Question 1

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. A customer is willing to pay $60 for the 601st heart rate monitor. Should the company produce and sell it? Explain.

Accepted Answer

No, because the marg...

Question 2

The business cycle is measured by the

Accepted Answer

A)   production of goods and services.
B)   number of people employed.
C)   the interest rate.
D)   Both a and b are correct.E) B) and C)
F) All of the above

Question 3

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) All of the above

Question 4

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)   reduce efficiency.
C)   reduce the reward for working hard.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 5

A rational decisionmaker

Accepted Answer

A)   ignores marginal changes and focuses instead on "the big picture."
B)   ignores the likely effects of government policies when he or she makes choices.
C)   takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
D)   takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.E) A) and D)
F) A) and C)

Question 6

The term refers to the size of the economic pie, and the term refers to how the pie is divided.

Accepted Answer

efficiency...

Question 7

Which of the following phrases best captures the notion of efficiency?

Accepted Answer

A)   absolute fairness
B)   equal distribution
C)   minimum waste
D)   equitable outcomeE) B) and C)
F) A) and D)

Question 8

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) A) and D)
F) B) and C)

Question 9

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Accepted Answer

A)   trade can make everyone better off.
B)   people face trade-offs.
C)   rational people think at the margin.
D)   decisions made at the margin are not particularly important.E) A) and C)
F) B) and C)

Question 10

Over the past century, the average income in the United States has risen about

Accepted Answer

A)   twofold.
B)   fivefold.
C)   eightfold.
D)   tenfold.E) All of the above
F) B) and D)

Question 11

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) A) and B)

Question 12

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) A) and B)
F) A) and C)

Question 13

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 14

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 soda.
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 15

A rationale for government involvement in a market economy is

Accepted Answer

A)   markets sometimes fail to produce a fair distribution of economic well-being.
B)   markets sometimes fail to produce an efficient allocation of resources.
C)   property rights have to be enforced.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 16

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo...

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. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Accepted Answer

A)   more than $200.
B)   more than $300.
C)   more than $500.
D)   This cannot be determined from the information given.E) B) and C)
F) None of the above

Question 18

Water pollution from pulp and paper mills harms plants, animals, and humans. 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) A) and D)
F) None of the above

Question 19

The term "invisible hand" was coined by

Accepted Answer

A)   Adam Smith.
B)   David Ricardo.
C)   Karl Marx.
D)   Benjamin Franklin.E) A) and C)
F) A) and B)

Question 20

Both the production of goods and services and the unemployment rate are used to measure

Accepted Answer

A)   the business cycle.
B)   productivity.
C)   the interest rate.
D)   inflation.E) All of the above
F) A) and B)

Exam 1: Ten Principles of Economics

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Correct Answer
verified

The term refers to the size of the economic pie, and the term refers to how the pie is divided.

Correct Answer
verified
efficiency...
View Answer

A rationale for government involvement in a market economy is

Correct Answer
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Over the past century, the average income in the United States has risen about

Correct Answer
verified

The business cycle is measured by the

Correct Answer
verified

Both the production of goods and services and the unemployment rate are used to measure

Correct Answer
verified

Which of the following statements about trade is false?

Correct Answer
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A rational decisionmaker

Correct Answer
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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 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

To increase living standards, public policy should

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. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Correct Answer
verified

Which of the following phrases best captures the notion of efficiency?

Correct Answer
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Market power and externalities are two possible causes of market failure.

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

Correct Answer
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The enjoyment you wo...
View Answer

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

Correct Answer
verified

The term "invisible hand" was coined by

Correct Answer
verified

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

Correct Answer
verified

Water pollution from pulp and paper mills harms plants, animals, and humans. This is an example of

Correct Answer
verified

Exam 1: Ten Principles of Economics

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Correct AnswerverifiedShow Answer

The term refers to the size of the economic pie, and the term refers to how the pie is divided.

Correct Answerverifiedefficiency...View AnswerShow Answer

A rationale for government involvement in a market economy is

Correct AnswerverifiedShow Answer

Over the past century, the average income in the United States has risen about

Correct AnswerverifiedShow Answer

The business cycle is measured by the

Correct AnswerverifiedShow Answer

Both the production of goods and services and the unemployment rate are used to measure

Correct AnswerverifiedShow Answer

Which of the following statements about trade is false?

Correct AnswerverifiedShow Answer

A rational decisionmaker

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 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

To increase living standards, public policy should

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. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Correct AnswerverifiedShow Answer

Which of the following phrases best captures the notion of efficiency?

Correct AnswerverifiedShow Answer

Market power and externalities are two possible causes of market failure.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The term "invisible hand" was coined by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Water pollution from pulp and paper mills harms plants, animals, and humans. This is an example of

Correct AnswerverifiedShow Answer

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Correct Answer
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efficiency...
View Answer

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No, because the marg...
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The enjoyment you wo...
View Answer

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Correct Answer
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