Question 1

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

Accepted Answer

A) markets move toward equilibrium. 
B) government policies can change spending. 
C) there are gains from trade. 
D) markets usually lead to efficiency. 
A) markets move toward equilibrium. 
B) government policies can change spending. 
C) there are gains from trade. 
D) markets usually lead to efficiency.

Question 2

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

Accepted Answer

A) People usually exploit opportunities to make themselves better off. 
B) Resources should be used as efficiently as possible to achieve society's goals. 
C) When markets don't achieve efficiency, government intervention can improve society's welfare. 
D) Government policies can change spending. 
A) People usually exploit opportunities to make themselves better off. 
B) Resources should be used as efficiently as possible to achieve society's goals. 
C) When markets don't achieve efficiency, government intervention can improve society's welfare. 
D) Government policies can change spending.

Question 3

If an economy has NOT achieved efficiency, there must be ways to:

Accepted Answer

A) increase opportunity costs. 
B) eliminate inequity. 
C) make some people better off without making others worse off. 
D) increase the incentives for its citizens to follow their own self-interest. 
A) increase opportunity costs. 
B) eliminate inequity. 
C) make some people better off without making others worse off. 
D) increase the incentives for its citizens to follow their own self-interest.

Question 4

When individuals act in their own self-interest:

Accepted Answer

A) efficiency is always achieved. 
B) equity is always achieved. 
C) society may be worse off in some cases. 
D) all opportunities have been taken to make some people better off without making other people worse off. 
A) efficiency is always achieved. 
B) equity is always achieved. 
C) society may be worse off in some cases. 
D) all opportunities have been taken to make some people better off without making other people worse off.

Question 5

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

Accepted Answer

A) compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study. 
A) compare the benefits of one more hour of study with the cost of one less hour of sleep. 
B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus. 
C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. 
D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.

Question 6

In Thailand, the land, labor, and capital in society are used to exploit all opportunities to make everyone better off. This statement best represents this economic concept:

Accepted Answer

A) Markets move toward equilibrium. 
B) Resources should be used as efficiently as possible to achieve society's goals. 
C) Markets usually lead to efficiency. 
D) When markets don't achieve efficiency, government intervention can improve society's welfare. 
A) Markets move toward equilibrium. 
B) Resources should be used as efficiently as possible to achieve society's goals. 
C) Markets usually lead to efficiency. 
D) When markets don't achieve efficiency, government intervention can improve society's welfare.

Question 7

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You love burgers and bagels, but you decide to have a burger today. If they were out of burgers, you would have bought a bagel. 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) Resources are used to produce something else. 
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) Resources are used to produce something else. 
D) There are gains from trade.

Question 8

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Accepted Answer

A) True 
 B)False

Question 9

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Accepted Answer

A) one person's spending is another person's income. 
B) when markets fail to achieve efficiency, government intervention can improve society's welfare. 
C) there are gains from trade. 
D) resources should be used as efficiently as possible to achieve society's goals. 
A) one person's spending is another person's income. 
B) when markets fail to achieve efficiency, government intervention can improve society's welfare. 
C) there are gains from trade. 
D) resources should be used as efficiently as possible to achieve society's goals.

Question 10

Buying vegetables at a farmers' market benefits the community because:

Accepted Answer

A) it is best to be self-sufficient when it comes to growing food. 
B) this will eliminate the opportunity cost of buying food. 
C) buying locally will increase human capital in the community. 
D) one person's local spending will increase another local person's income. 
A) it is best to be self-sufficient when it comes to growing food. 
B) this will eliminate the opportunity cost of buying food. 
C) buying locally will increase human capital in the community. 
D) one person's local spending will increase another local person's income.

Question 11

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

Accepted Answer

A) True 
 B)False

Question 12

Resources are being used efficiently when:

Accepted Answer

A) scarcity is no longer an issue. 
B) they are also used equitably. 
C) every opportunity to make people better off without making others worse off has been seized. 
D) gains from trade are still available. 
A) scarcity is no longer an issue. 
B) they are also used equitably. 
C) every opportunity to make people better off without making others worse off has been seized. 
D) gains from trade are still available.

Question 13

When markets fail:

Accepted Answer

A) government intervention may help. 
B) the market realizes the maximum possible gains from trade given the available resources. 
C) there may still be an efficient allocation of resources. 
D) no goods and services are produced. 
A) government intervention may help. 
B) the market realizes the maximum possible gains from trade given the available resources. 
C) there may still be an efficient allocation of resources. 
D) no goods and services are produced.

Question 14

A new startup airline is offering free round-trip tickets to anywhere to the first 600 people who enter the office on the airline's first day of business. You arrive 24 hours before it is scheduled to open to be sure to get the free tickets, and you buy food from vendors while waiting in line. The cost of the tickets to you is:

Accepted Answer

A) zero. 
B) the cost of food while you wait in line. 
C) the cost of food while you wait in line and the opportunity cost of your time spent in line. 
D) the actual value of the ticket. 
A) zero. 
B) the cost of food while you wait in line. 
C) the cost of food while you wait in line and the opportunity cost of your time spent in line. 
D) the actual value of the ticket.

Question 15

If a market is in disequilibrium:

Accepted Answer

A) it will continue unless there is government intervention. 
B) no individual will be better off doing something different. 
C) there are opportunities for people to make themselves better off. 
D) it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium. 
A) it will continue unless there is government intervention. 
B) no individual will be better off doing something different. 
C) there are opportunities for people to make themselves better off. 
D) it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium.

Question 16

Whenever a choice is made:

Accepted Answer

A) the cost of that choice is opportunity cost. 
B) the cost is easy to measure in dollar terms. 
C) efficiency is improved. 
D) scarcity is not the problem. 
A) the cost of that choice is opportunity cost. 
B) the cost is easy to measure in dollar terms. 
C) efficiency is improved. 
D) scarcity is not the problem.

Question 17

Which of the following is an example of individual choice?

Accepted Answer

A) The government announces plans to ban smoking in all Florida restaurants. 
B) Lauren spends her allowance on pillows for her bed. 
C) France decides to withhold funding to rebuild Iraq. 
D) Africa decides to accept U.S. aid for humanitarian efforts. 
A) The government announces plans to ban smoking in all Florida restaurants. 
B) Lauren spends her allowance on pillows for her bed. 
C) France decides to withhold funding to rebuild Iraq. 
D) Africa decides to accept U.S. aid for humanitarian efforts.

Question 18

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

Accepted Answer

A) marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero. 
B) opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference. 
C) efficiency: If their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt. 
D) equity: it is unfair that some people are still paying off their mortgage. 
A) marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero. 
B) opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference. 
C) efficiency: If their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt. 
D) equity: it is unfair that some people are still paying off their mortgage.

Question 19

Gains from trade exist for:

Accepted Answer

A) individuals only. 
B) states only. 
C) countries only. 
D) individuals, states, and countries. 
A) individuals only. 
B) states only. 
C) countries only. 
D) individuals, states, and countries.

Question 20

A trade-off between equity and efficiency may exist because of all of the following EXCEPT that:

Accepted Answer

A) allocating resources fairly may cause efficiency. 
B) an efficient allocation of resources may lead to an outcome that most people consider unfair. 
C) policies that promote equity often come at a cost of decreased efficiency. 
D) allocating resources fairly may cause inefficiency. 
A) allocating resources fairly may cause efficiency. 
B) an efficient allocation of resources may lead to an outcome that most people consider unfair. 
C) policies that promote equity often come at a cost of decreased efficiency. 
D) allocating resources fairly may cause inefficiency.

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

If an economy has NOT achieved efficiency, there must be ways to:

When individuals act in their own self-interest:

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

In Thailand, the land, labor, and capital in society are used to exploit all opportunities to make everyone better off. This statement best represents this economic concept:

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You love burgers and bagels, but you decide to have a burger today. If they were out of burgers, you would have bought a bagel. This statement best represents this economic concept:

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Buying vegetables at a farmers' market benefits the community because:

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

Resources are being used efficiently when:

When markets fail:

If a market is in disequilibrium:

Whenever a choice is made:

Which of the following is an example of individual choice?

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

Gains from trade exist for:

A trade-off between equity and efficiency may exist because of all of the following EXCEPT 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

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that:

All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided free at the county health clinic. This statement best represents this economic concept:

If an economy has NOT achieved efficiency, there must be ways to:

When individuals act in their own self-interest:

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:

In Thailand, the land, labor, and capital in society are used to exploit all opportunities to make everyone better off. This statement best represents this economic concept:

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You love burgers and bagels, but you decide to have a burger today. If they were out of burgers, you would have bought a bagel. This statement best represents this economic concept:

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:

Buying vegetables at a farmers' market benefits the community because:

In 2003, Congress passed a tax cut. The country did NOT incur any opportunity cost from this decision.

Resources are being used efficiently when:

When markets fail:

If a market is in disequilibrium:

Whenever a choice is made:

Which of the following is an example of individual choice?

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of:

Gains from trade exist for:

A trade-off between equity and efficiency may exist because of all of the following EXCEPT 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