Question 1

Which book illustrates the advantages of specialization using an eighteenth-century pin factory as an example?

Accepted Answer

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

Question 2

When markets don't achieve efficiency:

Accepted Answer

A)  they must achieve equity. 
B)  the government must be participating in the market. 
C)  the government may intervene to improve society's welfare. 
D)  they should be closed. 
A)  they must achieve equity. 
B)  the government must be participating in the market. 
C)  the government may intervene to improve society's welfare. 
D)  they should be closed.

Question 3

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

Accepted Answer

A)  at the fringe 
B)  in the beginning 
C)  at the margin 
D)  after the fact 
A)  at the fringe 
B)  in the beginning 
C)  at the margin 
D)  after the fact

Question 4

Which resource is NOT one that pertains to the production of rice?

Accepted Answer

A)  fertile land 
B)  labour 
C)  capital equipment 
D)  money 
A)  fertile land 
B)  labour 
C)  capital equipment 
D)  money

Question 5

A trade-off between equity and efficiency may NOT exist because of the fact that:

Accepted Answer

A)  allocating resources fairly may increase efficiency. 
B)  the 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 increase efficiency. 
B)  the 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.

Question 6

Which topic 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 7

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 8

A busy professor needs to decide whether to stay in his office to grade papers for another hour or to go home and go to bed.This is an example of:

Accepted Answer

A)  equity versus efficiency. 
B)  how one person's spending is another person's income. 
C)  economic incentives. 
D)  marginal analysis. 
A)  equity versus efficiency. 
B)  how one person's spending is another person's income. 
C)  economic incentives. 
D)  marginal analysis.

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)  "How much" is a decision at the margin. 
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)  "How much" is a decision at the margin.

Question 10

Which factor can BEST be considered to be a resource used in the production of computers?

Accepted Answer

A)  money from investors 
B)  wages of computer engineers 
C)  computer engineers 
D)  taxes on the profits from the sale of the computers 
A)  money from investors 
B)  wages of computer engineers 
C)  computer engineers 
D)  taxes on the profits from the sale of the computers

Question 11

If the value of homes in Montreal increases and,as a result,the people of Montreal spend more,incomes in Montreal 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 12

An economic situation is in equilibrium when no individual would be better off taking a different action.

Accepted Answer

A) True 
 B)False

Question 13

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 14

During the Great Depression,consumers and producers in Canada dramatically reduced their spending relative to the quantity of goods and services available at the time.Which economic principle does this statement BEST represent?

Accepted Answer

A)  Choices are necessary because resources are scarce. 
B)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
C)  Overall spending sometimes gets out of line with the economy's productive capacity. 
D)  Government policies can change spending. 
A)  Choices are necessary because resources are scarce. 
B)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
C)  Overall spending sometimes gets out of line with the economy's productive capacity. 
D)  Government policies can change spending.

Question 15

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame traffic.These 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 16

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 17

Which factor is NOT an example of a resource?

Accepted Answer

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

Question 18

Grades are low in your biology class,so your professor offers an optional 10-point extra credit assignment.Most of the students turn in the assignment.Which economic principle does this statement BEST represent?

Accepted Answer

A)  The true cost of something is its opportunity cost. 
B)  "How much" is a decision at the margin. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  There are gains from trade. 
A)  The true cost of something is its opportunity cost. 
B)  "How much" is a decision at the margin. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  There are gains from trade.

Question 19

The federal government regulates how much carbon dioxide a factory can emit.Which economic principle does this statement BEST represent?

Accepted Answer

A)  There are gains from trade. 
B)  "How much" is a decision at the margin. 
C)  Markets usually lead to efficiency. 
D)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
A)  There are gains from trade. 
B)  "How much" is a decision at the margin. 
C)  Markets usually lead to efficiency. 
D)  When markets don't achieve efficiency,government intervention can improve society's welfare.

Question 20

The BEST measure of the opportunity cost of any choice is:

Accepted Answer

A)  the monetary cost of that choice. 
B)  whatever you have given up to make that choice,even if no monetary costs are involved. 
C)  the cost associated with not taking full advantage of the opportunity offered by that choice. 
D)  your hourly wage. 
A)  the monetary cost of that choice. 
B)  whatever you have given up to make that choice,even if no monetary costs are involved. 
C)  the cost associated with not taking full advantage of the opportunity offered by that choice. 
D)  your hourly wage.

Exam 1: First Principles

Which book illustrates the advantages of specialization using an eighteenth-century pin factory as an example?

When markets don't achieve efficiency:

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

Which resource is NOT one that pertains to the production of rice?

A trade-off between equity and efficiency may NOT exist because of the fact that:

Which topic is studied in macroeconomics?

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

A busy professor needs to decide whether to stay in his office to grade papers for another hour or to go home and go to bed.This is an example of:

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:

Which factor can BEST be considered to be a resource used in the production of computers?

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

An economic situation is in equilibrium when no individual would be better off taking a different action.

Gains from trade arise because of:

During the Great Depression,consumers and producers in Canada dramatically reduced their spending relative to the quantity of goods and services available at the time.Which economic principle does this statement BEST represent?

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

One person's spending is another person's:

Which factor is NOT an example of a resource?

Grades are low in your biology class,so your professor offers an optional 10-point extra credit assignment.Most of the students turn in the assignment.Which economic principle does this statement BEST represent?

The federal government regulates how much carbon dioxide a factory can emit.Which economic principle does this statement BEST represent?

The BEST measure of the opportunity cost of any choice is:

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters