Question 1

The basic concern of microeconomics is:

Accepted Answer

A)  to keep business firms from losing money. 
B)  to prove that capitalism is better than socialism. 
C)  to study the choices people make. 
D)  to use unlimited resources to produce goods and services to satisfy limited wants. 
A)  to keep business firms from losing money. 
B)  to prove that capitalism is better than socialism. 
C)  to study the choices people make. 
D)  to use unlimited resources to produce goods and services to satisfy limited wants.

Question 2

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

Accepted Answer

A)  opportunity-cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision making. 
A)  opportunity-cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision making.

Question 3

If the value of homes in University City increases and as a result the people of University City spend more, incomes in University City will:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be unaffected.

Question 4

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 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

Gains from trade arise because of:

Accepted Answer

A)  specialization in production. 
B)  specialization in consumption. 
C)  marginal analysis. 
D)  individual choice. 
A)  specialization in production. 
B)  specialization in consumption. 
C)  marginal analysis. 
D)  individual choice.

Question 7

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. 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)  People usually exploit opportunities to make themselves better off. 
D)  Marginal analysis. 
A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  People usually exploit opportunities to make themselves better off. 
D)  Marginal analysis.

Question 8

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

Accepted Answer

A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity. 
A)  People usually exploit opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity.

Question 9

A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7; she could work at the college library at a wage of $6; or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

Accepted Answer

A)  $7. 
B)  $6. 
C)  $13. 
D)  $0. 
A)  $7. 
B)  $6. 
C)  $13. 
D)  $0.

Question 10

A trade-off involves weighing costs and benefits.

Accepted Answer

A) True 
 B)False

Question 11

The concept of the margin deals with:

Accepted Answer

A)  making incremental choices. 
B)  all or none of something. 
C)  engaging in unethical activities. 
D)  making difficult choices. 
A)  making incremental choices. 
B)  all or none of something. 
C)  engaging in unethical activities. 
D)  making difficult choices.

Question 12

For an economist, the cost of something is:

Accepted Answer

A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it. 
A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it.

Question 13

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. 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)  There are gains from trade. 
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)  There are gains from trade.

Question 14

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 15

Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people usually exploit opportunities to make themselves better off?

Accepted Answer

A)  a limited number of free early-bird parking passes given only to those who arrive prior to 6 A.M. 
B)  a toll road that requires each car to pay a fee to enter the city center 
C)  an increase in the price of subway and bus fare to and from the city 
D)  asking citizens to carpool 
A)  a limited number of free early-bird parking passes given only to those who arrive prior to 6 A.M. 
B)  a toll road that requires each car to pay a fee to enter the city center 
C)  an increase in the price of subway and bus fare to and from the city 
D)  asking citizens to carpool

Question 16

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 17

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 18

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 19

If government decided to increase taxes or decrease its spending, most likely this was to correct:

Accepted Answer

A)  a recession. 
B)  inflation. 
C)  high unemployment. 
D)  equilibrium.
Answer Key 
A)  a recession. 
B)  inflation. 
C)  high unemployment. 
D)  equilibrium.
Answer Key

Question 20

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

Accepted Answer

A)  marginal analysis. 
B)  scarce resources. 
C)  resources being used as efficiently as possible to achieve society's goals. 
D)  opportunity costs. 
A)  marginal analysis. 
B)  scarce resources. 
C)  resources being used as efficiently as possible to achieve society's goals. 
D)  opportunity costs.

Exam 1: First Principles

The basic concern of microeconomics is:

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

If the value of homes in University City increases and as a result the people of University City spend more, incomes in University City will:

Resources are being used efficiently when:

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:

Gains from trade arise because of:

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

A trade-off involves weighing costs and benefits.

The concept of the margin deals with:

For an economist, the cost of something is:

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. This statement best represents this economic concept:

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

Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people usually exploit opportunities to make themselves better off?

Overall, trade between China and the United States will:

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

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

If government decided to increase taxes or decrease its spending, most likely this was to correct:

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

Economic Models- Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas- Meddling With Markets

Elasticity

Taxes

The Rational Consumer

International Trade

Decision Making by Individuals and Firms

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Gdp and the Consumer Price Index

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

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