Question 1

In the United States,incomes historically have grown about 2 percent per year.At this rate,average income doubles every

Accepted Answer

A) 10 years. 
B) 25 years. 
C) 35 years. 
D) 50 years. 
A) 10 years. 
B) 25 years. 
C) 35 years. 
D) 50 years. C

Question 2

Government policies can change the costs and benefits that people face.Those policies have the potential to

Accepted Answer

A) alter people's behavior. 
B) alter people's decisions at the margin. 
C) produce results that policymakers did not intend. 
D) All of the above are correct. 
A) alter people's behavior. 
B) alter people's decisions at the margin. 
C) produce results that policymakers did not intend. 
D) All of the above are correct. D

Question 3

The term "productivity"

Accepted Answer

A) means the same thing as "efficiency." 
B) is seldom used by economists, as its meaning is not precise. 
C) refers to the quantity of goods and services produced from each hour of a worker's time. 
D) refers to the variety of goods and services from which households can choose when they shop. 
A) means the same thing as "efficiency." 
B) is seldom used by economists, as its meaning is not precise. 
C) refers to the quantity of goods and services produced from each hour of a worker's time. 
D) refers to the variety of goods and services from which households can choose when they shop. C

Question 4

Which of the following firms is most likely to have market power?

Accepted Answer

A) a fast food restaurant in a college town 
B) a wheat farm in Kansas 
C) the last gas station in New Mexico for 100 miles 
D) a shoe store in Kentucky 
A) a fast food restaurant in a college town 
B) a wheat farm in Kansas 
C) the last gas station in New Mexico for 100 miles 
D) a shoe store in Kentucky

Question 5

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 6

Market economies are distinguished from other types of economies largely on the basis of

Accepted Answer

A) the political affiliations of government officials. 
B) the process by which government officials are elected or appointed. 
C) the ways in which scarce resources are allocated. 
D) the number of retail outlets available to consumers. 
A) the political affiliations of government officials. 
B) the process by which government officials are elected or appointed. 
C) the ways in which scarce resources are allocated. 
D) the number of retail outlets available to consumers.

Question 7

A typical worker in Italy can produce 24 units of product in an eight-hour day,while a typical worker in Poland can produce 25 units of product in a 10-hour day.We can conclude that

Accepted Answer

A) worker productivity in Poland is higher than in Italy. 
B) the standard of living will likely be higher in Italy than in Poland. 
C) productivity is 3 units per hour for the Polish worker and 2¹/₂ units per hour for the Italian worker. 
D) there will be no difference between the standard of living in Italy and Poland. 
A) worker productivity in Poland is higher than in Italy. 
B) the standard of living will likely be higher in Italy than in Poland. 
C) productivity is 3 units per hour for the Polish worker and 2¹/₂ units per hour for the Italian worker. 
D) there will be no difference between the standard of living in Italy and Poland.

Question 8

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.A likely explanation of these facts is that

Accepted Answer

A) the United Kingdom is more industrialized than Turkey. 
B) the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. 
C) workers in the United Kingdom are less productive than workers in Turkey. 
D) there were more cases of market failure in Turkey than in the United Kingdom. 
A) the United Kingdom is more industrialized than Turkey. 
B) the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. 
C) workers in the United Kingdom are less productive than workers in Turkey. 
D) there were more cases of market failure in Turkey than in the United Kingdom.

Question 9

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A) every person is entitled to life, liberty, and the pursuit of happiness. 
B) individuals are best left to their own devices without the government guiding their actions. 
C) the government plays a central role in organizing a market economy. 
D) because of human nature a strong legal system is necessary for a market system to survive. 
A) every person is entitled to life, liberty, and the pursuit of happiness. 
B) individuals are best left to their own devices without the government guiding their actions. 
C) the government plays a central role in organizing a market economy. 
D) because of human nature a strong legal system is necessary for a market system to survive.

Question 10

Over the past century,the average income in the United States has risen about

Accepted Answer

A) twofold. 
B) fivefold. 
C) eightfold. 
D) tenfold. 
A) twofold. 
B) fivefold. 
C) eightfold. 
D) tenfold.

Question 11

Benefits from trade would not include

Accepted Answer

A) the ability of people and nations to specialize. 
B) a greater variety of goods and services becoming available. 
C) less competition. 
D) lower prices. 
A) the ability of people and nations to specialize. 
B) a greater variety of goods and services becoming available. 
C) less competition. 
D) lower prices.

Question 12

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.He has decided to take the job.For him,the marginal

Accepted Answer

A) cost of leaving was greater than the marginal benefit. 
B) benefit of leaving was greater than the marginal cost. 
C) benefit of teaching was greater than the marginal cost. 
D) All of the above are correct. 
A) cost of leaving was greater than the marginal benefit. 
B) benefit of leaving was greater than the marginal cost. 
C) benefit of teaching was greater than the marginal cost. 
D) All of the above are correct.

Question 13

A donut shop sells fresh baked donuts from 5 A.m.until 3 p.m.every day.The shop does not sell day-old donuts, so all unsold donuts are thrown away at 3 p.m.each day.The cost of making and selling a dozen donuts is $1.50; there are no costs associated with throwing donuts away.If the manager has 10 dozen donuts left at 2:30 p.m.on a particular day, which of the following alternatives is most attractive?

Accepted Answer

A) Lower the price of the remaining donuts, even if the price falls below $1.50 per dozen. 
B) Lower the price of the remaining donuts, but under no circumstances should the price fall below $1.50 per dozen. 
C) Throw the donuts away and produce 10 fewer dozen donuts tomorrow. 
D) Starting tomorrow, lower the price on all donuts so they will all be sold earlier in the day. 
A) Lower the price of the remaining donuts, even if the price falls below $1.50 per dozen. 
B) Lower the price of the remaining donuts, but under no circumstances should the price fall below $1.50 per dozen. 
C) Throw the donuts away and produce 10 fewer dozen donuts tomorrow. 
D) Starting tomorrow, lower the price on all donuts so they will all be sold earlier in the day.

Question 14

Incomes of U.S.households in the 1970s and 1980s

Accepted Answer

A) grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades. 
B) grew rapidly, due to several increases in the minimum wage during those decades. 
C) grew rapidly, due to government policies that discouraged the importation of foreign products during those decades. 
D) grew slowly, due to slow growth of the output of goods and services per hour of U.S.workers' time during those decades. 
A) grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades. 
B) grew rapidly, due to several increases in the minimum wage during those decades. 
C) grew rapidly, due to government policies that discouraged the importation of foreign products during those decades. 
D) grew slowly, due to slow growth of the output of goods and services per hour of U.S.workers' time during those decades.

Question 15

When the government attempts to improve equity in an economy the result is often

Accepted Answer

A) an increase in overall output in the economy. 
B) additional government revenue since overall income will increase. 
C) a reduction in equity. 
D) a reduction in efficiency. 
A) an increase in overall output in the economy. 
B) additional government revenue since overall income will increase. 
C) a reduction in equity. 
D) a reduction in efficiency.

Question 16

Tuition is the single-largest cost of attending college for most students.

Accepted Answer

A) True 
 B)False

Question 17

Productivity is defined as the

Accepted Answer

A) amount of goods and services produced from each hour of a worker's time. 
B) number of workers required to produce a given amount of goods and services. 
C) amount of labor which can be saved by replacing workers with machines. 
D) actual amount of effort workers put into an hour of working time. 
A) amount of goods and services produced from each hour of a worker's time. 
B) number of workers required to produce a given amount of goods and services. 
C) amount of labor which can be saved by replacing workers with machines. 
D) actual amount of effort workers put into an hour of working time.

Question 18

Economists use the word equity to describe a situation in which

Accepted Answer

A) each member of society has the same income. 
B) each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C) society is getting the maximum benefits from its scarce resources. 
D) the benefits of society's resources are distributed fairly among society's members. 
A) each member of society has the same income. 
B) each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C) society is getting the maximum benefits from its scarce resources. 
D) the benefits of society's resources are distributed fairly among society's members.

Question 19

The word "economy" comes from the Greek word oikonomos,which means

Accepted Answer

A) "environment." 
B) "production." 
C) "one who manages a household." 
D) "one who makes decisions." 
A) "environment." 
B) "production." 
C) "one who manages a household." 
D) "one who makes decisions."

Question 20

In an economy in which decisions are guided by prices and individual self-interest,there is

Accepted Answer

A) the potential to achieve efficiency in production. 
B) a strong need for government intervention in the market. 
C) less efficiency than would be observed in a centrally-planned economy. 
D) more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy. 
A) the potential to achieve efficiency in production. 
B) a strong need for government intervention in the market. 
C) less efficiency than would be observed in a centrally-planned economy. 
D) more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.

Exam 1: Ten Principles of Economics

In the United States,incomes historically have grown about 2 percent per year.At this rate,average income doubles every

Government policies can change the costs and benefits that people face.Those policies have the potential to

The term "productivity"

Which of the following firms is most likely to have market power?

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

Market economies are distinguished from other types of economies largely on the basis of

A typical worker in Italy can produce 24 units of product in an eight-hour day,while a typical worker in Poland can produce 25 units of product in a 10-hour day.We can conclude that

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.A likely explanation of these facts is that

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Over the past century,the average income in the United States has risen about

Benefits from trade would not include

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.He has decided to take the job.For him,the marginal

Incomes of U.S.households in the 1970s and 1980s

When the government attempts to improve equity in an economy the result is often

Tuition is the single-largest cost of attending college for most students.

Productivity is defined as the

Economists use the word equity to describe a situation in which

The word "economy" comes from the Greek word oikonomos,which means

In an economy in which decisions are guided by prices and individual self-interest,there is

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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