Question 1

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 2

Economists use the term equilibrium to describe when:

Accepted Answer

A)  individuals are equal. 
B)  no individual would be better off taking a different action. 
C)  no individual has an incentive to change his or her behavior. 
D)  no individual would be better off taking a different action or no individual has an incentive to change his or her behavior. 
A)  individuals are equal. 
B)  no individual would be better off taking a different action. 
C)  no individual has an incentive to change his or her behavior. 
D)  no individual would be better off taking a different action or no individual has an incentive to change his or her behavior.

Question 3

Scarcity exists when:

Accepted Answer

A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited. 
A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited.

Question 4

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor 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; tomatoes; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly 
A)  Molly; tomatoes; Sandy; peppers; Molly 
B)  Sandy; tomatoes; Molly; peppers; Sandy 
C)  Sandy; peppers; Molly; tomatoes; Molly 
D)  Molly; peppers; Sandy; tomatoes; Molly

Question 5

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

Accepted Answer

A)  charge higher tuition to in-state students. 
B)  award special scholarships to out-of-state students. 
C)  offer high-interest loans to in-state students. 
D)  offer lower tuition to in-state students. 
A)  charge higher tuition to in-state students. 
B)  award special scholarships to out-of-state students. 
C)  offer high-interest loans to in-state students. 
D)  offer lower tuition to in-state students.

Question 6

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 7

Microeconomics deals with:

Accepted Answer

A)  the working of the entire economy or large sectors of it. 
B)  economic growth. 
C)  individual decision makers in the economy. 
D)  gross domestic product. 
A)  the working of the entire economy or large sectors of it. 
B)  economic growth. 
C)  individual decision makers in the economy. 
D)  gross domestic product.

Question 8

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 9

Equity is the same as efficiency.

Accepted Answer

A) True 
 B)False

Question 10

In an attempt to reduce shooting deaths, some cities have offered money to people who turn in illegal guns. This program is an example of the government using _____ to influence behavior.

Accepted Answer

A)  incentives 
B)  law 
C)  marginal analysis 
D)  the gains from trade 
A)  incentives 
B)  law 
C)  marginal analysis 
D)  the gains from trade

Question 11

In most cases, economic efficiency is achieved through:

Accepted Answer

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

Question 12

Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test. Marla decides to study rather than tutor. Marla's choice indicates that she:

Accepted Answer

A)  values an additional hour of studying more than the $10 she would earn tutoring. 
B)  values an hour of studying less than the $10 she would earn tutoring. 
C)  does not understand that there is no benefit from studying. 
D)  doesn't need the money. 
A)  values an additional hour of studying more than the $10 she would earn tutoring. 
B)  values an hour of studying less than the $10 she would earn tutoring. 
C)  does not understand that there is no benefit from studying. 
D)  doesn't need the money.

Question 13

The primary emphasis in macroeconomics is on:

Accepted Answer

A)  how firms set prices. 
B)  the national economy. 
C)  marginal analysis. 
D)  bits and pieces of the economy. 
A)  how firms set prices. 
B)  the national economy. 
C)  marginal analysis. 
D)  bits and pieces of the economy.

Question 14

Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of:

Accepted Answer

A)  marginal analysis. 
B)  benefit analysis. 
C)  cost analysis. 
D)  equilibrium analysis. 
A)  marginal analysis. 
B)  benefit analysis. 
C)  cost analysis. 
D)  equilibrium analysis.

Question 15

A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why?

Accepted Answer

For the attorney, the opportunity cost o

Question 16

The economic way of thinking entails:

Accepted Answer

A)  the analysis of benefits but not costs. 
B)  the analysis of costs but not benefits. 
C)  making choices at the margin. 
D)  making the distinction between microeconomics and macroeconomics. 
A)  the analysis of benefits but not costs. 
B)  the analysis of costs but not benefits. 
C)  making choices at the margin. 
D)  making the distinction between microeconomics and macroeconomics.

Question 17

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 18

Julie is getting ready for final exams. She has three exams during the first three days of the exam period. To prepare, she has outlined a schedule that includes reviewing for her first exam on one 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 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 19

Using marginal analysis to decide whether to consume an additional slice of pizza requires making a comparison of the benefits and costs associated with the consumption of an additional slice of pizza.

Accepted Answer

A) True 
 B)False

Question 20

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  "How much" is a decision at the margin. 
C)  There are gains from trade. 
D)  Resources should be used as efficiently as possible to achieve society's goals. 
A)  Resources are scarce. 
B)  "How much" is a decision at the margin. 
C)  There are gains from trade. 
D)  Resources should be used as efficiently as possible to achieve society's goals.

Exam 1: First Principles

If a market is in disequilibrium:

Economists use the term equilibrium to describe when:

Scarcity exists when:

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

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

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:

Microeconomics deals with:

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:

Equity is the same as efficiency.

In an attempt to reduce shooting deaths, some cities have offered money to people who turn in illegal guns. This program is an example of the government using _____ to influence behavior.

In most cases, economic efficiency is achieved through:

Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test. Marla decides to study rather than tutor. Marla's choice indicates that she:

The primary emphasis in macroeconomics is on:

Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of:

A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why?

The economic way of thinking entails:

Individuals gain from trade because:

Using marginal analysis to decide whether to consume an additional slice of pizza requires making a comparison of the benefits and costs associated with the consumption of an additional slice of pizza.

In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept:

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

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