Question 1

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 2

Which of the following is motivated by an equity concern?

Accepted Answer

A) Some states have transferred funds to food bank programs in order to increase benefits to lower-income families. 
B) Following the implementation of subsidies for energy conservation,household demand for rooftop solar panels increased quite significantly in California. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The United States offers patent protection to pharmaceutical manufacturers to prevent others from duplicating their products. 
A) Some states have transferred funds to food bank programs in order to increase benefits to lower-income families. 
B) Following the implementation of subsidies for energy conservation,household demand for rooftop solar panels increased quite significantly in California. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The United States offers patent protection to pharmaceutical manufacturers to prevent others from duplicating their products.

Question 3

Productive efficiency is achieved when

Accepted Answer

A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market. 
A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market.

Question 4

Optimal decisions are made at the point where marginal cost equals zero.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a positive economic statement?

Accepted Answer

A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country. 
A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.

Question 6

All of the following contributed to the downfall of the Soviet Union in 1991 except

Accepted Answer

A) public dissatisfaction with low living standards and political repression. 
B) an inability to produce low-cost consumer goods that households wanted. 
C) lack of high-quality goods and services. 
D) lack of a strong dictator who can coordinate economic activities. 
A) public dissatisfaction with low living standards and political repression. 
B) an inability to produce low-cost consumer goods that households wanted. 
C) lack of high-quality goods and services. 
D) lack of a strong dictator who can coordinate economic activities.

Question 7

What is the "omitted variable" problem in determining cause and effect?

Accepted Answer

A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect. 
A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Question 8

Allocative efficiency best explains ________,and productive efficiency best explains ________.

Accepted Answer

A) how something will be produced;when something will be produced 
B) when something will be produced;why something will be produced 
C) why something will be produced;what will be produced 
D) what will be produced;how something will be produced 
A) how something will be produced;when something will be produced 
B) when something will be produced;why something will be produced 
C) why something will be produced;what will be produced 
D) what will be produced;how something will be produced

Question 9

Which of the following statements about positive economic analysis is false?

Accepted Answer

A) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. 
B) There is much more disagreement among economists over normative economic analysis than over positive economic analysis. 
C) There is much more disagreement among economists over positive economic analysis than over normative economic analysis. 
D) Unlike normative economic analysis,positive economic analysis can be tested. 
A) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. 
B) There is much more disagreement among economists over normative economic analysis than over positive economic analysis. 
C) There is much more disagreement among economists over positive economic analysis than over normative economic analysis. 
D) Unlike normative economic analysis,positive economic analysis can be tested.

Question 10

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Accepted Answer

Positive economic analysis is concerned

Question 11

Economists assume that individuals

Accepted Answer

A) behave in unpredictable ways. 
B) will never take actions to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives. 
A) behave in unpredictable ways. 
B) will never take actions to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives.

Question 12

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.Had the firm not produced and sold the last 3,000 cell phones,would its profit be higher or lower,and if so by how much?

Accepted Answer

A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower. 
A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower.

Question 13

The U.S.Health Resources and Services Administration (HRSA)forecasts that in 2020

Accepted Answer

A) there will be a shortage of doctors in the United States. 
B) the number of doctors in the United States will decrease and the number of doctors needed will increase. 
C) the number of doctors in the United States will increase and the number of doctors needed will decrease. 
D) there will be a surplus of doctors in the United States. 
A) there will be a shortage of doctors in the United States. 
B) the number of doctors in the United States will decrease and the number of doctors needed will increase. 
C) the number of doctors in the United States will increase and the number of doctors needed will decrease. 
D) there will be a surplus of doctors in the United States.

Question 14

The three fundamental questions that any economy must address are:

Accepted Answer

A) What will be the prices of goods and services;how will these goods and services be produced;and who will receive them? 
B) What goods and services to produce;how will these goods and services be produced;and who receives them? 
C) Who gets jobs;what wages do workers earn;and who owns what property? 
D) How much will be saved;what will be produced;and how can these goods and services be fairly distributed? 
A) What will be the prices of goods and services;how will these goods and services be produced;and who will receive them? 
B) What goods and services to produce;how will these goods and services be produced;and who receives them? 
C) Who gets jobs;what wages do workers earn;and who owns what property? 
D) How much will be saved;what will be produced;and how can these goods and services be fairly distributed?

Question 15

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) Some U.S.colleges are actively recruiting foreign students for their technology-based programs. 
D) All New York City art museums are considering adopting a free-admission policy for local residents one weekend per month. 
A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) Some U.S.colleges are actively recruiting foreign students for their technology-based programs. 
D) All New York City art museums are considering adopting a free-admission policy for local residents one weekend per month.

Question 16

The highest valued alternative that must be given up to engage in an activity is the definition of

Accepted Answer

A) economic equity. 
B) marginal benefit. 
C) opportunity cost. 
D) marginal cost. 
A) economic equity. 
B) marginal benefit. 
C) opportunity cost. 
D) marginal cost.

Question 17

Which of the following is a microeconomics question?

Accepted Answer

A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation? 
A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation?

Question 18

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Accepted Answer

A) True 
 B)False

Question 19

Who receives the most of what is produced in a market economy?

Accepted Answer

A) lawmakers and other politically favored groups 
B) those who are willing and able to buy them 
C) everyone receives an equal amount 
D) people who earn the highest incomes 
A) lawmakers and other politically favored groups 
B) those who are willing and able to buy them 
C) everyone receives an equal amount 
D) people who earn the highest incomes

Question 20

Marginal analysis involves undertaking an activity

Accepted Answer

A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits. 
A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits.

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

Which of the following is motivated by an equity concern?

Productive efficiency is achieved when

Optimal decisions are made at the point where marginal cost equals zero.

Which of the following is a positive economic statement?

All of the following contributed to the downfall of the Soviet Union in 1991 except

What is the "omitted variable" problem in determining cause and effect?

Allocative efficiency best explains ,and productive efficiency best explains .

Which of the following statements about positive economic analysis is false?

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Economists assume that individuals

The U.S.Health Resources and Services Administration (HRSA)forecasts that in 2020

The three fundamental questions that any economy must address are:

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

The highest valued alternative that must be given up to engage in an activity is the definition of

Which of the following is a microeconomics question?

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Who receives the most of what is produced in a market economy?

Marginal analysis involves undertaking an activity

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 1: Economics: Foundations and Models

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

Which of the following is motivated by an equity concern?

Productive efficiency is achieved when

Optimal decisions are made at the point where marginal cost equals zero.

Which of the following is a positive economic statement?

All of the following contributed to the downfall of the Soviet Union in 1991 except

What is the "omitted variable" problem in determining cause and effect?

Allocative efficiency best explains ________,and productive efficiency best explains ________.

Which of the following statements about positive economic analysis is false?

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Economists assume that individuals

The U.S.Health Resources and Services Administration (HRSA)forecasts that in 2020

The three fundamental questions that any economy must address are:

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

The highest valued alternative that must be given up to engage in an activity is the definition of

Which of the following is a microeconomics question?

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Who receives the most of what is produced in a market economy?

Marginal analysis involves undertaking an activity

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Allocative efficiency best explains ,and productive efficiency best explains .