Question 1

In economics, the cost of something is

Accepted Answer

A)   the dollar amount of obtaining it.
B)   always measured in units of time given up to get it.
C)   what you give up to get it.
D)   often impossible to quantify, even in principle.E) B) and D)
F) B) and C)

Question 2

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Accepted Answer

A)   Only Country A can benefit.
B)   Only Country B can benefit.
C)   Both Country A and Country B can benefit.
D)   Neither Country A nor Country B can benefit.E) A) and B)
F) None of the above

Question 3

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Accepted Answer

A)   the invisible hand.
B)   market power.
C)   government intervention.
D)   oikonomos.E) A) and B)
F) None of the above

Question 4

Suppose that in Brazil total annual output is worth $600 million and people work 30 million hours. In Peru total annual output is worth $800 million and people work 50 million hours. Productivity is higher

Accepted Answer

A)   in Brazil. Most variation in the standard of living across countries is due to differences in productivity.
B)   in Brazil. Differences in productivity explain very little of the variation in the standard of living across countries.
C)   in Peru. Most variation in the standard of living across countries is due to differences in productivity.
D)   in Peru. Differences in productivity explain very little of the variation in the standard of living across countries.E) A) and C)
F) B) and C)

Question 5

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A)   the success of labor unions.
B)   minimum-wage laws.
C)   improvements in productivity.
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 6

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 C)
F) B) and D)

Question 7

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. A customer is willing to pay $60 for the 701th calculator. Should the company produce and sell it? Explain.

Accepted Answer

No, because the marg...

Question 8

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Accepted Answer

A)   the 1970's and the 1990's
B)   the 1970's but not the 1990's
C)   the 1990's but not the 1970's
D)   neither the 1970's nor the 1990'sE) A) and C)
F) C) and D)

Question 9

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Accepted Answer

A)   can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas.
B)   determines Bridget's willingness to pay for the third sodb.
C)   is likely different from the marginal benefit provided to Bridget by the second soda.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 10

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 going to the movies?

Accepted Answer

The answer of Scenario 1-5
Suppose that you have a choice...

Question 11

In the short run, which of the following is not correct?

Accepted Answer

A)   Increasing the money supply increases the demand for goods and services.
B)   Increasing the money supply encourages firms to hire more workers.
C)   Lowering the money supply leads to a higher level of unemployment.
D)   Policies that encourage higher employment will also induce a lower rate of inflation.E) B) and C)
F) A) and D)

Question 12

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Accepted Answer

A)   worried about inflation.
B)   worried about unemployment.
C)   hoping to increase the demand for goods and services.
D)   worried that the economy is growing too slowly.E) C) and D)
F) A) and C)

Question 13

When computing the opportunity cost of attending a basketball game you should include

Accepted Answer

A)   the price you pay for the ticket and the value of your time.
B)   the price you pay for the ticket, but not the value of your time.
C)   the value of your time, but not the price you pay for the ticket.
D)   neither the price of the ticket nor the value of your time.E) A) and B)
F) A) and C)

Question 14

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. 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) B) and C)
F) A) and C)

Question 15

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Accepted Answer

In Germany. Almost all variati...

Question 17

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Accepted Answer

A)   trade can make everyone better off.
B)   rational people think at the margin.
C)   people face tradeoffs.
D)   people respond to incentives.E) A) and D)
F) C) and D)

Question 18

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Accepted Answer

A)   an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
B)   an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.
C)   a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
D)   a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.E) C) and D)
F) B) and D)

Question 19

The ability of an individual to own and exercise control over scarce resources is called

Accepted Answer

A)   market failure.
B)   property rights.
C)   externality.
D)   market power.E) A) and B)
F) A) and C)

Question 20

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Accepted Answer

A)   the value of the knowledge she would have received had she attended class.
B)   the $24 she could have earned if she had worked at her job for those two hours.
C)   the value of her nap minus the value of attending class.
D)   nothing, since she valued sleep more than attendance at class.E) B) and C)
F) C) and D)

Exam 1: Ten Principles of Economics

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct Answer
verified

The increase in living standards of American workers over the past century is primarily due to

Correct Answer
verified

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Correct Answer
verified

Correct Answer
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No, because the marg...
View Answer

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Correct Answer
verified

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Correct Answer
verified

To improve living standards, policymakers should

Correct Answer
verified

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct Answer
verified

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Correct Answer
verified

The ability of an individual to own and exercise control over scarce resources is called

Correct Answer
verified

In economics, the cost of something is

Correct Answer
verified

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Correct Answer
verified

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Correct Answer
verified
In Germany. Almost all variati...
View Answer

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Correct Answer
verified

Suppose that in Brazil total annual output is worth $600 million and people work 30 million hours. In Peru total annual output is worth $800 million and people work 50 million hours. Productivity is higher

Correct Answer
verified

In the short run, which of the following is not correct?

Correct Answer
verified

When computing the opportunity cost of attending a basketball game you should include

Correct Answer
verified

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct Answer
verified

Correct Answer
verified

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Correct Answer
verified

Exam 1: Ten Principles of Economics

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct AnswerverifiedShow Answer

The increase in living standards of American workers over the past century is primarily due to

Correct AnswerverifiedShow Answer

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNo, because the marg...View AnswerShow Answer

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Correct AnswerverifiedShow Answer

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Correct AnswerverifiedShow Answer

To improve living standards, policymakers should

Correct AnswerverifiedShow Answer

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct AnswerverifiedShow Answer

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

The ability of an individual to own and exercise control over scarce resources is called

Correct AnswerverifiedShow Answer

In economics, the cost of something is

Correct AnswerverifiedShow Answer

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

Correct AnswerverifiedShow Answer

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Correct AnswerverifiedIn Germany. Almost all variati...View AnswerShow Answer

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Correct AnswerverifiedShow Answer

Suppose that in Brazil total annual output is worth $600 million and people work 30 million hours. In Peru total annual output is worth $800 million and people work 50 million hours. Productivity is higher

Correct AnswerverifiedShow Answer

In the short run, which of the following is not correct?

Correct AnswerverifiedShow Answer

When computing the opportunity cost of attending a basketball game you should include

Correct AnswerverifiedShow Answer

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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No, because the marg...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In Germany. Almost all variati...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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