Question 1

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 2

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 3

Khalil is offered a free ticket to the opera which he cannot resell.His opportunity cost of going to the opera is:

Accepted Answer

A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera. 
A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera.

Question 4

The trade-off between equity and efficiency occurs because:

Accepted Answer

A)  the efficient allocation of resources is bad for business and industry. 
B)  allocating resources fairly may cause inefficiency. 
C)  everyone must pay more tax to ensure equity. 
D)  efficiency is politically unpopular. 
A)  the efficient allocation of resources is bad for business and industry. 
B)  allocating resources fairly may cause inefficiency. 
C)  everyone must pay more tax to ensure equity. 
D)  efficiency is politically unpopular.

Question 5

Market failure occurs when the pursuit of self-interest leads to bad results for society.

Accepted Answer

A) True 
 B)False

Question 6

The student centre on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You decide to have a burger today,but if they were out of burgers,you would have bought a bagel.Your opportunity cost of buying a burger is your enjoyment of the:

Accepted Answer

A)  burger. 
B)  bagel. 
C)  burrito. 
D)  bagel and the burrito. 
A)  burger. 
B)  bagel. 
C)  burrito. 
D)  bagel and the burrito.

Question 7

Although freshwater is very abundant in most places,it is scarce because:

Accepted Answer

A)  it has no alternative uses. 
B)  there is not enough of it to meet all needs. 
C)  it is a free good. 
D)  scarce goods in general are not all that costly. 
A)  it has no alternative uses. 
B)  there is not enough of it to meet all needs. 
C)  it is a free good. 
D)  scarce goods in general are not all that costly.

Question 8

Economists believe that resources should be used as efficiently as possible to:

Accepted Answer

A)  achieve society's goals. 
B)  eliminate scarcity. 
C)  reduce inequity. 
D)  maximize profits. 
A)  achieve society's goals. 
B)  eliminate scarcity. 
C)  reduce inequity. 
D)  maximize profits.

Question 9

When a market is in equilibrium:

Accepted Answer

A)  a person could do better if he or she did something different. 
B)  people have exploited all opportunities to make themselves better off. 
C)  the government has wrongly interfered in this market. 
D)  markets are not working efficiently. 
A)  a person could do better if he or she did something different. 
B)  people have exploited all opportunities to make themselves better off. 
C)  the government has wrongly interfered in this market. 
D)  markets are not working efficiently.

Question 10

Because one person's spending is another person's income,if one group in the economy spends more,the incomes of other groups will increase.

Accepted Answer

A) True 
 B)False

Question 11

Marginal analysis:

Accepted Answer

A)  refers to decisions about whether or not to engage in a particular activity. 
B)  is primarily used when making an either-or choice. 
C)  is used primarily when deciding how much of an activity should be done. 
D)  does not help when making a "how much" choice. 
A)  refers to decisions about whether or not to engage in a particular activity. 
B)  is primarily used when making an either-or choice. 
C)  is used primarily when deciding how much of an activity should be done. 
D)  does not help when making a "how much" choice.

Question 12

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.

Question 13

The problem of determining what goods and services society should produce:

Accepted Answer

A)  exists because we can produce more than we need or want. 
B)  exists because there are not enough resources to provide all of the goods and services that people want. 
C)  would not exist if all goods and services were scarce. 
D)  would not exist if government owned all of the resources. 
A)  exists because we can produce more than we need or want. 
B)  exists because there are not enough resources to provide all of the goods and services that people want. 
C)  would not exist if all goods and services were scarce. 
D)  would not exist if government owned all of the resources.

Question 14

Intel finds it difficult to hire enough skilled computer engineers.Which economic concept does this statement BEST represent?

Accepted Answer

A)  Scarcity 
B)  Specialization 
C)  Ceteris paribus 
D)  Trade-off 
A)  Scarcity 
B)  Specialization 
C)  Ceteris paribus 
D)  Trade-off

Question 15

When the nations that constitute the Organization of the Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:

Accepted Answer

A)  achieves an efficient outcome because profits increase. 
B)  achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C)  fails because there is no longer an efficient allocation of resources. 
D)  fails because there is no longer an equitable allocation of resources. 
A)  achieves an efficient outcome because profits increase. 
B)  achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource. 
C)  fails because there is no longer an efficient allocation of resources. 
D)  fails because there is no longer an equitable allocation of resources.

Question 16

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 17

Gains from trade exist for:

Accepted Answer

A)  individuals only. 
B)  states only. 
C)  countries only. 
D)  individuals,states,and countries. 
A)  individuals only. 
B)  states only. 
C)  countries only. 
D)  individuals,states,and countries.

Question 18

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 19

A trade-off involves weighing costs and benefits.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 1: First Principles

Individuals gain from trade because:

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.

Khalil is offered a free ticket to the opera which he cannot resell.His opportunity cost of going to the opera is:

The trade-off between equity and efficiency occurs because:

Market failure occurs when the pursuit of self-interest leads to bad results for society.

The student centre on campus has burritos,bagels,or burgers for lunch,and they all cost the same.You decide to have a burger today,but if they were out of burgers,you would have bought a bagel.Your opportunity cost of buying a burger is your enjoyment of the:

Although freshwater is very abundant in most places,it is scarce because:

Economists believe that resources should be used as efficiently as possible to:

When a market is in equilibrium:

Because one person's spending is another person's income,if one group in the economy spends more,the incomes of other groups will increase.

Marginal analysis:

Which principle underlies the economics of individual choices?

The problem of determining what goods and services society should produce:

Intel finds it difficult to hire enough skilled computer engineers.Which economic concept does this statement BEST represent?

When the nations that constitute the Organization of the Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:

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

Gains from trade exist for:

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:

A trade-off involves weighing costs and benefits.

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

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

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.