Question 1

The phrase "no such thing as a free lunch" means

Accepted Answer

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

Question 2

Rational people make decisions "at the margin" by comparing .

Accepted Answer

marginal c...

Question 3

An increase in the overall level of prices in an economy is referred to as

Accepted Answer

A)   the income effect.
B)   inflation.
C)   deflation.
D)   the substitution effect.E) A) and C)
F) B) and C)

Question 4

Which of the following principles is not one of the four principles of individual decisionmaking?

Accepted Answer

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

Question 5

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Accepted Answer

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

Question 6

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

Accepted Answer

A)   the value to Barb of the option she would have chosen had Option B not been available.
B)   the value to Barb of Options A, C and D combined.
C)   the average of the values to Barb of Options A, C, and D.
D)   $100.E) A) and B)
F) A) and D)

Question 7

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Melinda quits her job at a bank,...

Question 8

Germany could have avoided the high inflation that it experienced in the 1920s by

Accepted Answer

A)   not directing so many of its resources toward preparation for World War II.
B)   not increasing taxes so much on the German middle class.
C)   not allowing the quantity of money to increase so rapidly.
D)   using government policies to stimulate the economy more so than what was done.E) B) and D)
F) A) and B)

Question 9

Which of the following is correct concerning opportunity cost?

Accepted Answer

A)   Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.
B)   To compute opportunity costs, you should subtract benefits from costs.
C)   Opportunity costs and the idea of trade-offs are not closely related.
D)   Rational people should compare various options without considering opportunity costs.E) All of the above
F) A) and D)

Question 10

Benefits from trade would not include

Accepted Answer

A)   the ability of people and nations to specialize.
B)   a greater variety of goods and services becoming available.
C)   less competition.
D)   lower prices.E) C) and D)
F) None of the above

Question 11

It costs a company $35,000 to produce 500 graphing calculators. The company's cost will be $35,080 if it produces an additional graphing calculator. If the company produces 501 graphing calculators then

Accepted Answer

A)   its average cost is greater than its marginal cost.
B)   its average cost and its marginal cost are equal.
C)   its average cost is less than its marginal cost.
D)   This cannot be determined from the information given.E) B) and C)
F) All of the above

Question 12

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) A) and D)
F) None of the above

Question 13

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a principle concerning how people interact?

Accepted Answer

A)   Markets are usually a good way to organize economic activity.
B)   Rational people think at the margin.
C)   People respond to incentives.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 15

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Accepted Answer

A)   slow productivity growth in the US.
B)   increased competition from Japan.
C)   increased competition from European countries.
D)   a rapid decrease in the quantity of money in the economy.E) B) and C)
F) All of the above

Question 16

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Accepted Answer

The answer of Consider two countries, Muria and Zenya. In...

Question 17

High-school athletes who skip college to become professional athletes

Accepted Answer

A)   obviously do not understand the value of a college education.
B)   usually do so because they cannot get into college.
C)   understand that the opportunity cost of attending college is very high.
D)   are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.E) A) and B)
F) A) and C)

Question 18

When a government program is justified not on its merits but on the number of jobs it will create,

Accepted Answer

A)   the program is an efficient use of taxpayer dollars.
B)   it should be approved only if the unemployment rate is low.
C)   taxes should be raised to fund the program.
D)   it is known as the "broken window fallacy."E) A) and D)
F) None of the above

Question 19

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

A)   durable and nondurable goods.
B)   imports and exports.
C)   national defense and consumer goods.
D)   law enforcement and agriculture.E) B) and D)
F) A) and B)

Question 20

The "invisible hand" works to promote general well­being in the economy primarily through

Accepted Answer

A)   government intervention.
B)   the political process.
C)   people's pursuit of self­interest.
D)   altruism.E) C) and D)
F) B) and D)

Exam 1: Ten Principles of Economics

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct Answer
verified

The phrase "no such thing as a free lunch" means

Correct Answer
verified

Correct Answer
verified

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Correct Answer
verified

An increase in the overall level of prices in an economy is referred to as

Correct Answer
verified

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct Answer
verified

Guns and butter are used to represent the classic societal tradeoff between spending on

Correct Answer
verified

Which of the following is correct concerning opportunity cost?

Correct Answer
verified

Rational people make decisions "at the margin" by comparing .

Correct Answer
verified
marginal c...
View Answer

The "invisible hand" works to promote general wellbeing in the economy primarily through

Correct Answer
verified

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Correct Answer
verified

High-school athletes who skip college to become professional athletes

Correct Answer
verified

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

Correct Answer
verified

Which of the following is a principle concerning how people interact?

Correct Answer
verified

Benefits from trade would not include

Correct Answer
verified

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Correct Answer
verified

It costs a company $35,000 to produce 500 graphing calculators. The company's cost will be $35,080 if it produces an additional graphing calculator. If the company produces 501 graphing calculators then

Correct Answer
verified

When a government program is justified not on its merits but on the number of jobs it will create,

Correct Answer
verified

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Correct Answer
verified

Germany could have avoided the high inflation that it experienced in the 1920s by

Correct Answer
verified

Exam 1: Ten Principles of Economics

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct AnswerverifiedShow Answer

The phrase "no such thing as a free lunch" means

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Correct AnswerverifiedShow Answer

An increase in the overall level of prices in an economy is referred to as

Correct AnswerverifiedShow Answer

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct AnswerverifiedShow Answer

Guns and butter are used to represent the classic societal tradeoff between spending on

Correct AnswerverifiedShow Answer

Which of the following is correct concerning opportunity cost?

Correct AnswerverifiedShow Answer

Rational people make decisions "at the margin" by comparing .

Correct Answerverifiedmarginal c...View AnswerShow Answer

The "invisible hand" works to promote general well­being in the economy primarily through

Correct AnswerverifiedShow Answer

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Correct AnswerverifiedShow Answer

High-school athletes who skip college to become professional athletes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a principle concerning how people interact?

Correct AnswerverifiedShow Answer

Benefits from trade would not include

Correct AnswerverifiedShow Answer

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Correct AnswerverifiedShow Answer

It costs a company $35,000 to produce 500 graphing calculators. The company's cost will be $35,080 if it produces an additional graphing calculator. If the company produces 501 graphing calculators then

Correct AnswerverifiedShow Answer

When a government program is justified not on its merits but on the number of jobs it will create,

Correct AnswerverifiedShow Answer

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Correct AnswerverifiedShow Answer

Germany could have avoided the high inflation that it experienced in the 1920s by

Correct AnswerverifiedShow 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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marginal c...
View Answer

The "invisible hand" works to promote general wellbeing in the economy primarily through

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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Correct Answer
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Correct Answer
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