Question 1

To increase living standards, public policy should

Accepted Answer

A)  ensure that workers are well educated and have the necessary tools and technology.
B)  make unemployment benefits more generous.
C)  move workers into jobs directly from high school.
D)  ensure a greater degree of equality, taking all income-earners into account.E) None of the above
F) B) and C)

Question 2

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Question 3

To improve living standards, policymakers should

Accepted Answer

A)  impose restrictions on foreign competition.
B)  formulate policies designed to increase productivity.
C)  impose tougher immigration policies.
D)  provide tax breaks for the middle class.E) A) and D)
F) A) and C)

Question 4

In the short-run, society faces a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 1-5
Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-5. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo...

Question 6

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)  enhance equality.
B)  enhance efficiency.
C)  increase the reward for working hard.
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 7

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A)  Michelle can attend the concert only if she takes her sister with her.
B)  Michael is hungry and homeless.
C)  Andrea must repair the tire on her bike before she can ride it to class.
D)  Dani must decide between going to Florida or Brazil for spring break.E) None of the above
F) All of the above

Question 8

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A)  only the values that society places on those products.
B)  only the costs to society of producing those products.
C)  both the values that society places on those products and the costs to society of producing those products.
D)  none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."E) All of the above
F) B) and D)

Question 9

Stephen is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A)  He should sell the car now for $3,800.
B)  He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800.
C)  He should complete the additional work and sell the car for $5,800.
D)  It does not matter which action he takes since the outcome will be the same either way.E) A) and C)
F) B) and C)

Question 10

Causes of market failure include

Accepted Answer

A)  externalities and market power.
B)  market power and incorrect forecasts of consumer demand.
C)  externalities and foreign competition.
D)  incorrect forecasts of consumer demand and foreign competition.E) C) and D)
F) B) and C)

Question 11

One reason we need government, even in a market economy, is that

Accepted Answer

A)  there is insufficient market power in the absence of government.
B)  property rights are too strong in the absence of government.
C)  the invisible hand is not perfect.
D)  Both a and b are correct.E) None of the above
F) B) and D)

Question 12

Market failure can be caused by

Accepted Answer

A)  low consumer demand.
B)  equilibrium prices.
C)  externalities and market power.
D)  high prices and foreign competition.E) A) and B)
F) All of the above

Question 13

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of

Accepted Answer

A)  a market failure caused by an externality.
B)  a market failure caused by market power.
C)  a market failure caused by equality.
D)  There is no market failure in this case.E) All of the above
F) None of the above

Question 14

Scenario 1-1
You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo...

Question 15

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

Accepted Answer

The answer of Economists use the term ______ to refer...

Question 16

The marginal benefit Susie gets from purchasing a third pair of gloves is

Accepted Answer

A)  the same as the total benefit she gets from purchasing three pairs of gloves.
B)  more than the marginal cost of purchasing the third pair of gloves.
C)  the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves.
D)  the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.E) C) and D)
F) All of the above

Question 17

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

Accepted Answer

A)  Your full room-and-board expenses should always be included.
B)  None of your room-and-board expenses should ever be included.
C)  You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college.
D)  You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.E) B) and D)
F) A) and B)

Question 18

What are the two short-run effects of increasing the quantity of nation's money?

Accepted Answer

Higher inf...

Question 19

A rational decision maker takes an action only if the

Accepted Answer

A)  marginal benefit is less than the marginal cost.
B)  marginal benefit is greater than the marginal cost.
C)  average benefit is greater than the average cost.
D)  marginal benefit is greater than both the average cost and the marginal cost.E) C) and D)
F) A) and B)

Question 20

The "invisible hand" refers to

Accepted Answer

A)  the government.
B)  the free market.
C)  central planners.
D)  large businesses.E) A) and D)
F) B) and C)

Exam 1: Ten Principles of Economics

Market failure can be caused by

Correct Answer
verified

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct Answer
verified

A rational decision maker takes an action only if the

Correct Answer
verified

Correct Answer
verified

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of

Correct Answer
verified

To improve living standards, policymakers should

Correct Answer
verified

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct Answer
verified

One reason we need government, even in a market economy, is that

Correct Answer
verified

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

The "invisible hand" refers to

Correct Answer
verified

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

Correct Answer
verified

Causes of market failure include

Correct Answer
verified

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct Answer
verified

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Correct Answer
verified

To increase living standards, public policy should

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

When the "invisible hand" guides economic activity, prices of products reflect

Correct Answer
verified

What are the two short-run effects of increasing the quantity of nation's money?

Correct Answer
verified
Higher inf...
View Answer

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

Correct Answer
verified

Exam 1: Ten Principles of Economics

Market failure can be caused by

Correct AnswerverifiedShow Answer

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct AnswerverifiedShow Answer

A rational decision maker takes an action only if the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of

Correct AnswerverifiedShow Answer

To improve living standards, policymakers should

Correct AnswerverifiedShow Answer

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct AnswerverifiedShow Answer

One reason we need government, even in a market economy, is that

Correct AnswerverifiedShow Answer

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

Correct AnswerverifiedShow Answer

Causes of market failure include

Correct AnswerverifiedShow Answer

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct AnswerverifiedShow Answer

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Correct AnswerverifiedShow Answer

To increase living standards, public policy should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

When the "invisible hand" guides economic activity, prices of products reflect

Correct AnswerverifiedShow Answer

What are the two short-run effects of increasing the quantity of nation's money?

Correct AnswerverifiedHigher inf...View AnswerShow Answer

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

Correct Answer
verified

Correct Answer
verified
Higher inf...
View Answer

Correct Answer
verified