

A)  all goods are produced at their maximum quantity. 
B)  all opportunities to make people better off without making other people worse off have been taken. 
C)  more resources have been used to produce specific consumer goods than producer goods. 
D)  prices are the lowest they can possibly be. 
A)  all goods are produced at their maximum quantity. 
B)  all opportunities to make people better off without making other people worse off have been taken. 
C)  more resources have been used to produce specific consumer goods than producer goods. 
D)  prices are the lowest they can possibly be.

Question 2

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

Accepted Answer

A)  charge higher tuition to in-state students. 
B)  award special scholarships to out-of-state students. 
C)  offer high-interest loans to in-state students. 
D)  offer lower tuition to in-state students. 
A)  charge higher tuition to in-state students. 
B)  award special scholarships to out-of-state students. 
C)  offer high-interest loans to in-state students. 
D)  offer lower tuition to in-state students.

Question 3

A key theme fundamental to all of economics is that:

Accepted Answer

A)  wants are limited. 
B)  the United States is a rich country, but we are simply not aware of it. 
C)  people have unlimited wants but limited means to satisfy them. 
D)  resources are unlimited. 
A)  wants are limited. 
B)  the United States is a rich country, but we are simply not aware of it. 
C)  people have unlimited wants but limited means to satisfy them. 
D)  resources are unlimited.

Question 4

We have to make choices because:

Accepted Answer

A)  we have unlimited income. 
B)  resources are scarce. 
C)  resources are infinite. 
D)  with good planning, trade-offs can be avoided. 
A)  we have unlimited income. 
B)  resources are scarce. 
C)  resources are infinite. 
D)  with good planning, trade-offs can be avoided.

Question 5

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Accepted Answer

A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  There are gains from trade. 
D)  People usually take advantage of opportunities to make themselves better off. 
A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  There are gains from trade. 
D)  People usually take advantage of opportunities to make themselves better off.

Question 6

Specialization and trade should lead to all of the following EXCEPT:

Accepted Answer

A)  individuals learning specific skills and earning a salary. 
B)  a decrease in total economic output. 
C)  higher living standards. 
D)  the exchange of goods and services in markets. 
A)  individuals learning specific skills and earning a salary. 
B)  a decrease in total economic output. 
C)  higher living standards. 
D)  the exchange of goods and services in markets.

Question 7

When we are forced to make choices, we are facing the concept of:

Accepted Answer

A)  human capital. 
B)  inflation. 
C)  scarcity. 
D)  market failure. 
A)  human capital. 
B)  inflation. 
C)  scarcity. 
D)  market failure.

Question 8

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

Accepted Answer

A)  be beneficial to both individuals. 
B)  hurt both individuals. 
C)  help Beth but hurt Alice. 
D)  help Alice but hurt Beth. 
A)  be beneficial to both individuals. 
B)  hurt both individuals. 
C)  help Beth but hurt Alice. 
D)  help Alice but hurt Beth.

Question 9

An economic situation is in equilibrium when no individual would be better off taking a different action.

Accepted Answer

A) True 
 B)False

Question 10

In equilibrium there will be no further opportunities for gains from trade.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  People usually exploit opportunities to make themselves better off. 
D)  Resources should be used as efficiently as possible to achieve society's goals. 
A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  People usually exploit opportunities to make themselves better off. 
D)  Resources should be used as efficiently as possible to achieve society's goals.

Question 12

In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
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)  Resources are scarce. 
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 13

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Accepted Answer

A)  one person's spending is another person's income. 
B)  when markets fail to achieve efficiency, government intervention can improve society's welfare. 
C)  there are gains from trade. 
D)  resources should be used as efficiently as possible to achieve society's goals. 
A)  one person's spending is another person's income. 
B)  when markets fail to achieve efficiency, government intervention can improve society's welfare. 
C)  there are gains from trade. 
D)  resources should be used as efficiently as possible to achieve society's goals.

Question 14

Which of the following is the BEST example of making a choice at the margin?

Accepted Answer

A)  buying a new car 
B)  quitting your job 
C)  drinking another cup of coffee 
D)  attending college 
A)  buying a new car 
B)  quitting your job 
C)  drinking another cup of coffee 
D)  attending college

Question 15

An increase in efficiency means that an economy has:

Accepted Answer

A)  reduced its opportunity costs. 
B)  increased the equity of its distribution of goods and services. 
C)  made more people better off without making others worse off. 
D)  increased the incentives for its citizens to follow their own self-interest. 
A)  reduced its opportunity costs. 
B)  increased the equity of its distribution of goods and services. 
C)  made more people better off without making others worse off. 
D)  increased the incentives for its citizens to follow their own self-interest.

Question 16

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  "How much" is a decision at the margin. 
C)  There are gains from trade. 
D)  Resources should be used as efficiently as possible to achieve society's goals. 
A)  Resources are scarce. 
B)  "How much" is a decision at the margin. 
C)  There are gains from trade. 
D)  Resources should be used as efficiently as possible to achieve society's goals.

Question 17

The primary emphasis in macroeconomics is on:

Accepted Answer

A)  how firms set prices. 
B)  the national economy. 
C)  marginal analysis. 
D)  bits and pieces of the economy. 
A)  how firms set prices. 
B)  the national economy. 
C)  marginal analysis. 
D)  bits and pieces of the economy.

Question 18

A new startup airline is offering free round-trip tickets to anywhere to the first 600 people who enter the office on the airline's first day of business. You arrive 24 hours before it is scheduled to open to be sure to get the free tickets, and you buy food from vendors while waiting in line. The cost of the tickets to you is:

Accepted Answer

A)  zero. 
B)  the cost of food while you wait in line. 
C)  the cost of food while you wait in line and the opportunity cost of your time spent in line. 
D)  the actual value of the ticket. 
A)  zero. 
B)  the cost of food while you wait in line. 
C)  the cost of food while you wait in line and the opportunity cost of your time spent in line. 
D)  the actual value of the ticket.

Question 19

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Accepted Answer

A)  Molly; tomatoes; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly 
A)  Molly; tomatoes; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly

Question 20

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of scarcity of resources.

Accepted Answer

A) True 
 B)False

If an economy is efficient:

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

A key theme fundamental to all of economics is that:

We have to make choices because:

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Specialization and trade should lead to all of the following EXCEPT:

When we are forced to make choices, we are facing the concept of:

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

An economic situation is in equilibrium when no individual would be better off taking a different action.

In equilibrium there will be no further opportunities for gains from trade.

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

In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept:

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Which of the following is the BEST example of making a choice at the margin?

An increase in efficiency means that an economy has:

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

The primary emphasis in macroeconomics is on:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of scarcity of resources.

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 an economy is efficient:

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

A key theme fundamental to all of economics is that:

We have to make choices because:

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Specialization and trade should lead to all of the following EXCEPT:

When we are forced to make choices, we are facing the concept of:

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

An economic situation is in equilibrium when no individual would be better off taking a different action.

In equilibrium there will be no further opportunities for gains from trade.

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

In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept:

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Which of the following is the BEST example of making a choice at the margin?

An increase in efficiency means that an economy has:

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

The primary emphasis in macroeconomics is on:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of scarcity of resources.

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

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.