Question 1

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Accepted Answer

A) True 
 B)False

Question 2

Because people usually exploit opportunities to make themselves better off, if the price of gasoline rises and stays high for an extended period, we expect people to:

Accepted Answer

A) increase the number of miles they drive. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride their bicycles less. 
A) increase the number of miles they drive. 
B) buy larger and less fuel-efficient cars. 
C) use more public transportation. 
D) ride their bicycles less.

Question 3

When someone says resources are scarce, this suggests that:

Accepted Answer

A) lower-income individuals must be especially careful about the choices they make. 
B) choices must be made to utilize resources in the best manner possible. 
C) additional resources could be found if there were additional funds allocated to the effort. 
D) we have enough resources to meet all of our needs and wants. 
A) lower-income individuals must be especially careful about the choices they make. 
B) choices must be made to utilize resources in the best manner possible. 
C) additional resources could be found if there were additional funds allocated to the effort. 
D) we have enough resources to meet all of our needs and wants.

Question 4

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Accepted Answer

A) Karl Marx 
B) David Ricardo 
C) Adam Smith 
D) John Maynard Keynes 
A) Karl Marx 
B) David Ricardo 
C) Adam Smith 
D) John Maynard Keynes

Question 5

When a factory closes, why does it spell bad news for the local restaurants?

Accepted Answer

A) Sales taxes are likely to increase. 
B) Unemployed factory workers have lower incomes and are less likely to dine out. 
C) Unemployed factory workers are eligible for government unemployment benefits. 
D) The opportunity cost of dining out has fallen. 
A) Sales taxes are likely to increase. 
B) Unemployed factory workers have lower incomes and are less likely to dine out. 
C) Unemployed factory workers are eligible for government unemployment benefits. 
D) The opportunity cost of dining out has fallen.

Question 6

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities. As a result, many of these spaces are vacant quite often when they could be used by able-bodied individuals. Such a situation illustrates the:

Accepted Answer

A) trade-off between efficiency and equity. 
B) trade-off between efficiency and specialization. 
C) ability of markets to provide efficient and equitable outcomes. 
D) power of the market to provide for equilibrium outcomes. 
A) trade-off between efficiency and equity. 
B) trade-off between efficiency and specialization. 
C) ability of markets to provide efficient and equitable outcomes. 
D) power of the market to provide for equilibrium outcomes.

Question 7

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

Accepted Answer

A) land. 
B) labor. 
C) capital. 
D) human capital. 
A) land. 
B) labor. 
C) capital. 
D) human capital.

Question 8

Market failure may occur because:

Accepted Answer

A) individual actions have side effects that are not properly taken into account by the market. 
B) one party to a trade benefits more than another. 
C) all goods are suited for efficient management by markets. 
D) of regulated self-interest. 
A) individual actions have side effects that are not properly taken into account by the market. 
B) one party to a trade benefits more than another. 
C) all goods are suited for efficient management by markets. 
D) of regulated self-interest.

Question 9

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Accepted Answer

A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) There are gains from trade. 
D) People usually take advantage of opportunities to make themselves better off. 
A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) There are gains from trade. 
D) People usually take advantage of opportunities to make themselves better off.

Question 10

Overall, trade between China and the United States will:

Accepted Answer

A) benefit the United States more than China. 
B) benefit China more than the United States. 
C) benefit both countries. 
D) hurt both countries. 
A) benefit the United States more than China. 
B) benefit China more than the United States. 
C) benefit both countries. 
D) hurt both countries.

Question 11

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

Accepted Answer

A) True 
 B)False

Question 12

A market failure occurs when:

Accepted Answer

A) some people are able to buy many more goods than other people are. 
B) the individual's pursuit of self-interest means some people will not be able to buy all of the goods they need. 
C) the individual's pursuit of self-interest makes the society worse off. 
D) while pursuing their self-interest, some people may make a mistake-for example, they may regret buying a particular car. 
A) some people are able to buy many more goods than other people are. 
B) the individual's pursuit of self-interest means some people will not be able to buy all of the goods they need. 
C) the individual's pursuit of self-interest makes the society worse off. 
D) while pursuing their self-interest, some people may make a mistake-for example, they may regret buying a particular car.

Question 13

You and your roommate are taking the same economics class. When it comes to doing homework assignments, your roommate draws beautifully precise graphs, while you are an extremely fast typist. Therefore, you and your roommate work on the assignments together. Which of the 12 principles is at work here?

Accepted Answer

There are gains from trade. Wh

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Because people usually exploit opportunities to make themselves better off, if the price of gasoline rises and stays high for an extended period, we expect people to:

When someone says resources are scarce, this suggests that:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

When a factory closes, why does it spell bad news for the local restaurants?

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities. As a result, many of these spaces are vacant quite often when they could be used by able-bodied individuals. Such a situation illustrates the:

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

Market failure may occur because:

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Overall, trade between China and the United States will:

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

A market failure occurs when:

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

Because of the opportunity cost, if the United States spends $87 billion in the rebuilding of Iraq, it has to forgo the opportunity to spend $87 billion on some other program.

Because people usually exploit opportunities to make themselves better off, if the price of gasoline rises and stays high for an extended period, we expect people to:

When someone says resources are scarce, this suggests that:

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

When a factory closes, why does it spell bad news for the local restaurants?

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities. As a result, many of these spaces are vacant quite often when they could be used by able-bodied individuals. Such a situation illustrates the:

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

Market failure may occur because:

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle:

Overall, trade between China and the United States will:

The fact that individuals in a market economy act so as to make themselves better off is a major reason a market equilibrium is usually efficient.

A market failure occurs when:

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