Question 1

Which of the following is NOT one of the four principles for understanding individual choice?

Accepted Answer

A) Resources are scarce. 
B) Overall spending sometimes gets out of line with the economy's productive capacity. 
C) "How much" is a decision at the margin. 
D) People usually take advantage of opportunities to make themselves better off. 
A) Resources are scarce. 
B) Overall spending sometimes gets out of line with the economy's productive capacity. 
C) "How much" is a decision at the margin. 
D) People usually take advantage of opportunities to make themselves better off.

Question 2

One person's spending is another person's:

Accepted Answer

A) loss. 
B) income. 
C) physical capital. 
D) opportunity cost. 
A) loss. 
B) income. 
C) physical capital. 
D) opportunity cost.

Question 3

Individuals gain from trade because:

Accepted Answer

A) of specialization in production. 
B) they can sell at a lower price than they can buy at. 
C) self-sufficiency is efficient. 
D) of the principle of absolute advantage. 
A) of specialization in production. 
B) they can sell at a lower price than they can buy at. 
C) self-sufficiency is efficient. 
D) of the principle of absolute advantage.

Question 4

Everyone benefits from street lighting, yet the marginal benefit to any one individual usually falls short of the marginal cost. This is an example of:

Accepted Answer

A) individual actions whose side effects are not properly taken into account by the market. 
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself. 
C) the unsuitability of some goods for efficient management by markets. 
D) regulating self-interest. 
A) individual actions whose side effects are not properly taken into account by the market. 
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself. 
C) the unsuitability of some goods for efficient management by markets. 
D) regulating self-interest.

Question 5

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

Accepted Answer

A) not considering that they have already paid for their tickets. 
B) making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C) thinking only about the benefits of avoiding traffic. 
D) underestimating the value of staying for the rest of the game. 
A) not considering that they have already paid for their tickets. 
B) making a marginal decision by comparing the cost of leaving early to the benefit of leaving early. 
C) thinking only about the benefits of avoiding traffic. 
D) underestimating the value of staying for the rest of the game.

Question 6

We are forced to make choices because of:

Accepted Answer

A) exploitation. 
B) efficiency. 
C) scarcity. 
D) the margin. 
A) exploitation. 
B) efficiency. 
C) scarcity. 
D) the margin.

Question 7

Which of the following is the BEST example of making a choice at the margin?

Accepted Answer

A) buying a new car 
B) quitting your job 
C) drinking another cup of coffee 
D) attending college 
A) buying a new car 
B) quitting your job 
C) drinking another cup of coffee 
D) attending college

Question 8

Which of the following statements is TRUE?

Accepted Answer

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

Question 9

Freshwater is considered a scarce good because:

Accepted Answer

A) not enough of it is available for all needs. 
B) it does not have any uses. 
C) scarce goods are not expensive. 
D) not enough of it is available for all needs and because it is not expensive. 
A) not enough of it is available for all needs. 
B) it does not have any uses. 
C) scarce goods are not expensive. 
D) not enough of it is available for all needs and because it is not expensive.

Question 10

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Accepted Answer

A) hurt Allison's community because Allison's spending will be income for people in the large city. 
B) hurt the city because Allison will take the goods that she purchases back home to her small town. 
C) help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D) help the city because people from small towns usually buy things that people in big cities don't want. 
A) hurt Allison's community because Allison's spending will be income for people in the large city. 
B) hurt the city because Allison will take the goods that she purchases back home to her small town. 
C) help Allison's community because Allison's shopping in the big city leaves more goods for the other small-town residents to buy. 
D) help the city because people from small towns usually buy things that people in big cities don't want.

Question 11

Economists tend to believe that to change people's behavior you must:

Accepted Answer

A) appeal to their concern for society. 
B) change their incentives. 
C) legislate the change. 
D) appeal to their religious values. 
A) appeal to their concern for society. 
B) change their incentives. 
C) legislate the change. 
D) appeal to their religious values.

Question 12

We have to make choices because:

Accepted Answer

A) we have unlimited income. 
B) resources are scarce. 
C) resources are infinite. 
D) with good planning, trade-offs can be avoided. 
A) we have unlimited income. 
B) resources are scarce. 
C) resources are infinite. 
D) with good planning, trade-offs can be avoided.

Question 13

Because one person's spending is another person's income, if one group in the economy spends more, the incomes of other groups will increase.

Accepted Answer

A) True 
 B)False

Question 14

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC) restrict the supply of oil to increase their profits, the oil market:

Accepted Answer

A) achieves an efficient outcome because profits increase. 
B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C) fails because there is no longer an efficient allocation of resources. 
D) fails because there is no longer an equitable allocation of resources. 
A) achieves an efficient outcome because profits increase. 
B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C) fails because there is no longer an efficient allocation of resources. 
D) fails because there is no longer an equitable allocation of resources.

Question 15

A trade-off involves weighing costs and benefits.

Accepted Answer

A) True 
 B)False

Question 16

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. 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) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade. 
A) The real cost of something is what you must give up to get it. 
B) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade.

Question 17

Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment. 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) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade. 
A) The real cost of something is what you must give up to get it. 
B) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade.

Question 18

Which of the following demonstrates one of the three principles of economy-wide interactions?

Accepted Answer

A) A student chooses to rent a movie with friends rather than study for an economics quiz. 
B) Your roommate offers to pay for the movie tickets if you drive to the theater. 
C) A city builds a new public park on the grounds of an abandoned warehouse. 
D) In 2008, fearing a recession, Congress approved a White House proposal to rebate some taxes for 2007. 
A) A student chooses to rent a movie with friends rather than study for an economics quiz. 
B) Your roommate offers to pay for the movie tickets if you drive to the theater. 
C) A city builds a new public park on the grounds of an abandoned warehouse. 
D) In 2008, fearing a recession, Congress approved a White House proposal to rebate some taxes for 2007.

Question 19

According to the textbook, markets usually lead to efficiency.

Accepted Answer

A) True 
 B)False

Question 20

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

Accepted Answer

A) True 
 B)False

Which of the following is NOT one of the four principles for understanding individual choice?

One person's spending is another person's:

Individuals gain from trade because:

Everyone benefits from street lighting, yet the marginal benefit to any one individual usually falls short of the marginal cost. This is an example of:

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

We are forced to make choices because of:

Which of the following is the BEST example of making a choice at the margin?

Which of the following statements is TRUE?

Freshwater is considered a scarce good because:

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Economists tend to believe that to change people's behavior you must:

We have to make choices because:

Because one person's spending is another person's income, if one group in the economy spends more, the incomes of other groups will increase.

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC) restrict the supply of oil to increase their profits, the oil market:

A trade-off involves weighing costs and benefits.

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. This statement best represents this economic concept:

Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment. This statement best represents this economic concept:

Which of the following demonstrates one of the three principles of economy-wide interactions?

According to the textbook, markets usually lead to efficiency.

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

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 NOT one of the four principles for understanding individual choice?

One person's spending is another person's:

Individuals gain from trade because:

Everyone benefits from street lighting, yet the marginal benefit to any one individual usually falls short of the marginal cost. This is an example of:

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic. The fans are:

We are forced to make choices because of:

Which of the following is the BEST example of making a choice at the margin?

Which of the following statements is TRUE?

Freshwater is considered a scarce good because:

If Allison drives to a large city 100 miles from her small community to do her back-to-school shopping, this will:

Economists tend to believe that to change people's behavior you must:

We have to make choices because:

Because one person's spending is another person's income, if one group in the economy spends more, the incomes of other groups will increase.

When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC) restrict the supply of oil to increase their profits, the oil market:

A trade-off involves weighing costs and benefits.

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. This statement best represents this economic concept:

Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment. This statement best represents this economic concept:

Which of the following demonstrates one of the three principles of economy-wide interactions?

According to the textbook, markets usually lead to efficiency.

Because the United States is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

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