Question 1

A direct or positive relationship exists between a country's

Accepted Answer

A)   productivity and its standard of living.
B)   amount of government spending and its productivity.
C)   total population and its average citizen's income.
D)   rate of population growth and the extent of its trade with other countries.E) None of the above
F) A) and B)

Question 2

In a market economy,economic activity is guided by

Accepted Answer

A)   the government.
B)   corporations.
C)   central planners.
D)   self-interest and prices.E) None of the above
F) B) and D)

Question 3

Economics is the study of

Accepted Answer

A)   production methods.
B)   how society manages its scarce resources.
C)   how households decide who performs which tasks.
D)   the interaction of business and government.E) A) and B)
F) All of the above

Question 4

John is an athlete.He has $120 to spend and wants to buy either a heart rate monitor or new running shoes.Both the heart rate monitor and running shoes cost $120,so he can only buy one.This illustrates the principle that

Accepted Answer

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

Question 5

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)   resources are scarce.
B)   goods and services are not scarce.
C)   incomes fluctuate with business cycles.
D)   people,by nature,tend to disagree.E) All of the above
F) B) and C)

Question 6

The cost of an action is measured in terms of foregone opportunities.

Accepted Answer

A) True 
 B)False

Question 7

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Accepted Answer

A)   guns and butter.
B)   efficiency and equality.
C)   inflation and unemployment.
D)   work and leisure.E) B) and C)
F) B) and D)

Question 8

Which of the following statements about trade is false?

Accepted Answer

A)   Trade increases competition.
B)   With trade,one country wins and one country loses.
C)   Bulgaria can benefit,potentially,from trade with any other country.
D)   Trade allows people to buy a greater variety of goods and services at lower cost.E) None of the above
F) A) and C)

Question 9

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Accepted Answer

A)   People respond to incentives
B)   Rational people think at the margin
C)   Trade can make everyone better off
D)   Markets are usually a good way to organize economic activityE) A) and B)
F) A) and C)

Question 10

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A)   inflation
B)   unemployment
C)   both inflation and unemployment
D)   neither inflation nor unemploymentE) B) and C)
F) B) and D)

Question 11

In a particular country in 1998,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2008,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

Accepted Answer

A)   decreased by 1.7 percent between 1998 and 2008.
B)   remained unchanged between 1998 and 2008.
C)   increased by 4.75 percent between 1998 and 2008.
D)   increased by 6.25 percent between 1998 and 2008.E) None of the above
F) B) and C)

Question 12

Max and Maddy charge people to park on their lawn while attending a nearby craft fair.At the current price of $10,seven people park on their lawn.If they raise the price to $15,they know that only five people will want to park on their lawn.Whether they have seven or five cars parked on their lawn does not affect their costs.From this information it follows that

Accepted Answer

A)   they should leave the price at $10.
B)   it does not matter if they charge $10 or $15.
C)   they would do better charging $15 than $10.
D)   they should raise the price even more.E) B) and D)
F) A) and D)

Question 13

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)   A college student buys a deck of cards to play solitaire in her dorm room.
B)   An elderly woman plants a flower garden on the vacant lot next to her house.
C)   An executive purchases a book to read on a business trip.
D)   A ten-year-old uses his allowance to buy new Nike shoes.E) All of the above
F) B) and D)

Question 14

The "broken window fallacy"

Accepted Answer

A)   explains why inflation is so high.
B)   is a justification for the government to print more money.
C)   is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
D)   has nothing to do with public policy.E) All of the above
F) A) and B)

Question 15

What are the two basic types of economies?

Accepted Answer

Centrally ...

Question 16

Suppose after graduating from college you get a job working at a bank earning $30,000 per year.After two years of working at the bank earning the same salary,you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank.Which of the following should not be included in a calculation of your opportunity cost?

Accepted Answer

A)   the cost of tuition and books to attend the graduate program
B)   the $30,000 salary that you could have earned if you retained your job at the bank
C)   the $45,000 salary that you will be able to earn after having completed your graduate program
D)   the value of insurance coverage and other employee benefits you would have received if you retained your job at the bankE) B) and C)
F) A) and B)

Question 17

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight.If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300,the airline should

Accepted Answer

A)   sell the ticket because the marginal benefit exceeds the marginal cost.
B)   sell the ticket because the marginal benefit exceeds the average cost.
C)   not sell the ticket because the marginal benefit is less than the marginal cost.
D)   not sell the ticket because the marginal benefit is less than the average cost.E) A) and B)
F) A) and C)

Question 18

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million.If the company builds a 31st house,its total cost will increase to $7.76 million.Which of the following statements is correct?

Accepted Answer

A)   For the first 30 houses,the average cost per house was $250,000.
B)   The marginal cost of the 31st house,if it is built,will be $260,000.
C)   If the company can experience a marginal benefit of $275,000 by building the 31st house,then the company should build it.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 19

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Accepted Answer

A)   only the one with a low level of output per person.
B)   only the one with a high level of output per person.
C)   both
D)   neitherE) A) and C)
F) B) and C)

Question 20

Government policies resulting in reduced efficiency include (i) 
The welfare system
(ii) 
Unemployment insurance
(iii) 
Progressive income tax

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (ii) only
D)   (i) , (ii) ,and (iii) E) C) and D)
F) None of the above

Exam 1: Ten Principles of Economics

What are the two basic types of economies?

Correct Answer
verified
Centrally ...
View Answer

Government policies resulting in reduced efficiency include (i) The welfare system (ii) Unemployment insurance (iii) Progressive income tax

Correct Answer
verified

In a particular country in 1998,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2008,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

Correct Answer
verified

Correct Answer
verified

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Correct Answer
verified

Correct Answer
verified

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million.If the company builds a 31^st house,its total cost will increase to $7.76 million.Which of the following statements is correct?

Correct Answer
verified

Which of these activities will most likely result in an external benefit?

Correct Answer
verified

John is an athlete.He has $120 to spend and wants to buy either a heart rate monitor or new running shoes.Both the heart rate monitor and running shoes cost $120,so he can only buy one.This illustrates the principle that

Correct Answer
verified

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Correct Answer
verified

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Correct Answer
verified

In a market economy,economic activity is guided by

Correct Answer
verified

Which of the following statements about trade is false?

Correct Answer
verified

The "broken window fallacy"

Correct Answer
verified

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Correct Answer
verified

Economics is the study of

Correct Answer
verified

The cost of an action is measured in terms of foregone opportunities.

Correct Answer
verified

The overriding reason why households and societies face many decisions is that

Correct Answer
verified

A direct or positive relationship exists between a country's

Correct Answer
verified

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight.If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300,the airline should

Correct Answer
verified

Exam 1: Ten Principles of Economics

What are the two basic types of economies?

Correct AnswerverifiedCentrally ...View AnswerShow Answer

Government policies resulting in reduced efficiency include (i) The welfare system (ii) Unemployment insurance (iii) Progressive income tax

Correct AnswerverifiedShow Answer

In a particular country in 1998,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2008,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million.If the company builds a 31st house,its total cost will increase to $7.76 million.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of these activities will most likely result in an external benefit?

Correct AnswerverifiedShow Answer

John is an athlete.He has $120 to spend and wants to buy either a heart rate monitor or new running shoes.Both the heart rate monitor and running shoes cost $120,so he can only buy one.This illustrates the principle that

Correct AnswerverifiedShow Answer

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Correct AnswerverifiedShow Answer

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Correct AnswerverifiedShow Answer

In a market economy,economic activity is guided by

Correct AnswerverifiedShow Answer

Which of the following statements about trade is false?

Correct AnswerverifiedShow Answer

The "broken window fallacy"

Correct AnswerverifiedShow Answer

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

Correct AnswerverifiedShow Answer

Economics is the study of

Correct AnswerverifiedShow Answer

The cost of an action is measured in terms of foregone opportunities.

Correct AnswerverifiedShow Answer

The overriding reason why households and societies face many decisions is that

Correct AnswerverifiedShow Answer

A direct or positive relationship exists between a country's

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight.If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300,the airline should

Correct AnswerverifiedShow Answer

Correct Answer
verified
Centrally ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million.If the company builds a 31^st house,its total cost will increase to $7.76 million.Which of the following statements is correct?

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified