Question 1

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient. 
A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient. D

Question 2

The principle that "trade can make everyone better off" applies to interactions and trade between

Accepted Answer

A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct. 
A)  families. 
B)  states within the United States. 
C)  nations. 
D)  All of the above are correct. D

Question 3

It costs a company $50,000 to produce 5000 beach towels.The company's cost will be $50,009 if it produces an additional beach towel.If the company produces 5,000 beach towels then

Accepted Answer

A)  its average cost is greater than its marginal cost. 
B)  its average cost and its marginal cost are equal. 
C)  its average cost is less than its marginal cost. 
D)  there is insufficient information to compute average and marginal costs. 
A)  its average cost is greater than its marginal cost. 
B)  its average cost and its marginal cost are equal. 
C)  its average cost is less than its marginal cost. 
D)  there is insufficient information to compute average and marginal costs. A

Question 4

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Accepted Answer

A)  intended to reduce unemployment. 
B)  may lead to excessive inflation over time. 
C)  resulted in higher taxes and an increased supply of money. 
D)  Both a and b are correct. 
A)  intended to reduce unemployment. 
B)  may lead to excessive inflation over time. 
C)  resulted in higher taxes and an increased supply of money. 
D)  Both a and b are correct.

Question 5

Trade makes costs

Accepted Answer

A)  higher and reduces the variety of goods and services available. 
B)  higher but raises the variety of goods and services available. 
C)  lower but reduces the variety of goods and services available. 
D)  lower and raises the variety of goods and services available. 
A)  higher and reduces the variety of goods and services available. 
B)  higher but raises the variety of goods and services available. 
C)  lower but reduces the variety of goods and services available. 
D)  lower and raises the variety of goods and services available.

Question 6

If an externality is present in a market,economic efficiency may be enhanced by

Accepted Answer

A)  government intervention. 
B)  a decrease in foreign competition. 
C)  fewer market participants. 
D)  weaker property rights. 
A)  government intervention. 
B)  a decrease in foreign competition. 
C)  fewer market participants. 
D)  weaker property rights.

Question 7

The "broken window fallacy"

Accepted Answer

A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy. 
A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy.

Question 8

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Accepted Answer

A)  only the one with a low level of output per person. 
B)  only the one with a high level of output per person. 
C)  both 
D)  neither 
A)  only the one with a low level of output per person. 
B)  only the one with a high level of output per person. 
C)  both 
D)  neither

Question 9

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.The marginal cost per room per night

Accepted Answer

A)  is $40. 
B)  is $80. 
C)  is $120. 
D)  cannot be determined from the information given. 
A)  is $40. 
B)  is $80. 
C)  is $120. 
D)  cannot be determined from the information given.

Question 10

A rationale for government involvement in a market economy is

Accepted Answer

A)  markets sometimes fail to produce a fair distribution of economic well-being. 
B)  markets sometimes fail to produce an efficient allocation of resources. 
C)  property rights have to be enforced. 
D)  All of the above are correct. 
A)  markets sometimes fail to produce a fair distribution of economic well-being. 
B)  markets sometimes fail to produce an efficient allocation of resources. 
C)  property rights have to be enforced. 
D)  All of the above are correct.

Question 11

Efficiency

Accepted Answer

A)  and equality both refer to how much a society can produce with its resources. 
B)  and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C)  refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D)  refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources 
A)  and equality both refer to how much a society can produce with its resources. 
B)  and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C)  refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D)  refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources

Question 12

With careful planning,we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 13

In a particular country in 1998,the average worker needed to work 40 hours to produce 100 units of output.In that same country in 2008,the average worker needed to work 36 hours to produce 72 units of output.In that country,the productivity of the average worker

Accepted Answer

A)  decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B)  increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C)  decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D)  increased between 1998 and 2008, so we would expect inflation to have increased accordingly. 
A)  decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B)  increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C)  decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D)  increased between 1998 and 2008, so we would expect inflation to have increased accordingly.

Question 14

To promote good economic outcomes,policymakers should strive to enact policies that

Accepted Answer

A)  enhance productivity. 
B)  enhance individuals' market power. 
C)  result in a rapidly-growing quantity of money. 
D)  All of the above are correct. 
A)  enhance productivity. 
B)  enhance individuals' market power. 
C)  result in a rapidly-growing quantity of money. 
D)  All of the above are correct.

Question 15

You have eaten two bowls of ice cream at Sundae School Ice Cream store.You consider eating a third.As a rational consumer you should make your choice by comparing

Accepted Answer

A)  the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. 
B)  the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. 
C)  the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. 
D)  the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs. 
A)  the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. 
B)  the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. 
C)  the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. 
D)  the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.

Question 16

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 17

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

Accepted Answer

A)  Your full room-and-board expenses should always be included. 
B)  None of your room-and-board expenses should ever be included. 
C)  You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D)  You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. 
A)  Your full room-and-board expenses should always be included. 
B)  None of your room-and-board expenses should ever be included. 
C)  You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. 
D)  You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.

Question 18

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Accepted Answer

A)  safety glass in all new cars. 
B)  seat belts in all new cars. 
C)  air bags in all new cars. 
D)  stricter drunk driving laws in all states. 
A)  safety glass in all new cars. 
B)  seat belts in all new cars. 
C)  air bags in all new cars. 
D)  stricter drunk driving laws in all states.

Question 19

Which of the following statements best represents the principle represented by the adage,"There is no such thing as a free lunch"?

Accepted Answer

A)  Melissa can attend the concert only if she takes her sister with her. 
B)  Greg is hungry and homeless. 
C)  Brian must repair the tire on his bike before he can ride it to class. 
D)  Kendra must decide between going to Colorado or Cancun for spring break. 
A)  Melissa can attend the concert only if she takes her sister with her. 
B)  Greg is hungry and homeless. 
C)  Brian must repair the tire on his bike before he can ride it to class. 
D)  Kendra must decide between going to Colorado or Cancun for spring break.

Question 20

If Germany chooses to engage in trade,it

Accepted Answer

A)  will only benefit if it trades with countries that produce goods Germany cannot produce. 
B)  cannot benefit if it trades with less developed countries. 
C)  should first attempt to produce the good itself. 
D)  can benefit by trading with any other country. 
A)  will only benefit if it trades with countries that produce goods Germany cannot produce. 
B)  cannot benefit if it trades with less developed countries. 
C)  should first attempt to produce the good itself. 
D)  can benefit by trading with any other country.

Exam 1: Ten Principles of Economics.

One advantage market economies have over centrally-planned economies is that market economies

The principle that "trade can make everyone better off" applies to interactions and trade between

It costs a company $50,000 to produce 5000 beach towels.The company's cost will be $50,009 if it produces an additional beach towel.If the company produces 5,000 beach towels then

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Trade makes costs

If an externality is present in a market,economic efficiency may be enhanced by

The "broken window fallacy"

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.The marginal cost per room per night

A rationale for government involvement in a market economy is

Efficiency

With careful planning,we can usually get something that we like without having to give up something else that we like.

In a particular country in 1998,the average worker needed to work 40 hours to produce 100 units of output.In that same country in 2008,the average worker needed to work 36 hours to produce 72 units of output.In that country,the productivity of the average worker

To promote good economic outcomes,policymakers should strive to enact policies that

You have eaten two bowls of ice cream at Sundae School Ice Cream store.You consider eating a third.As a rational consumer you should make your choice by comparing

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Which of the following statements best represents the principle represented by the adage,"There is no such thing as a free lunch"?

If Germany chooses to engage in trade,it

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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