Question 1

Which of the following is not true?

Accepted Answer

A) Voluntary exchange is expected to be advantageous to both parties to the exchange. 
B) What one trader gains from a trade, the other must lose. 
C) If one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. 
D) The expectation of gain motivates people to engage in trade. 
A) Voluntary exchange is expected to be advantageous to both parties to the exchange. 
B) What one trader gains from a trade, the other must lose. 
C) If one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. 
D) The expectation of gain motivates people to engage in trade. B

Question 2

Which of the following is true?

Accepted Answer

A) Voluntary trades give both parties more in value than what they give up. 
B) Without the ability to trade, people would not tend to specialize in those areas where they had a comparative advantage. 
C) People can gain by specializing in the production of the good in which they have a comparative advantage. 
D) Voluntary trade directly increases wealth by making both parties better off, and it is the prospect of wealth-increasing exchange that leads to productive specialization. 
E) All of the above are true. 
A) Voluntary trades give both parties more in value than what they give up. 
B) Without the ability to trade, people would not tend to specialize in those areas where they had a comparative advantage. 
C) People can gain by specializing in the production of the good in which they have a comparative advantage. 
D) Voluntary trade directly increases wealth by making both parties better off, and it is the prospect of wealth-increasing exchange that leads to productive specialization. 
E) All of the above are true. E

Question 3

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Accepted Answer

A) True 
 B)False  False

Question 4

The opportunity cost of an action is equal to:

Accepted Answer

A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the highest valued opportunity that must be sacrificed in order to take the action. 
D) the value of all of the alternative actions that could have been taken. 
E) zero, as only goods cost money. 
A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the highest valued opportunity that must be sacrificed in order to take the action. 
D) the value of all of the alternative actions that could have been taken. 
E) zero, as only goods cost money.

Question 5

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

Accepted Answer

A) True 
 B)False

Question 6

One topic that microeconomics explores is how prices are determined in individual markets, while macroeconomics is concerned with issues such as the economy's overall rate of inflation, economic growth and unemployment.

Accepted Answer

A) True 
 B)False

Question 7

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

Accepted Answer

A) disincentive to trade with others. 
B) higher opportunity cost. 
C) absolute advantage in production. 
D) comparative advantage in production. 
E) None of the above. People, regions, and countries should learn to be self-sufficient. 
A) disincentive to trade with others. 
B) higher opportunity cost. 
C) absolute advantage in production. 
D) comparative advantage in production. 
E) None of the above. People, regions, and countries should learn to be self-sufficient.

Question 8

The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.

Accepted Answer

A) True 
 B)False

Question 9

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Why doesn't Sergei make his own clothes?

Accepted Answer

A) He has already made all the clothes he will need for a few years. 
B) The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C) Sergei just can't find the material he likes in the United States. 
D) Sergei has a comparative advantage in tailoring clothes. 
E) The opportunity cost of making clothes instead of playing hockey is relatively low, so he should instead concentrate on his hockey career (for which the opportunity cost is very high). 
A) He has already made all the clothes he will need for a few years. 
B) The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
C) Sergei just can't find the material he likes in the United States. 
D) Sergei has a comparative advantage in tailoring clothes. 
E) The opportunity cost of making clothes instead of playing hockey is relatively low, so he should instead concentrate on his hockey career (for which the opportunity cost is very high).

Question 10

"Opportunity cost" refers to:

Accepted Answer

A) the dollar price paid for a good. 
B) the price paid for the opportunity to buy stock in an initial public offering. 
C) the value of the best foregone alternative. 
D) the finder's fee paid to a job placement agency for locating employment for workers. 
E) the membership fee paid to join a club. 
A) the dollar price paid for a good. 
B) the price paid for the opportunity to buy stock in an initial public offering. 
C) the value of the best foregone alternative. 
D) the finder's fee paid to a job placement agency for locating employment for workers. 
E) the membership fee paid to join a club.

Question 11

Which of the following statements is most consistent with the rule of rational choice?

Accepted Answer

A) "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B) "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C) "Police forces should be enlarged until virtually all crime is eliminated." 
D) "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved." 
A) "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." 
B) "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." 
C) "Police forces should be enlarged until virtually all crime is eliminated." 
D) "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

Question 12

Specialization is a way for:

Accepted Answer

A) individuals to make the best use of resources by devoting themselves to one primary productive activity. 
B) society to become wealthier while not using their resources. 
C) people to avoid having to trade. 
D) increasing one's opportunity cost for an activity. 
A) individuals to make the best use of resources by devoting themselves to one primary productive activity. 
B) society to become wealthier while not using their resources. 
C) people to avoid having to trade. 
D) increasing one's opportunity cost for an activity.

Question 13

"The president of the world's biggest polluter (the United States) needs to do more than propose well-intentioned but insufficient measures that amount to using a squirt gun to quell a raging fire." Is this a positive or a normative economic statement? Explain your answer.

Accepted Answer

This statement is normative. T

Question 14

The opportunity cost of attending a college basketball game is:

Accepted Answer

A) price of the admission to the game. 
B) the sum of the value of all the alternative uses of your time while at the game. 
C) the value of the highest alternative use of your time and money sacrificed as a result of attending the game. 
D) less if your favorite team wins. 
A) price of the admission to the game. 
B) the sum of the value of all the alternative uses of your time while at the game. 
C) the value of the highest alternative use of your time and money sacrificed as a result of attending the game. 
D) less if your favorite team wins.

Question 15

Assume the total benefits to Mark from trips to a local amusement park during the year are given by the following schedule: 1 trip: $60; 2 trips: $115; 3 trips: $165; 4 trips: $200; 5 trips: $225; 6 or more trips: $240.Which of the following is false?

Accepted Answer

A) Mark would not go to the park more than 6 times per year even if there was free admission. 
B) Mark would not go at all if a single visit cost $65. 
C) If the admission price was $20 per day, Mark would go 5 times per year. 
D) If the amusement park offered no per day admission but only year-long passes for $200, Mark would be willing to buy one. 
E) None of the above are false; all are true. 
A) Mark would not go to the park more than 6 times per year even if there was free admission. 
B) Mark would not go at all if a single visit cost $65. 
C) If the admission price was $20 per day, Mark would go 5 times per year. 
D) If the amusement park offered no per day admission but only year-long passes for $200, Mark would be willing to buy one. 
E) None of the above are false; all are true.

Question 16

The ability to produce at a lower opportunity cost than someone else is referred to as:

Accepted Answer

A) absolute advantage. 
B) comparative advantage. 
C) absolute superiority. 
D) competitive disadvantage. 
E) comparative disadvantage. 
A) absolute advantage. 
B) comparative advantage. 
C) absolute superiority. 
D) competitive disadvantage. 
E) comparative disadvantage.

Question 17

The opportunity cost of going to college includes:

Accepted Answer

A) both tuition and the value of the student's time. 
B) tuition, but not the value of the student's time, which is a cash cost. 
C) tuition, but not the value of the student's time, which is a monetary cost. 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
E) neither tuition nor the value of the student's time, at least at state-supported universities and colleges. 
A) both tuition and the value of the student's time. 
B) tuition, but not the value of the student's time, which is a cash cost. 
C) tuition, but not the value of the student's time, which is a monetary cost. 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
E) neither tuition nor the value of the student's time, at least at state-supported universities and colleges.

Question 18

The highest valued alternative sacrificed as a result of a choice is:

Accepted Answer

A) the opportunity cost, which can be objectively measured by anyone. 
B) the opportunity cost, which can only be subjectively measured by the individual who chooses. 
C) the explicit cost, which can be objectively measured by anyone. 
D) the explicit cost, which can only be subjectively measured by the individual who chooses. 
E) the accounting cost, which can only be objectively measured by an accountant. 
A) the opportunity cost, which can be objectively measured by anyone. 
B) the opportunity cost, which can only be subjectively measured by the individual who chooses. 
C) the explicit cost, which can be objectively measured by anyone. 
D) the explicit cost, which can only be subjectively measured by the individual who chooses. 
E) the accounting cost, which can only be objectively measured by an accountant.

Question 19

Since resources are abundant, we do not have to make choices about their use.

Accepted Answer

A) True 
 B)False

Question 20

The marginal benefit to you of drinking bottled iced tea is $1.50.The price of a bottle of iced tea is $1.25.

Accepted Answer

A) If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B) If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C) You will not purchase iced tea if you are acting rationally. 
D) If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents. 
A) If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B) If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C) You will not purchase iced tea if you are acting rationally. 
D) If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

Which of the following is not true?

Which of the following is true?

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

The opportunity cost of an action is equal to:

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

One topic that microeconomics explores is how prices are determined in individual markets, while macroeconomics is concerned with issues such as the economy's overall rate of inflation, economic growth and unemployment.

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Why doesn't Sergei make his own clothes?

"Opportunity cost" refers to:

Which of the following statements is most consistent with the rule of rational choice?

Specialization is a way for:

"The president of the world's biggest polluter (the United States) needs to do more than propose well-intentioned but insufficient measures that amount to using a squirt gun to quell a raging fire." Is this a positive or a normative economic statement? Explain your answer.

The opportunity cost of attending a college basketball game is:

Assume the total benefits to Mark from trips to a local amusement park during the year are given by the following schedule: 1 trip: $60; 2 trips: $115; 3 trips: $165; 4 trips: $200; 5 trips: $225; 6 or more trips: $240.Which of the following is false?

The ability to produce at a lower opportunity cost than someone else is referred to as:

The opportunity cost of going to college includes:

The highest valued alternative sacrificed as a result of a choice is:

Since resources are abundant, we do not have to make choices about their use.

The marginal benefit to you of drinking bottled iced tea is $1.50.The price of a bottle of iced tea is $1.25.

The Role and Method of Economics

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 2: The Economic Way of Thinking

Which of the following is not true?

Which of the following is true?

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

The opportunity cost of an action is equal to:

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

One topic that microeconomics explores is how prices are determined in individual markets, while macroeconomics is concerned with issues such as the economy's overall rate of inflation, economic growth and unemployment.

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Why doesn't Sergei make his own clothes?

"Opportunity cost" refers to:

Which of the following statements is most consistent with the rule of rational choice?

Specialization is a way for:

"The president of the world's biggest polluter (the United States) needs to do more than propose well-intentioned but insufficient measures that amount to using a squirt gun to quell a raging fire." Is this a positive or a normative economic statement? Explain your answer.

The opportunity cost of attending a college basketball game is:

Assume the total benefits to Mark from trips to a local amusement park during the year are given by the following schedule: 1 trip: $60; 2 trips: $115; 3 trips: $165; 4 trips: $200; 5 trips: $225; 6 or more trips: $240.Which of the following is false?

The ability to produce at a lower opportunity cost than someone else is referred to as:

The opportunity cost of going to college includes:

The highest valued alternative sacrificed as a result of a choice is:

Since resources are abundant, we do not have to make choices about their use.

The marginal benefit to you of drinking bottled iced tea is $1.50.The price of a bottle of iced tea is $1.25.

The Role and Method of Economics

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters