Question 1

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

Accepted Answer

A) lawmakers in the government deciding 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 deciding 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

Question 2

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. C

Question 3

Which of the following is a microeconomics question?

Accepted Answer

A) Why do economies experience periods of recession? 
B) Will government intervention lower the unemployment rate? 
C) Why has growth in the economy slowed down over the past decade? 
D) How will Apple decide on a selling price for the iPad? 
A) Why do economies experience periods of recession? 
B) Will government intervention lower the unemployment rate? 
C) Why has growth in the economy slowed down over the past decade? 
D) How will Apple decide on a selling price for the iPad? D

Question 4

An economic model is a complex version of reality used to analyze real-world economic situations.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is part of an economic model?

Accepted Answer

A) assumptions 
B) norms 
C) opinions 
D) preferences of economic agents 
A) assumptions 
B) norms 
C) opinions 
D) preferences of economic agents

Question 6

What is a market economy?

Accepted Answer

A market economy is an economy

Question 7

Describe what has happened to state obesity rates in the United States since 1994.

Accepted Answer

There has been a dramatic increase in ob

Question 8

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

Accepted Answer

In economics,the word "marginal" means "

Question 9

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 10

Before a doctor decides to keep her office open on Saturdays,she should

Accepted Answer

A) make sure that the marginal cost of doing so will exceed the marginal benefit. 
B) only consider the increase in total profit from doing so. 
C) weigh the costs and benefits of staying open on Saturdays before deciding if she should go through with this idea. 
D) only look at the marginal benefit of doing so,because marginal cost will not change. 
A) make sure that the marginal cost of doing so will exceed the marginal benefit. 
B) only consider the increase in total profit from doing so. 
C) weigh the costs and benefits of staying open on Saturdays before deciding if she should go through with this idea. 
D) only look at the marginal benefit of doing so,because marginal cost will not change.

Question 11

Which of the following is an example of a "how much" decision?

Accepted Answer

A) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots. 
B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster. 
C) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive. 
D) Diana is trying to decide if she should open her pet shop on Sundays. 
A) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots. 
B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster. 
C) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive. 
D) Diana is trying to decide if she should open her pet shop on Sundays.

Question 12

One example of human capital is the amount of savings that you have.

Accepted Answer

A) True 
 B)False

Question 13

There is often a trade-off between

Accepted Answer

A) productive efficiency and allocative efficiency. 
B) limited and unlimited resources. 
C) voluntary and involuntary exchanges. 
D) economic efficiency and economic equity. 
A) productive efficiency and allocative efficiency. 
B) limited and unlimited resources. 
C) voluntary and involuntary exchanges. 
D) economic efficiency and economic equity.

Question 14

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

Accepted Answer

A) 0 since he will no longer be earning a salary 
B) depends on the "going rate" for stay-at-home dads 
C) at least $60,000 
D) the value he attributes to the joy of parenting 
A) 0 since he will no longer be earning a salary 
B) depends on the "going rate" for stay-at-home dads 
C) at least $60,000 
D) the value he attributes to the joy of parenting

Question 15

What is the difference between accounting profit and economic profit?

Accepted Answer

Profit is the difference between revenue

Question 16

Which of the following is motivated by an equity concern?

Accepted Answer

A) Some U.S.colleges have cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
B) Following the removal of subsidies in urban water use,household demand for water decreased quite significantly in Bogor,Indonesia. 
C) In November 2003,the Federal Communications Commission implemented the "local number portability" rule which gives cell phone customers the option of keeping their number when they switch carriers within the same geographic region. 
D) The United States protects intellectual property rights,allowing inventors to prevent others from using their inventions without payment. 
A) Some U.S.colleges have cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
B) Following the removal of subsidies in urban water use,household demand for water decreased quite significantly in Bogor,Indonesia. 
C) In November 2003,the Federal Communications Commission implemented the "local number portability" rule which gives cell phone customers the option of keeping their number when they switch carriers within the same geographic region. 
D) The United States protects intellectual property rights,allowing inventors to prevent others from using their inventions without payment.

Question 17

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

Accepted Answer

A) Yes,I agree with her.One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. 
B) I disagree with her.Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally,meaning they make the best decisions given their knowledge of the costs and benefits. 
C) Yes,I agree with her.Economic theory should allow for irrational behavior so that we can have more reliable predictions. 
D) I disagree with her.If we cannot assume that decisions are correct,then we will not be able to examine the moral implications of these decisions. 
A) Yes,I agree with her.One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. 
B) I disagree with her.Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally,meaning they make the best decisions given their knowledge of the costs and benefits. 
C) Yes,I agree with her.Economic theory should allow for irrational behavior so that we can have more reliable predictions. 
D) I disagree with her.If we cannot assume that decisions are correct,then we will not be able to examine the moral implications of these decisions.

Question 18

In economics,activities done for others,such as providing house cleaning or dental work,are referred to as

Accepted Answer

A) technology. 
B) physical capital. 
C) services. 
D) goods. 
A) technology. 
B) physical capital. 
C) services. 
D) goods.

Question 19

How does a market system prevent people from getting as many goods and services as they wish?

Accepted Answer

A) Governments interfere with the market mechanism to influence the allocation of goods and services. 
B) In a market system,firms can charge any price they want,thus preventing poor people from getting as many goods and services as they wish. 
C) The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor. 
D) The government imposes taxes on those who earn beyond a certain amount of income. 
A) Governments interfere with the market mechanism to influence the allocation of goods and services. 
B) In a market system,firms can charge any price they want,thus preventing poor people from getting as many goods and services as they wish. 
C) The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor. 
D) The government imposes taxes on those who earn beyond a certain amount of income.

Question 20

In economics,the difference between a firm's revenues and its costs is referred to as

Accepted Answer

A) physical capital. 
B) profit. 
C) capital gains. 
D) factor payments. 
A) physical capital. 
B) profit. 
C) capital gains. 
D) factor payments.

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

Opportunity cost is defined as

Which of the following is a microeconomics question?

An economic model is a complex version of reality used to analyze real-world economic situations.

Which of the following is part of an economic model?

What is a market economy?

Describe what has happened to state obesity rates in the United States since 1994.

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

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?

Before a doctor decides to keep her office open on Saturdays,she should

Which of the following is an example of a "how much" decision?

One example of human capital is the amount of savings that you have.

There is often a trade-off between

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

What is the difference between accounting profit and economic profit?

Which of the following is motivated by an equity concern?

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

In economics,activities done for others,such as providing house cleaning or dental work,are referred to as

How does a market system prevent people from getting as many goods and services as they wish?

In economics,the difference between a firm's revenues and its costs is referred to as

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

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

Opportunity cost is defined as

Which of the following is a microeconomics question?

An economic model is a complex version of reality used to analyze real-world economic situations.

Which of the following is part of an economic model?

What is a market economy?

Describe what has happened to state obesity rates in the United States since 1994.

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

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?

Before a doctor decides to keep her office open on Saturdays,she should

Which of the following is an example of a "how much" decision?

One example of human capital is the amount of savings that you have.

There is often a trade-off between

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

What is the difference between accounting profit and economic profit?

Which of the following is motivated by an equity concern?

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

In economics,activities done for others,such as providing house cleaning or dental work,are referred to as

How does a market system prevent people from getting as many goods and services as they wish?

In economics,the difference between a firm's revenues and its costs is referred to as

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