Question 1

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 2

Katherine has a physics exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Katherine decides to attend the lecture instead of studying for her exam. Katherine's opportunity cost is:

Accepted Answer

A)  the time spent listening to the lecture. 
B)  not relevant, since no money is involved. 
C)  the cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D)  the time spent getting to the lecture. 
A)  the time spent listening to the lecture. 
B)  not relevant, since no money is involved. 
C)  the cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D)  the time spent getting to the lecture.

Question 3

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 4

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.

Question 5

You are analyzing a trade-off when you compare the _____and _____ of doing something.

Accepted Answer

A)  direct costs; opportunity costs 
B)  marginal benefits; total benefits 
C)  costs; benefits 
D)  direct costs; total costs 
A)  direct costs; opportunity costs 
B)  marginal benefits; total benefits 
C)  costs; benefits 
D)  direct costs; total costs

Question 6

A resource is anything that:

Accepted Answer

A)  can be used in production. 
B)  you pay for. 
C)  is in scarce supply. 
D)  can be consumed. 
A)  can be used in production. 
B)  you pay for. 
C)  is in scarce supply. 
D)  can be consumed.

Question 7

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 8

Suppose a local community decides to give all of its citizens over age 60 a parking pass that will enable them to park in the front of parking lots. For people over 60, this policy is:

Accepted Answer

A)  equitable and efficient, since it applies to all citizens over 60. 
B)  equitable but not efficient, since it applies to all citizens over 60. 
C)  efficient but not equitable, since it applies to all citizens over 60. 
D)  neither equitable nor efficient. 
A)  equitable and efficient, since it applies to all citizens over 60. 
B)  equitable but not efficient, since it applies to all citizens over 60. 
C)  efficient but not equitable, since it applies to all citizens over 60. 
D)  neither equitable nor efficient.

Question 9

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 10

A two-year-old child is eating raisins one at a time from a large box. Even though the child doesn't understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Accepted Answer

The child stops eating when he

Question 11

Because one person's spending is another person's income, if one group in the economy spends more, they increase their share of income and decrease the incomes of other groups.

Accepted Answer

A) True 
 B)False

Question 12

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

Accepted Answer

A)  scarcity. 
B)  efficiency. 
C)  opportunity cost. 
D)  marginal analysis. 
A)  scarcity. 
B)  efficiency. 
C)  opportunity cost. 
D)  marginal analysis.

Question 13

After a great holiday season when it opened its doors for business regularly at 6 A.M., a local retail store decides to continue to open at 6 A.M., even though many customers plan on arriving later to do their shopping. Such a plan by the retail store is:

Accepted Answer

A)  efficient, since it worked previously. 
B)  inefficient, since most customers will revert to their normal shopping behavior after the holidays are over. 
C)  efficient, since it means that workers do not have to change their hours. 
D)  most likely to lead to lower operating costs for the store. 
A)  efficient, since it worked previously. 
B)  inefficient, since most customers will revert to their normal shopping behavior after the holidays are over. 
C)  efficient, since it means that workers do not have to change their hours. 
D)  most likely to lead to lower operating costs for the store.

Question 14

A choice made _____ is a choice whether to do a little more or a little less of something.

Accepted Answer

A)  at the front end 
B)  in the beginning 
C)  at the margin 
D)  ceteris paribus 
A)  at the front end 
B)  in the beginning 
C)  at the margin 
D)  ceteris paribus

Question 15

Market equilibrium will always be efficient even if it is not equitable.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

Which is NOT an example of a resource?

Accepted Answer

A)  land 
B)  labor 
C)  capital 
D)  production 
A)  land 
B)  labor 
C)  capital 
D)  production

Question 18

At most airports there are multiple security guards ready to screen passengers and their luggage through the X-ray and metal detector checkpoints. The length of the wait for each line is about the same. Why?

Accepted Answer

Passengers will always prefer a shorter

Question 19

You decide whether to eat one more slice of pizza based on how hungry you feel. 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 20

Too little spending in an economy often leads to:

Accepted Answer

A)  a recession. 
B)  inflation. 
C)  equilibrium. 
D)  efficiency. 
A)  a recession. 
B)  inflation. 
C)  equilibrium. 
D)  efficiency.

Exam 1: First Principles

Which of the following is an example of individual choice?

Katherine has a physics exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Katherine decides to attend the lecture instead of studying for her exam. Katherine's opportunity cost is:

Which of the following is studied in macroeconomics?

The existence of government intervention often suggests that:

You are analyzing a trade-off when you compare the _____and _____ of doing something.

A resource is anything that:

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

Suppose a local community decides to give all of its citizens over age 60 a parking pass that will enable them to park in the front of parking lots. For people over 60, this policy is:

We are forced to make choices because of:

A two-year-old child is eating raisins one at a time from a large box. Even though the child doesn't understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Because one person's spending is another person's income, if one group in the economy spends more, they increase their share of income and decrease the incomes of other groups.

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

After a great holiday season when it opened its doors for business regularly at 6 A.M., a local retail store decides to continue to open at 6 A.M., even though many customers plan on arriving later to do their shopping. Such a plan by the retail store is:

A choice made _____ is a choice whether to do a little more or a little less of something.

Market equilibrium will always be efficient even if it is not equitable.

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

Which is NOT an example of a resource?

At most airports there are multiple security guards ready to screen passengers and their luggage through the X-ray and metal detector checkpoints. The length of the wait for each line is about the same. Why?

You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept:

Too little spending in an economy often leads to:

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

Filters

You are analyzing a trade-off when you compare the _and _ of doing something.