Question 1

An economy is efficient when:

Accepted Answer

A) the problem of scarcity is eliminated. 
B) output is distributed equitably. 
C) all opportunities to make some people better off without making other people worse off have been taken. 
D) all opportunities to make some people worse off without making other people better off have been taken. 
A) the problem of scarcity is eliminated. 
B) output is distributed equitably. 
C) all opportunities to make some people better off without making other people worse off have been taken. 
D) all opportunities to make some people worse off without making other people better off have been taken. C

Question 2

For which of the following decisions would marginal analysis be most relevant?

Accepted Answer

A) Should I go to college or work after graduating from high school? 
B) Should I eat another doughnut? 
C) Should I use $20,000 as a down payment on a house or to buy a car? 
D) Should I get married? 
A) Should I go to college or work after graduating from high school? 
B) Should I eat another doughnut? 
C) Should I use $20,000 as a down payment on a house or to buy a car? 
D) Should I get married? B

Question 3

Marginal analysis:

Accepted Answer

A) refers to decisions about whether to do a bit more or a bit less of an activity. 
B) helps when making a "how much" choice. 
C) involves trade-offs. 
D) refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a "how much" choice, and involves trade-offs. 
A) refers to decisions about whether to do a bit more or a bit less of an activity. 
B) helps when making a "how much" choice. 
C) involves trade-offs. 
D) refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a "how much" choice, and involves trade-offs. D

Question 4

Because one person's spending is another person's income:

Accepted Answer

A) if one group in the economy spends more, the incomes of other groups will decrease. 
B) if one group in the economy spends less, the incomes of other groups will increase. 
C) if one group in the economy spends more, the incomes of other groups will increase. 
D) spending by one group does not influence the income of any other group. 
A) if one group in the economy spends more, the incomes of other groups will decrease. 
B) if one group in the economy spends less, the incomes of other groups will increase. 
C) if one group in the economy spends more, the incomes of other groups will increase. 
D) spending by one group does not influence the income of any other group.

Question 5

When markets don't achieve efficiency:

Accepted Answer

A) they must achieve equity. 
B) government must be participating in the market. 
C) government may intervene to improve society's welfare. 
D) they should be closed. 
A) they must achieve equity. 
B) government must be participating in the market. 
C) government may intervene to improve society's welfare. 
D) they should be closed.

Question 6

Economists believe that resources should be used as efficiently as possible to:

Accepted Answer

A) achieve society's goals. 
B) eliminate scarcity. 
C) reduce inequity. 
D) maximize profits. 
A) achieve society's goals. 
B) eliminate scarcity. 
C) reduce inequity. 
D) maximize profits.

Question 7

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Accepted Answer

A) is efficient. 
B) cannot be efficient, since efficiency requires a more nearly equal distribution of income. 
C) may be efficient. 
D) is neither efficient nor equitable. 
A) is efficient. 
B) cannot be efficient, since efficiency requires a more nearly equal distribution of income. 
C) may be efficient. 
D) is neither efficient nor equitable.

Question 8

Scarcity in economics means that:

Accepted Answer

A) we do not have sufficient resources to produce all of the goods and services we want. 
B) the wants of people are limited. 
C) there must be poor people in rich countries. 
D) shortages exist in nearly all markets. 
A) we do not have sufficient resources to produce all of the goods and services we want. 
B) the wants of people are limited. 
C) there must be poor people in rich countries. 
D) shortages exist in nearly all markets.

Question 9

Economists define an efficient use of resources as a situation in which:

Accepted Answer

A) one person can be made better off but only by making another person worse off. 
B) all persons can be made better off without making anyone worse off. 
C) all persons receive an equal share of the resources. 
D) all persons are made worse off when one person is made better off. 
A) one person can be made better off but only by making another person worse off. 
B) all persons can be made better off without making anyone worse off. 
C) all persons receive an equal share of the resources. 
D) all persons are made worse off when one person is made better off.

Question 10

Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:

Accepted Answer

A) considers only the price of the brownie. 
B) considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie. 
C) compares all of the benefits and costs of eating another brownie. 
D) considers whether she can do so without anyone else noticing. 
A) considers only the price of the brownie. 
B) considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie. 
C) compares all of the benefits and costs of eating another brownie. 
D) considers whether she can do so without anyone else noticing.

Question 11

The phrase gains from trade refers to the:

Accepted Answer

A) profits obtained from sales of a good or service. 
B) increase in total output that is realized when individuals specialize in particular tasks and trade with each other. 
C) gains that one obtains by taking advantage of an uninformed buyer and selling at a higher than average price. 
D) gains that one obtains by taking advantage of a temporary discount, or sale price. 
A) profits obtained from sales of a good or service. 
B) increase in total output that is realized when individuals specialize in particular tasks and trade with each other. 
C) gains that one obtains by taking advantage of an uninformed buyer and selling at a higher than average price. 
D) gains that one obtains by taking advantage of a temporary discount, or sale price.

Question 12

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Accepted Answer

A) equity versus efficiency. 
B) how one person's spending is another person's income. 
C) economic incentives. 
D) marginal analysis. 
A) equity versus efficiency. 
B) how one person's spending is another person's income. 
C) economic incentives. 
D) marginal analysis.

Question 13

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

Accepted Answer

A) be beneficial to both individuals. 
B) hurt both individuals. 
C) help Beth but hurt Alice. 
D) help Alice but hurt Beth. 
A) be beneficial to both individuals. 
B) hurt both individuals. 
C) help Beth but hurt Alice. 
D) help Alice but hurt Beth.

Question 14

When people in Brazil engage in trade with people in Germany, the citizens of each nation are made worse off.

Accepted Answer

A) True 
 B)False

Question 15

In most cases, economic efficiency is achieved through:

Accepted Answer

A) incentives built into a market economy. 
B) regulation. 
C) individuals seeking out opportunities that involve no risk. 
D) maximizing equity. 
A) incentives built into a market economy. 
B) regulation. 
C) individuals seeking out opportunities that involve no risk. 
D) maximizing equity.

Question 16

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) "How much" is a decision at the margin. 
C) There are gains from trade. 
D) Resources should be used as efficiently as possible to achieve society's goals. 
A) Resources are scarce. 
B) "How much" is a decision at the margin. 
C) There are gains from trade. 
D) Resources should be used as efficiently as possible to achieve society's goals.

Question 17

The opportunity cost of something is:

Accepted Answer

A) greater during periods of rising prices. 
B) equal to the money cost. 
C) less during periods of falling prices. 
D) what is given up to acquire it. 
A) greater during periods of rising prices. 
B) equal to the money cost. 
C) less during periods of falling prices. 
D) what is given up to acquire it.

Question 18

The economic way of thinking entails:

Accepted Answer

A) the analysis of benefits but not costs. 
B) the analysis of costs but not benefits. 
C) making choices at the margin. 
D) making the distinction between microeconomics and macroeconomics. 
A) the analysis of benefits but not costs. 
B) the analysis of costs but not benefits. 
C) making choices at the margin. 
D) making the distinction between microeconomics and macroeconomics.

Question 19

Scarcity in economics means that:

Accepted Answer

A) we do not have sufficient resources to produce all of the goods and services we want. 
B) the wants of people are limited. 
C) there must be poor people in rich countries. 
D) economists are clearly not doing their job. 
A) we do not have sufficient resources to produce all of the goods and services we want. 
B) the wants of people are limited. 
C) there must be poor people in rich countries. 
D) economists are clearly not doing their job.

Question 20

An increase in efficiency means that an economy has:

Accepted Answer

A) reduced its opportunity costs. 
B) increased the equity of its distribution of goods and services. 
C) made more people better off without making others worse off. 
D) increased the incentives for its citizens to follow their own self-interest. 
A) reduced its opportunity costs. 
B) increased the equity of its distribution of goods and services. 
C) made more people better off without making others worse off. 
D) increased the incentives for its citizens to follow their own self-interest.

An economy is efficient when:

For which of the following decisions would marginal analysis be most relevant?

Marginal analysis:

Because one person's spending is another person's income:

When markets don't achieve efficiency:

Economists believe that resources should be used as efficiently as possible to:

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Scarcity in economics means that:

Economists define an efficient use of resources as a situation in which:

Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:

The phrase gains from trade refers to the:

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

When people in Brazil engage in trade with people in Germany, the citizens of each nation are made worse off.

In most cases, economic efficiency is achieved through:

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

The opportunity cost of something is:

The economic way of thinking entails:

Scarcity in economics means that:

An increase in efficiency means that an economy has:

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 1: First Principles

An economy is efficient when:

For which of the following decisions would marginal analysis be most relevant?

Marginal analysis:

Because one person's spending is another person's income:

When markets don't achieve efficiency:

Economists believe that resources should be used as efficiently as possible to:

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy:

Scarcity in economics means that:

Economists define an efficient use of resources as a situation in which:

Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:

The phrase gains from trade refers to the:

A busy professor can't decide whether to stay in his office to grade papers for another hour or to go home and go to bed. This is an example of:

Beth promises to do Alice's taxes, and in exchange, Alice will set up several spreadsheets for Beth's household budget. This trade will most likely:

When people in Brazil engage in trade with people in Germany, the citizens of each nation are made worse off.

In most cases, economic efficiency is achieved through:

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

The opportunity cost of something is:

The economic way of thinking entails:

Scarcity in economics means that:

An increase in efficiency means that an economy has:

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters