Question 1

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

Accepted Answer

A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent 
A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent

Question 2

Scenario 1-1
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week.A manager at the plant observes,"Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700,we are still making an overall profit of $5,000 per week so I think we're on the right track.We are producing the optimal number of cell phones."
-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 3,000 cell phones?

Accepted Answer

A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct. 
A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct.

Question 3

Economists assume that rational people do all of the following except

Accepted Answer

A) use all available information as they act to achieve their goals. 
B) undertake activities that benefit others and hurt themselves. 
C) weigh the benefits and costs of all possible alternative actions. 
D) respond to economic incentives. 
A) use all available information as they act to achieve their goals. 
B) undertake activities that benefit others and hurt themselves. 
C) weigh the benefits and costs of all possible alternative actions. 
D) respond to economic incentives.

Question 4

Which of the following is an example of an activity undertaken by an entrepreneur?

Accepted Answer

A) deciding whether to purchase a gasoline-powered automobile or an electric vehicle 
B) being appointed as the head of a charitable organization 
C) running for a seat on the city council 
D) starting your own cigar manufacturing business 
A) deciding whether to purchase a gasoline-powered automobile or an electric vehicle 
B) being appointed as the head of a charitable organization 
C) running for a seat on the city council 
D) starting your own cigar manufacturing business

Question 5

Marginal benefit refers to the additional benefit that your activity provides to you.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics?
a.gasoline prices
b.unemployment
c.inflation
d.health care costs
e.air pollution
f.economic growth

Accepted Answer

b,c,and f are primar

Question 7

Economists reason that the optimal decision is to continue any activity up to the point where the

Accepted Answer

A) marginal benefit is zero. 
B) marginal benefit is greater than the marginal cost. 
C) marginal cost is zero. 
D) marginal benefit equals the marginal cost. 
A) marginal benefit is zero. 
B) marginal benefit is greater than the marginal cost. 
C) marginal cost is zero. 
D) marginal benefit equals the marginal cost.

Question 8

Explain the economic assumption that "people are rational."

Accepted Answer

"People are rational" means that economi

Question 9

The town of Harmonia gives away all 500 tickets to its annual Founder's Day Free Concert-in-the-Park to local residents.Each year,more than 500 people wish to attend the concert,so some of the residents who receive the free tickets sell them for as much as $75 each.Is a transaction where someone pays a resident $75 for a "free ticket" economically efficient?

Accepted Answer

A) No,people should never be allowed to sell items they received for free. 
B) Yes,it was a voluntary exchange that benefited both parties. 
C) No,the buyer paid too much for the ticket. 
D) Yes,but it is efficient only from the perspective of the seller and not from the perspective of the buyer. 
A) No,people should never be allowed to sell items they received for free. 
B) Yes,it was a voluntary exchange that benefited both parties. 
C) No,the buyer paid too much for the ticket. 
D) Yes,but it is efficient only from the perspective of the seller and not from the perspective of the buyer.

Question 10

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.
-What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Accepted Answer

A) invest in companies that produce goods and services based on consumer preferences 
B) invest in companies that produce goods and services at the lowest possible cost 
C) invest in companies that fairly distribute their products and services 
D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero 
A) invest in companies that produce goods and services based on consumer preferences 
B) invest in companies that produce goods and services at the lowest possible cost 
C) invest in companies that fairly distribute their products and services 
D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero

Question 11

Figure 1.1  
-Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2013 and 2015.

Accepted Answer

A) 23.8% 
B) 40% 
C) 42.9% 
D) 73.3% 
A) 23.8% 
B) 40% 
C) 42.9% 
D) 73.3%

Question 12

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each.What is the opportunity cost of buying a goldfish?

Accepted Answer

A) 5 angelfish 
B) 1/5 of an angelfish 
C) $10 
D) $2 
A) 5 angelfish 
B) 1/5 of an angelfish 
C) $10 
D) $2

Question 13

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

Accepted Answer

A) purchases;unlimited 
B) choices;scarce 
C) income;available 
D) decisions;household 
A) purchases;unlimited 
B) choices;scarce 
C) income;available 
D) decisions;household

Question 14

What is the "reverse causality" problem in determining cause and effect?

Accepted Answer

A) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Z that caused a change in variable Y. 
B) It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. 
C) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X. 
D) It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y,and a change in variable Y causes a change in variable X. 
A) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Z that caused a change in variable Y. 
B) It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. 
C) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X. 
D) It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y,and a change in variable Y causes a change in variable X.

Question 15

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300,Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively,he can sell the machine "as is" now for $1,000.What is his marginal benefit if he sells the machine "as is" now?

Accepted Answer

A) $300 
B) $900 
C) $1,000 
D) The marginal benefit cannot be determined. 
A) $300 
B) $900 
C) $1,000 
D) The marginal benefit cannot be determined.

Question 16

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is motivated by an efficiency concern?

Accepted Answer

A) In 2009,the Obama administration increased unemployment benefits. 
B) As part of an economic stimulus package,each taxpayer received a $3,000 tax rebate check. 
C) Following a six-month drought,a city banned homeowners from watering their lawns in an effort to conserve water. 
D) Some U.S.colleges have cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
A) In 2009,the Obama administration increased unemployment benefits. 
B) As part of an economic stimulus package,each taxpayer received a $3,000 tax rebate check. 
C) Following a six-month drought,a city banned homeowners from watering their lawns in an effort to conserve water. 
D) Some U.S.colleges have cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need.

Question 18

Why is it necessary for all economic systems to not only provide people with goods and services,but also restrict them from getting as much of these goods and services as they wish?

Accepted Answer

A) Failure to do this could reduce the efficiency of the system by producing some goods and services that are not as highly valued as others. 
B) Failure to do this could lead to an inequitable allocation of goods and services produced. 
C) Failure to do this could lead to drastic shortages of goods and services. 
D) Failure to do this could reduce efficiency and lead to an inequitable allocation of output. 
A) Failure to do this could reduce the efficiency of the system by producing some goods and services that are not as highly valued as others. 
B) Failure to do this could lead to an inequitable allocation of goods and services produced. 
C) Failure to do this could lead to drastic shortages of goods and services. 
D) Failure to do this could reduce efficiency and lead to an inequitable allocation of output.

Question 19

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Accepted Answer

A) zero,since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents 
A) zero,since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents

Question 20

All of the following questions or statements regarding medical school are positive except

Accepted Answer

A) How do changes in expected future incomes affect the decisions of medical students about which specialty to choose? 
B) Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care. 
C) What role does tuition play in a student's decision about whether to attend medical school? 
D) Have tuition increases had a large effect or a small effect on the number of applications to medical school? 
A) How do changes in expected future incomes affect the decisions of medical students about which specialty to choose? 
B) Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care. 
C) What role does tuition play in a student's decision about whether to attend medical school? 
D) Have tuition increases had a large effect or a small effect on the number of applications to medical school?

Exam 1: Economics: Foundations and Models

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

Economists assume that rational people do all of the following except

Which of the following is an example of an activity undertaken by an entrepreneur?

Marginal benefit refers to the additional benefit that your activity provides to you.

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.gasoline prices b.unemployment c.inflation d.health care costs e.air pollution f.economic growth

Economists reason that the optimal decision is to continue any activity up to the point where the

Explain the economic assumption that "people are rational."

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. -What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2013 and 2015.

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each.What is the opportunity cost of buying a goldfish?

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

What is the "reverse causality" problem in determining cause and effect?

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

Which of the following is motivated by an efficiency concern?

Why is it necessary for all economic systems to not only provide people with goods and services,but also restrict them from getting as much of these goods and services as they wish?

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

All of the following questions or statements regarding medical school are positive except

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Economics is the study of the people make to attain their goals,given their resources.