Question 1

Which of the following is motivated by an efficiency concern?

Accepted Answer

A) In December 2006, the Bush administration restarted a short-term housing assistance program for victims of Hurricane Katrina. 
B) Each year, the University of Notre Dame conducts a lottery to parcel out the 30,000 seats available to contributors, former athletes, and parents in the 80,000-seat stadium. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The federal government's housing choice voucher program assists very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. 
A) In December 2006, the Bush administration restarted a short-term housing assistance program for victims of Hurricane Katrina. 
B) Each year, the University of Notre Dame conducts a lottery to parcel out the 30,000 seats available to contributors, former athletes, and parents in the 80,000-seat stadium. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The federal government's housing choice voucher program assists very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. C

Question 2

Which of the following is a macroeconomic question?

Accepted Answer

A) What determines the growth rate of gross domestic product? 
B) How is the production quantity of snowboards determined? 
C) What factors determine the price of electronic cigarettes? 
D) What determines the salaries of Wall Street executives? 
A) What determines the growth rate of gross domestic product? 
B) How is the production quantity of snowboards determined? 
C) What factors determine the price of electronic cigarettes? 
D) What determines the salaries of Wall Street executives? A

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A) The price of gasoline is too high. 
B) The current high price of gasoline is the result of strong worldwide demand. 
C) When the price of gasoline rises, the quantity of gasoline purchased falls. 
D) When the price of gasoline rises, transportation costs rise. 
A) The price of gasoline is too high. 
B) The current high price of gasoline is the result of strong worldwide demand. 
C) When the price of gasoline rises, the quantity of gasoline purchased falls. 
D) When the price of gasoline rises, transportation costs rise. A

Question 4

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a Russian tea cake?

Accepted Answer

A) 2 1/2 cappuccinos 
B) 2/5 of a cappuccino 
C) $2.50 
D) $1.00 
A) 2 1/2 cappuccinos 
B) 2/5 of a cappuccino 
C) $2.50 
D) $1.00

Question 5

Optimal decisions are made at the point where marginal cost equals zero.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a positive economic statement?

Accepted Answer

A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country. 
A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.

Question 8

In the market for factors of production, firms earn income by selling factors of production to households.

Accepted Answer

A) True 
 B)False

Question 9

Figure 1.1
  
-Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2012 and 2016.

Accepted Answer

A) 30% 
B) 50% 
C) 66.7% 
D) 100% 
A) 30% 
B) 50% 
C) 66.7% 
D) 100%

Question 10

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

Accepted Answer

A) allocatively efficient. 
B) productively efficient. 
C) guaranteed to make a profit. 
D) all of the above 
A) allocatively efficient. 
B) productively efficient. 
C) guaranteed to make a profit. 
D) all of the above

Question 11

What is the difference between an invention and an innovation?

Accepted Answer

An invention is the development of a new

Question 12

Economic models do all of the following except

Accepted Answer

A) answer economic questions. 
B) portray reality in all its minute details. 
C) make economic ideas explicit and concrete for use by decision makers. 
D) simplify some aspect of economic life. 
A) answer economic questions. 
B) portray reality in all its minute details. 
C) make economic ideas explicit and concrete for use by decision makers. 
D) simplify some aspect of economic life.

Question 13

Which of the following statements about economic resources is true?

Accepted Answer

A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used only by businesses. 
D) All economic resources are man-made. 
A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used only by businesses. 
D) All economic resources are man-made.

Question 14

The decision about what goods and services will be produced in a market economy is made by

Accepted Answer

A) lawmakers in the government voting on what will be produced. 
B) workers deciding to produce only what the boss says must be produced. 
C) producers deciding what society wants most. 
D) consumers and firms choosing which goods and services to buy or produce. 
E) consumers dictating to firms what they need most. 
A) lawmakers in the government voting on what will be produced. 
B) workers deciding to produce only what the boss says must be produced. 
C) producers deciding what society wants most. 
D) consumers and firms choosing which goods and services to buy or produce. 
E) consumers dictating to firms what they need most.

Question 15

The town of Harmonia gives away all 500 tickets to its annual Founder's Day Free Concert-in-the-Park to local residents.Each year, more than 500 people wish to attend the concert, so some of the residents who receive the free tickets sell them for as much as $75 each.Is a transaction where someone pays a resident $75 for a "free ticket" economically efficient?

Accepted Answer

A) No, people should never be allowed to sell items they received for free. 
B) Yes, it was a voluntary exchange that benefited both parties. 
C) No, the buyer paid too much for the ticket. 
D) Yes, but it is efficient only from the perspective of the seller and not from the perspective of the buyer. 
A) No, people should never be allowed to sell items they received for free. 
B) Yes, it was a voluntary exchange that benefited both parties. 
C) No, the buyer paid too much for the ticket. 
D) Yes, but it is efficient only from the perspective of the seller and not from the perspective of the buyer.

Question 16

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Accepted Answer

A) True 
 B)False

Question 17

Figure 1.1
  
-Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2016.

Accepted Answer

A) 23.1% 
B) 23.8% 
C) 30% 
D) 42.9% 
A) 23.1% 
B) 23.8% 
C) 30% 
D) 42.9%

Question 18

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Accepted Answer

A) collective 
B) cooperative 
C) market 
D) trade-off 
A) collective 
B) cooperative 
C) market 
D) trade-off

Question 19

Scenario 1-1
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."
-Refer to Scenario 1-1.Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and by how much?

Accepted Answer

A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower. 
A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower.

Question 20

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively, he can sell the machine "as is" now for $1,000.What is his marginal benefit if he sells the machine "as is" now?

Accepted Answer

A) $300 
B) $900 
C) $1,000 
D) The marginal benefit cannot be determined. 
A) $300 
B) $900 
C) $1,000 
D) The marginal benefit cannot be determined.

Which of the following is motivated by an efficiency concern?

Which of the following is a macroeconomic question?

Which of the following is a normative economic statement?

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a Russian tea cake?

Optimal decisions are made at the point where marginal cost equals zero.

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

Which of the following is a positive economic statement?

In the market for factors of production, firms earn income by selling factors of production to households.

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2012 and 2016.

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

What is the difference between an invention and an innovation?

Economic models do all of the following except

Which of the following statements about economic resources is true?

The decision about what goods and services will be produced in a market economy is made by

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2016.

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 1: Economics: Foundations and Models

Which of the following is motivated by an efficiency concern?

Which of the following is a macroeconomic question?

Which of the following is a normative economic statement?

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a Russian tea cake?

Optimal decisions are made at the point where marginal cost equals zero.

Suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

Which of the following is a positive economic statement?

In the market for factors of production, firms earn income by selling factors of production to households.

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2012 and 2016.

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

What is the difference between an invention and an innovation?

Economic models do all of the following except

Which of the following statements about economic resources is true?

The decision about what goods and services will be produced in a market economy is made by

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above, calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2016.

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters