Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Equity means that:

Accepted Answer

A) everyone gets an efficient share of the goods and services produced. 
B) everyone gets his or her fair share of the goods and services produced. 
C) more of some goods and services can be produced only if the production of others is reduced. 
D) more of all goods and services may be produced.

Question 3

Marginal analysis studies how individuals decide:

Accepted Answer

A) whether to live on the margin of society. 
B) whether to do a bit more of an activity versus a bit less of it. 
C) whether to go to college. 
D) how much down payment to make when buying stocks.

Question 4

Intel finds it difficult to hire enough skilled computer engineers. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) People usually exploit opportunities to make themselves better off. 
C) There are gains from trade. 
D) One person's spending is another person's income.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Nara has gone to three movies this week. She has some extra money, so she decides to go to another. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) "How much" is a decision at the margin. 
D) There are gains from trade.

Question 7

The student center 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.

Question 8

An economy is efficient if it is:

Accepted Answer

A) possible to produce more of all goods and services. 
B) possible to produce more of one good without producing less of another. 
C) not possible to produce more of one good without producing less of another good. 
D) producing a combination of goods.

Question 9

While buying refreshments for an upcoming party, you notice that a six-pack of Americana Beer costs $2 and a six-pack of Bavarian Beer costs $4. You buy the six-pack of Bavarian Beer, although you wonder if maybe two six-packs of Americana Beer would have been a better choice. The opportunity cost of the Bavarian Beer is:

Accepted Answer

A) $4. 
B) a six-pack of Americana Beer. 
C) two six-packs of Americana Beer. 
D) $4 and the six-pack of Americana Beer.

Question 10

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents the economic concept that:

Accepted Answer

A) resources should be used as efficiently as possible to achieve society's goals. 
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 11

Which of the following statements is CORRECT?

Accepted Answer

A) Resource scarcity is not a major concern in the rich countries of the world. 
B) Some opportunity costs are zero. 
C) An economic situation is in equilibrium when no individual would be better off taking a different action. 
D) Some very talented, skilled individuals who can do everything better than most people should not specialize in doing any one thing.

Question 12

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

Accepted Answer

A) zero. 
B) $260. 
C) whatever else she would have done with the 48 hours. 
D) The cost is impossible to determine.

Question 13

For which of the following decisions would marginal analysis be MOST relevant?

Accepted Answer

A) Should I invest all of my savings in real estate or should I keep it all in a savings account? 
B) After I graduate from college, should I go to graduate school or should I get a job? 
C) After meeting my basic needs, how should I allocate the remainder of my monthly budget? 
D) Should I keep a pet?

Question 14

As long as individuals know that they can find the goods and services they want in the market, they are willing to forgo being self-sufficient and are willing to specialize.

Accepted Answer

A) True 
 B)False

Question 15

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) People usually exploit opportunities to make themselves better off. 
D) Marginal analysis.

Question 16

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

Accepted Answer

A) charge higher tuition to in-state students. 
B) award special scholarships to out-of-state students. 
C) offer high-interest loans to in-state students. 
D) offer lower tuition to in-state students.

Question 17

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) government has directed the market in such a way as to achieve this point. 
D) markets are not working efficiently.

Question 18

Equity is the same as efficiency.

Accepted Answer

A) True 
 B)False

Question 19

In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) Resources should be used as efficiently as possible to achieve society's goals. 
C) When markets don't achieve efficiency, government intervention can improve society's welfare. 
D) Government policies can change spending.

Question 20

You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept:

Accepted Answer

A) Resources are scarce. 
B) The real cost of something is what you must give up to get it. 
C) "How much" is a decision at the margin. 
D) There are gains from trade.

Exam 1: First Principles

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

Equity means that:

Marginal analysis studies how individuals decide:

Intel finds it difficult to hire enough skilled computer engineers. This statement best represents this economic concept:

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

Nara has gone to three movies this week. She has some extra money, so she decides to go to another. This statement best represents this economic concept:

The student center 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:

An economy is efficient if it is:

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents the economic concept that:

Which of the following statements is CORRECT?

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

For which of the following decisions would marginal analysis be MOST relevant?

As long as individuals know that they can find the goods and services they want in the market, they are willing to forgo being self-sufficient and are willing to specialize.

You notice that when a new yoga class is offered at the student recreation center at a highly desirable time, some students from the other yoga classes go to the new class instead. This statement best represents this economic concept:

Because people usually exploit opportunities to make themselves better off, to encourage young people to go to college in their home state, state universities can:

When a market is in equilibrium:

Equity is the same as efficiency.

In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept:

You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept: