Question 1

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Accepted Answer

A)  people with health insurance are less likely to be overweight than people without health insurance. 
B)  people with health insurance are more likely to be overweight than people without health insurance. 
C)  people with health insurance are equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight. 
A)  people with health insurance are less likely to be overweight than people without health insurance. 
B)  people with health insurance are more likely to be overweight than people without health insurance. 
C)  people with health insurance are equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight. B

Question 2

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that

Accepted Answer

A)  people are rational. 
B)  people respond to economic incentives. 
C)  optimal decisions are made at the margin. 
D)  equity is more important than efficiency. 
A)  people are rational. 
B)  people respond to economic incentives. 
C)  optimal decisions are made at the margin. 
D)  equity is more important than efficiency. B

Question 3

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Accepted Answer

A)  people without health insurance will be less likely to be overweight than people with health insurance. 
B)  people without health insurance will be more likely to be overweight than people with health insurance. 
C)  people without health insurance will be equally likely to be overweight as people with health insurance. 
D)  there is no correlation between not having health insurance and being overweight. 
A)  people without health insurance will be less likely to be overweight than people with health insurance. 
B)  people without health insurance will be more likely to be overweight than people with health insurance. 
C)  people without health insurance will be equally likely to be overweight as people with health insurance. 
D)  there is no correlation between not having health insurance and being overweight. A

Question 4

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Accepted Answer

A)  Two-dimensional graphs 
B)  One-dimensional graphs 
C)  Pie Charts 
D)  Bar graphs 
A)  Two-dimensional graphs 
B)  One-dimensional graphs 
C)  Pie Charts 
D)  Bar graphs

Question 5

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers.Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

Accepted Answer

A)  People are rational. 
B)  People respond to economic incentives. 
C)  Optimal decisions are made at the margin. 
D)  The market system relies on the principle of voluntary exchange. 
A)  People are rational. 
B)  People respond to economic incentives. 
C)  Optimal decisions are made at the margin. 
D)  The market system relies on the principle of voluntary exchange.

Question 6

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A)  How to produce goods that consumers want? 
B)  Why produce a variety of menu items? 
C)  What to produce? 
D)  Who to produce the menu items for? 
A)  How to produce goods that consumers want? 
B)  Why produce a variety of menu items? 
C)  What to produce? 
D)  Who to produce the menu items for?

Question 7

When voluntary exchange takes place,neither party usually gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Opportunity cost is defined as

Accepted Answer

A)  the benefit of an activity. 
B)  the monetary expense associated with an activity. 
C)  the highest valued alternative that must be given up to engage in an activity. 
D)  the total value of all alternatives that must be given up to engage in an activity. 
A)  the benefit of an activity. 
B)  the monetary expense associated with an activity. 
C)  the highest valued alternative that must be given up to engage in an activity. 
D)  the total value of all alternatives that must be given up to engage in an activity.

Question 10

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Accepted Answer

A)  using economic models to analyze unemployment and inflation rates in Australia 
B)  assessing whether automobile injuries are directly related to speed limits 
C)  analyzing data related to passenger air traffic in China 
D)  forecasting the demand for U.S.-produced organic produce over the next 15 years 
A)  using economic models to analyze unemployment and inflation rates in Australia 
B)  assessing whether automobile injuries are directly related to speed limits 
C)  analyzing data related to passenger air traffic in China 
D)  forecasting the demand for U.S.-produced organic produce over the next 15 years

Question 11

Which of the following is a result of a market economy?

Accepted Answer

A)  environmental protection 
B)  an equal income distribution 
C)  agreement on equity 
D)  voluntary exchange 
A)  environmental protection 
B)  an equal income distribution 
C)  agreement on equity 
D)  voluntary exchange

Question 12

Economists assume that rational people

Accepted Answer

A)  never use all available information as they act to achieve their goals. 
B)  undertake activities that benefit others and hurt themselves. 
C)  only weigh the benefits and costs of the most desirable alternative actions. 
D)  respond to economic incentives. 
A)  never use all available information as they act to achieve their goals. 
B)  undertake activities that benefit others and hurt themselves. 
C)  only weigh the benefits and costs of the most desirable alternative actions. 
D)  respond to economic incentives.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a normative economic statement?

Accepted Answer

A)  The price of wheat is too low. 
B)  The current low price of wheat is the result of increased worldwide supply. 
C)  When the price of wheat falls, the quantity of wheat purchased rises. 
D)  When the price of wheat falls, the cost of wheat-based products falls. 
A)  The price of wheat is too low. 
B)  The current low price of wheat is the result of increased worldwide supply. 
C)  When the price of wheat falls, the quantity of wheat purchased rises. 
D)  When the price of wheat falls, the cost of wheat-based products falls.

Question 15

All centrally planned economies

Accepted Answer

A)  have been political dictatorships. 
B)  started out as market economies. 
C)  began as mixed economies. 
D)  have become mixed economies. 
A)  have been political dictatorships. 
B)  started out as market economies. 
C)  began as mixed economies. 
D)  have become mixed economies.

Question 16

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks,and compact cars.What fundamental economic question are they addressing by making this range of products?

Accepted Answer

A)  How to produce goods that consumers want? 
B)  Why produce a variety of automobiles? 
C)  What to produce? 
D)  Who to produce automobiles for? 
A)  How to produce goods that consumers want? 
B)  Why produce a variety of automobiles? 
C)  What to produce? 
D)  Who to produce automobiles for?

Question 17

Consider the following statements:
A.Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
B.Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
C.Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?

Accepted Answer

A)  a only 
B)  b only 
C)  c only 
D)  a and b 
E)  a, b, and c 
A)  a only 
B)  b only 
C)  c only 
D)  a and b 
E)  a, b, and c

Question 18

By definition,economics is the study of

Accepted Answer

A)  how to make money in the stock market. 
B)  how to make money in a market economy. 
C)  the choices people make to attain their goals, given their scarce resources. 
D)  supply and demand. 
A)  how to make money in the stock market. 
B)  how to make money in a market economy. 
C)  the choices people make to attain their goals, given their scarce resources. 
D)  supply and demand.

Question 19

Table 1-1
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Extra Hours } \
\text { Open }
\end{array} & \text { Total Revenue (dollars) } \
\hline 1 & \$ 50 \
\hline 2 & 75 \
\hline 3 & 95 \
\hline 4 & 110 \
\hline 5 & 120 \
\hline 6 & 125 \
\hline
\end{array}$ 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 extra hours the nail salon is open as shown in the table above. She would have to hire a worker for those extra 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 an extra 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 20

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package.What is Lionel's marginal benefit if he sells the standard package?

Accepted Answer

A)  $10 
B)  $15 
C)  $25 
D)  $40 
A)  $10 
B)  $15 
C)  $25 
D)  $40

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

When voluntary exchange takes place,neither party usually gains from the exchange.

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

Opportunity cost is defined as

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Which of the following is a result of a market economy?

Economists assume that rational people

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

Which of the following is a normative economic statement?

All centrally planned economies

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks,and compact cars.What fundamental economic question are they addressing by making this range of products?

By definition,economics is the study of

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 1: Economics: Foundations and Models

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

When voluntary exchange takes place,neither party usually gains from the exchange.

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

Opportunity cost is defined as

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Which of the following is a result of a market economy?

Economists assume that rational people

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

Which of the following is a normative economic statement?

All centrally planned economies

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks,and compact cars.What fundamental economic question are they addressing by making this range of products?

By definition,economics is the study of

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters