Question 1

Making optimal decisions "at the margin" requires

Accepted Answer

A)  making decisions according to one's whims and fancies. 
B)  making consistently irrational decisions. 
C)  weighing the costs and benefits of a decision before deciding if it should be pursued. 
D)  making borderline decisions. 
A)  making decisions according to one's whims and fancies. 
B)  making consistently irrational decisions. 
C)  weighing the costs and benefits of a decision before deciding if it should be pursued. 
D)  making borderline decisions.

Question 2

The government makes all economic decisions in a mixed economy.

Accepted Answer

A) True 
 B)False

Question 3

Explain why economics is considered a social science.

Accepted Answer

Economics is a social science

Question 4

Voluntary exchange between buyers and sellers generates ________ in a market economy.

Accepted Answer

A)  scarcity 
B)  allocative efficiency 
C)  productive efficiency 
D)  equity 
A)  scarcity 
B)  allocative efficiency 
C)  productive efficiency 
D)  equity

Question 5

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Accepted Answer

A)  They are both automatically achieved in a free market economy. 
B)  They always call for opposite outcomes. 
C)  There is no conflict between the two goals. 
D)  There is often a trade-off between the two. 
A)  They are both automatically achieved in a free market economy. 
B)  They always call for opposite outcomes. 
C)  There is no conflict between the two goals. 
D)  There is often a trade-off between the two.

Question 6

Table 1-1
   
Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.
-Refer to Table 1-1.What is Lydia's marginal benefit if she decides to stay open for two hours instead of one hour?

Accepted Answer

A)  $25 
B)  $50 
C)  $75 
D)  $125 
A)  $25 
B)  $50 
C)  $75 
D)  $125

Question 7

Figure 1-3
  
-Refer to Figure 1-3.Calculate the area of the trapezoid X.

Accepted Answer

A)  $270 
B)  $720 
C)  $810 
D)  $2,520 
A)  $270 
B)  $720 
C)  $810 
D)  $2,520

Question 8

Making "how much" decisions involve

Accepted Answer

A)  calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B)  calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C)  calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D)  determining the additional benefits and the additional costs of that activity. 
A)  calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B)  calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C)  calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D)  determining the additional benefits and the additional costs of that activity.

Question 9

How are the fundamental economic questions answered in a market economy?

Accepted Answer

A)  The government alone decides the answers. 
B)  Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C)  Households and firms interact in markets to decide the answers to these questions. 
D)  Large corporations alone decide the answers. 
A)  The government alone decides the answers. 
B)  Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C)  Households and firms interact in markets to decide the answers to these questions. 
D)  Large corporations alone decide the answers.

Question 10

The decision about what goods and services will be produced made 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 11

On a two-dimensional graph,________ allows for the effects of additional variables.

Accepted Answer

A)  moving along a curve 
B)  shifting curves 
C)  eliminating a curve 
D)  adding an additional curve 
A)  moving along a curve 
B)  shifting curves 
C)  eliminating a curve 
D)  adding an additional curve

Question 12

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Accepted Answer

A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units 
A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a macroeconomics question?

Accepted Answer

A)  What determines the inflation rate? 
B)  What determines the production of DVDs? 
C)  What factors determine the price of carrots? 
D)  What determines the wage of auto workers? 
A)  What determines the inflation rate? 
B)  What determines the production of DVDs? 
C)  What factors determine the price of carrots? 
D)  What determines the wage of auto workers?

Question 15

When production reflects consumer preferences,________ occurs.

Accepted Answer

A)  allocative efficiency 
B)  productive efficiency 
C)  equity 
D)  efficient central planning 
A)  allocative efficiency 
B)  productive efficiency 
C)  equity 
D)  efficient central planning

Question 16

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

Accepted Answer

A)  Competition 
B)  Voluntary exchange 
C)  Equity 
D)  A centrally planned economy 
A)  Competition 
B)  Voluntary exchange 
C)  Equity 
D)  A centrally planned economy

Question 17

What is the difference between an invention and an innovation?

Accepted Answer

An invention is the development of a new

Question 18

The term ________ in economics 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

In 2010,Hooverville consumed 205,000 tons of sugar.In 2011,sugar consumption rose to 245,000 tons.Calculate the percentage change in sugar consumption.

Accepted Answer

A)  8.37% 
B)  11.95% 
C)  19.51% 
D)  26.33% 
A)  8.37% 
B)  11.95% 
C)  19.51% 
D)  26.33%

Question 20

Which of the following is a problem inherent in centrally planned economies?

Accepted Answer

A)  Households and firms make poor decisions in choosing how resources are allocated. 
B)  There is too little production of low-cost, high-quality goods and services. 
C)  Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D)  Exports tend to exceed imports. 
A)  Households and firms make poor decisions in choosing how resources are allocated. 
B)  There is too little production of low-cost, high-quality goods and services. 
C)  Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D)  Exports tend to exceed imports.

Making optimal decisions "at the margin" requires

The government makes all economic decisions in a mixed economy.

Explain why economics is considered a social science.

Voluntary exchange between buyers and sellers generates ________ in a market economy.

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Figure 1-3 -Refer to Figure 1-3.Calculate the area of the trapezoid X.

Making "how much" decisions involve

How are the fundamental economic questions answered in a market economy?

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

On a two-dimensional graph,________ allows for the effects of additional variables.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

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

Which of the following is a macroeconomics question?

When production reflects consumer preferences,________ occurs.

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

What is the difference between an invention and an innovation?

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

In 2010,Hooverville consumed 205,000 tons of sugar.In 2011,sugar consumption rose to 245,000 tons.Calculate the percentage change in sugar consumption.

Which of the following is a problem inherent in centrally planned economies?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 1: Economics: Foundations and Models

Making optimal decisions "at the margin" requires

The government makes all economic decisions in a mixed economy.

Explain why economics is considered a social science.

Voluntary exchange between buyers and sellers generates ________ in a market economy.

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Figure 1-3 -Refer to Figure 1-3.Calculate the area of the trapezoid X.

Making "how much" decisions involve

How are the fundamental economic questions answered in a market economy?

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

On a two-dimensional graph,________ allows for the effects of additional variables.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

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

Which of the following is a macroeconomics question?

When production reflects consumer preferences,________ occurs.

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

What is the difference between an invention and an innovation?

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

In 2010,Hooverville consumed 205,000 tons of sugar.In 2011,sugar consumption rose to 245,000 tons.Calculate the percentage change in sugar consumption.

Which of the following is a problem inherent in centrally planned economies?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters