Question 1

Which of the following is studied in macroeconomics?

Accepted Answer

A) the change in automobile sales due to a change in the price of automobiles 
B) the effect of a tax reduction on the profits of an individual business 
C) recessions 
D) the unemployment of workers displaced by technological change in the typesetting industry 
A) the change in automobile sales due to a change in the price of automobiles 
B) the effect of a tax reduction on the profits of an individual business 
C) recessions 
D) the unemployment of workers displaced by technological change in the typesetting industry

Question 2

Which of the following principles underlies the gains from trade?

Accepted Answer

A) Resources are scarce. 
B) Marginal analysis is used for "how much" decisions. 
C) Resources should be used as efficiently as possible to achieve society's goals. 
D) People usually exploit opportunities to make themselves better off. 
A) Resources are scarce. 
B) Marginal analysis is used for "how much" decisions. 
C) Resources should be used as efficiently as possible to achieve society's goals. 
D) People usually exploit opportunities to make themselves better off.

Question 3

Which of the following is NOT a reason that markets usually lead to efficiency?

Accepted Answer

A) People are naturally efficient. 
B) Individuals have incentives to offer what people want. 
C) Trade encourages efficiency. 
D) Inefficient firms will lose business. 
A) People are naturally efficient. 
B) Individuals have incentives to offer what people want. 
C) Trade encourages efficiency. 
D) Inefficient firms will lose business.

Question 4

Macroeconomics deals with:

Accepted Answer

A) bits and pieces of the economy. 
B) how a business unit should operate profitably. 
C) the working of the entire economy or large sectors of it. 
D) how individuals make decisions. 
A) bits and pieces of the economy. 
B) how a business unit should operate profitably. 
C) the working of the entire economy or large sectors of it. 
D) how individuals make decisions.

Question 5

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that:

Accepted Answer

A) people usually are not selfish enough to exploit opportunities to make themselves better off. 
B) markets move toward equilibrium. 
C) resources should be used as efficiently as possible to achieve society's goals. 
D) markets usually lead to efficiency. 
A) people usually are not selfish enough to exploit opportunities to make themselves better off. 
B) markets move toward equilibrium. 
C) resources should be used as efficiently as possible to achieve society's goals. 
D) markets usually lead to efficiency.

Question 6

When hurricane Katrina devastated the Gulf coast, the businesses in the area, even those not physically damaged by the storm, had losses. Explain how this illustrates the principle that "one person's spending is another person's income."

Accepted Answer

After the hurricane, very few tourists v

Question 7

If equilibrium exists:

Accepted Answer

A) all individuals must have an equal amount of income. 
B) the price in that market will not fluctuate by more than 5%. 
C) there will be no remaining opportunities for individuals to make themselves better off. 
D) the number of buyers will equal the number of sellers. 
A) all individuals must have an equal amount of income. 
B) the price in that market will not fluctuate by more than 5%. 
C) there will be no remaining opportunities for individuals to make themselves better off. 
D) the number of buyers will equal the number of sellers.

Question 8

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

Accepted Answer

A) $45,000 plus the three weeks of vacation 
B) $45,000 per year 
C) one week of vacation 
D) two weeks of vacation 
A) $45,000 plus the three weeks of vacation 
B) $45,000 per year 
C) one week of vacation 
D) two weeks of vacation

Question 9

You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is:

Accepted Answer

A) $1 plus the enjoyment you would have received from the candy bar. 
B) $2 minus the enjoyment you received from the bag of chips. 
C) $1. 
D) the enjoyment you would have received from the candy bar. 
A) $1 plus the enjoyment you would have received from the candy bar. 
B) $2 minus the enjoyment you received from the bag of chips. 
C) $1. 
D) the enjoyment you would have received from the candy bar.

Question 10

Microeconomics deals with:

Accepted Answer

A) the working of the entire economy or large sectors of it. 
B) economic growth. 
C) individual decision makers in the economy. 
D) gross domestic product. 
A) the working of the entire economy or large sectors of it. 
B) economic growth. 
C) individual decision makers in the economy. 
D) gross domestic product.

Question 11

When the San Francisco city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities, he responds that the $1 million improvement will not happen because "that money could be spent building 70 curb ramps." This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) "How much" is a decision at the margin. 
D) When markets don't achieve efficiency, government intervention can improve society's welfare. 
A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) "How much" is a decision at the margin. 
D) When markets don't achieve efficiency, government intervention can improve society's welfare.

Question 12

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

Accepted Answer

A) equitable. 
B) inefficient. 
C) marginally optimal. 
D) efficient. 
A) equitable. 
B) inefficient. 
C) marginally optimal. 
D) efficient.

Question 13

The Taco Hut charges the same price for everything on its menu: $3 will buy a taco, a burrito, or nachos. You buy the taco and think that if you had not purchased the taco, you would have purchased the burrito. The opportunity cost of the taco is:

Accepted Answer

A) $3. 
B) your enjoyment of the burrito. 
C) $3 and your enjoyment of the burrito. 
D) $3, your enjoyment of the burrito, and your enjoyment of the nachos. 
A) $3. 
B) your enjoyment of the burrito. 
C) $3 and your enjoyment of the burrito. 
D) $3, your enjoyment of the burrito, and your enjoyment of the nachos.

Question 14

A friend comes up to you and offers you a free ticket to a professional baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game?

Accepted Answer

A) The cost is zero-the ticket is free. 
B) $65 
C) $40 
D) $55 
A) The cost is zero-the ticket is free. 
B) $65 
C) $40 
D) $55

Question 15

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

Accepted Answer

A) $10,000. 
B) whatever she would have purchased with the $10,000 instead. 
C) whatever she would have earned had she not been in college. 
D) whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college. 
A) $10,000. 
B) whatever she would have purchased with the $10,000 instead. 
C) whatever she would have earned had she not been in college. 
D) whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college.

Question 16

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Accepted Answer

A) The real cost of something is what you must give up to get it. 
B) People usually exploit opportunities to make themselves better off. 
C) There are gains from trade. 
D) Markets move toward equilibrium. 
A) The real cost of something is what you must give up to get it. 
B) People usually exploit opportunities to make themselves better off. 
C) There are gains from trade. 
D) Markets move toward equilibrium.

Question 17

Which of the following statements is FALSE?

Accepted Answer

A) Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B) If an economy is efficient, it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C) Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D) Markets usually lead to efficiency. 
A) Efficiency exists when an economy realizes the maximum possible gains from trade given the available resources. 
B) If an economy is efficient, it is possible to make only a few people better off without reducing other individuals' economic welfare. 
C) Economic efficiency exists when all opportunities to make people better off have been fully exploited. 
D) Markets usually lead to efficiency.

Question 18

Which of the following is NOT a resource in the production of rice?

Accepted Answer

A) fertile land 
B) labor 
C) capital equipment 
D) money 
A) fertile land 
B) labor 
C) capital equipment 
D) money

Question 19

When the United States and Mexico trade:

Accepted Answer

A) the United States will be worse off because wages in Mexico are so low. 
B) Mexico will be worse off because the United States is a stronger economic power. 
C) both Mexico and the United States will be better off. 
D) both Mexico and the United States will be worse off. 
A) the United States will be worse off because wages in Mexico are so low. 
B) Mexico will be worse off because the United States is a stronger economic power. 
C) both Mexico and the United States will be better off. 
D) both Mexico and the United States will be worse off.

Question 20

The existence of government intervention often suggests that:

Accepted Answer

A) markets may not be able to provide for efficient results all of the time. 
B) individual actions have no side effects. 
C) equilibrium will be achieved through this intervention. 
D) markets can efficiently manage the allocation of goods. 
A) markets may not be able to provide for efficient results all of the time. 
B) individual actions have no side effects. 
C) equilibrium will be achieved through this intervention. 
D) markets can efficiently manage the allocation of goods.

Which of the following is studied in macroeconomics?

Which of the following principles underlies the gains from trade?

Which of the following is NOT a reason that markets usually lead to efficiency?

Macroeconomics deals with:

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that:

When hurricane Katrina devastated the Gulf coast, the businesses in the area, even those not physically damaged by the storm, had losses. Explain how this illustrates the principle that "one person's spending is another person's income."

If equilibrium exists:

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is:

Microeconomics deals with:

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

The Taco Hut charges the same price for everything on its menu: $3 will buy a taco, a burrito, or nachos. You buy the taco and think that if you had not purchased the taco, you would have purchased the burrito. The opportunity cost of the taco is:

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Which of the following statements is FALSE?

Which of the following is NOT a resource in the production of rice?

When the United States and Mexico trade:

The existence of government intervention often suggests that:

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

Which of the following is studied in macroeconomics?

Which of the following principles underlies the gains from trade?

Which of the following is NOT a reason that markets usually lead to efficiency?

Macroeconomics deals with:

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that:

When hurricane Katrina devastated the Gulf coast, the businesses in the area, even those not physically damaged by the storm, had losses. Explain how this illustrates the principle that "one person's spending is another person's income."

If equilibrium exists:

Alison is offered two jobs. One pays $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000?

You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is:

Microeconomics deals with:

If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is:

The Taco Hut charges the same price for everything on its menu: $3 will buy a taco, a burrito, or nachos. You buy the taco and think that if you had not purchased the taco, you would have purchased the burrito. The opportunity cost of the taco is:

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

Your health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents this economic concept:

Which of the following statements is FALSE?

Which of the following is NOT a resource in the production of rice?

When the United States and Mexico trade:

The existence of government intervention often suggests that:

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