Question 1

Specialization in production was the starting point for:

Accepted Answer

A)  The Wealth of Nations,by Adam Smith. 
B)  The General Theory,by John Maynard Keynes. 
C)  Das Kapital,by Karl Marx. 
D)  Free to Choose,by Milton Friedman. 
A)  The Wealth of Nations,by Adam Smith. 
B)  The General Theory,by John Maynard Keynes. 
C)  Das Kapital,by Karl Marx. 
D)  Free to Choose,by Milton Friedman.

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

Julie is getting ready for final exams.She has three exams during the first 3 days of the exam period.To prepare,she has outlined a schedule that includes reviewing for her first exam on 1 day,her next exam on the following day,and her third exam on the third day.On each day,she has also allocated some time when she can watch TV or basically do nothing.Which statement BEST explains why Julie provides some time for leisure?

Accepted Answer

A)  Julie is not that smart and cannot study that long. 
B)  Julie is slacking off and will most likely fail all of her finals. 
C)  Julie realizes that there are benefits to leisure time that outweigh the costs of constant studying. 
D)  Julie does not understand the importance of studying. 
A)  Julie is not that smart and cannot study that long. 
B)  Julie is slacking off and will most likely fail all of her finals. 
C)  Julie realizes that there are benefits to leisure time that outweigh the costs of constant studying. 
D)  Julie does not understand the importance of studying.

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

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 6

According to standard economic theory,markets usually lead to efficiency.

Accepted Answer

A) True 
 B)False

Question 7

You are planning to study 8 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 8

Which method of discouraging speeding is likely to be MOST effective given that people usually exploit opportunities to make themselves better off?

Accepted Answer

A)  increasing the number of signs stating the speed limit 
B)  increasing the fine associated with speeding tickets 
C)  public service announcements reminding drivers of the dangers of speeding 
D)  asking drivers to reduce speed 
A)  increasing the number of signs stating the speed limit 
B)  increasing the fine associated with speeding tickets 
C)  public service announcements reminding drivers of the dangers of speeding 
D)  asking drivers to reduce speed

Question 9

In most cases,economic efficiency is achieved through:

Accepted Answer

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

Question 10

After swimming 100 laps at the pool,Erik decides to swim 10 more before lifting weights.Which economic principle does this statement BEST represent?

Accepted Answer

A)  Choices are necessary because resources are scarce. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  There are gains from trade. 
A)  Choices are necessary because resources are scarce. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  There are gains from trade.

Question 11

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 12

When a factory closes,why is it 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 13

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 14

Which statement 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)  Free markets usually lead to efficiency,but not necessarily equity. 
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)  Free markets usually lead to efficiency,but not necessarily equity.

Question 15

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 16

Opportunity cost is:

Accepted Answer

A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice. 
A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice.

Question 17

A grocery store benefits when a new furniture factory moves to town and hires workers because the:

Accepted Answer

A)  new jobs at the factory will increase local incomes,some of which will be spent at the grocery store. 
B)  new factory will eliminate scarcity in the area. 
C)  presence of a new factory will guarantee that resources are used efficiently. 
D)  local circular flow will be smaller with a new factory in town. 
A)  new jobs at the factory will increase local incomes,some of which will be spent at the grocery store. 
B)  new factory will eliminate scarcity in the area. 
C)  presence of a new factory will guarantee that resources are used efficiently. 
D)  local circular flow will be smaller with a new factory in town.

Question 18

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

Accepted Answer

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

Question 19

Two neighbours,Molly and Sandy,are separated by a white picket fence.Each neighbour has a garden that grows tomatoes and peppers.To gain from trade,_____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Accepted Answer

A)  Molly;peppers;Sandy;peppers;Molly 
B)  Sandy;tomatoes;Molly;peppers;Sandy 
C)  Sandy;peppers;Molly;tomatoes;Molly 
D)  Molly;peppers;Sandy;tomatoes;Molly 
A)  Molly;peppers;Sandy;peppers;Molly 
B)  Sandy;tomatoes;Molly;peppers;Sandy 
C)  Sandy;peppers;Molly;tomatoes;Molly 
D)  Molly;peppers;Sandy;tomatoes;Molly

Question 20

Which principle underlies the economics of individual choices?

Accepted Answer

A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  Resources should be used as efficiently as possible to achieve society's goals. 
A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  Resources should be used as efficiently as possible to achieve society's goals.

Specialization in production was the starting point for:

One person's spending is another person's:

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:

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:

According to standard economic theory,markets usually lead to efficiency.

You are planning to study 8 hours this week for your economics final and are considering studying a ninth hour.You should:

Which method of discouraging speeding is likely to be MOST effective given that people usually exploit opportunities to make themselves better off?

In most cases,economic efficiency is achieved through:

After swimming 100 laps at the pool,Erik decides to swim 10 more before lifting weights.Which economic principle does this statement BEST represent?

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:

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

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:

Which statement is FALSE?

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

Opportunity cost is:

A grocery store benefits when a new furniture factory moves to town and hires workers because the:

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

Two neighbours,Molly and Sandy,are separated by a white picket fence.Each neighbour has a garden that grows tomatoes and peppers.To gain from trade,___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.

Which principle underlies the economics of individual choices?

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Exam 1: First Principles

Specialization in production was the starting point for:

One person's spending is another person's:

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:

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:

According to standard economic theory,markets usually lead to efficiency.

You are planning to study 8 hours this week for your economics final and are considering studying a ninth hour.You should:

Which method of discouraging speeding is likely to be MOST effective given that people usually exploit opportunities to make themselves better off?

In most cases,economic efficiency is achieved through:

After swimming 100 laps at the pool,Erik decides to swim 10 more before lifting weights.Which economic principle does this statement BEST represent?

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:

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

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:

Which statement is FALSE?

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

Opportunity cost is:

A grocery store benefits when a new furniture factory moves to town and hires workers because the:

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

Two neighbours,Molly and Sandy,are separated by a white picket fence.Each neighbour has a garden that grows tomatoes and peppers.To gain from trade,_____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Which principle underlies the economics of individual choices?

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Two neighbours,Molly and Sandy,are separated by a white picket fence.Each neighbour has a garden that grows tomatoes and peppers.To gain from trade,___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.