Question 1

In a market economy,

Accepted Answer

A)   households decide which firms to work for and what to buy with their incomes.
B)   firms decide whom to hire and what to make.
C)   a central planner makes decisions about production and consumption.
D)   Both a and b are correct.E) None of the above
F) A) and B)

Question 2

What are the two short­run effects of increasing the quantity of nation's money?

Accepted Answer

Higher inf...

Question 3

Rational people make decisions at the margin by

Accepted Answer

A)   following marginal traditions.
B)   behaving in a random fashion.
C)   thinking in black-and-white terms.
D)   comparing marginal costs and marginal benefits.E) C) and D)
F) A) and D)

Question 4

Adam Smith's book The Wealth of Nations was published in

Accepted Answer

A)   1692.
B)   1776.
C)   1816.
D)   1936.E) A) and D)
F) B) and C)

Question 5

Economics is the study of ______.

Accepted Answer

how societ...

Question 6

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. 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 B)
F) A) and C)

Question 7

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 D)
F) C) and D)

Question 8

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 9

The government enforces property rights by

Accepted Answer

A)   requiring property owners to pay property taxes.
B)   providing police and courts.
C)   forcing people to own property.
D)   providing public parks and recreation facilities.E) A) and B)
F) B) and D)

Question 10

Efficiency means that

Accepted Answer

A)   society is conserving resources in order to save them for the future.
B)   society's goods and services are distributed equally among society's members.
C)   society's goods and services are distributed fairly, though not necessarily equally, among society's members.
D)   society is getting the maximum benefits from its scarce resources.E) B) and C)
F) B) and D)

Question 11

What do prices reflect in a market economy?

Accepted Answer

The value of a good ...

Question 12

Which of the following can policy do?

Accepted Answer

A)   alter incentives
B)   alter trade-offs
C)   change opportunity costs
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 13

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Accepted Answer

A)   should be counted in full, regardless of the costs of eating and sleeping elsewhere.
B)   should be counted only to the extent that they are more expensive at college than elsewhere.
C)   usually exceed the opportunity cost of going to college.
D)   plus the cost of tuition, equals the opportunity cost of going to college.E) A) and B)
F) All of the above

Question 14

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Accepted Answer

A)   more than $40, as the average benefit will exceed the marginal cost.
B)   more than $40, as the marginal benefit will exceed the marginal cost.
C)   more than $80, as the average benefit will exceed the marginal cost.
D)   more than $80, as the marginal benefit will exceed the marginal cost.E) A) and B)
F) None of the above

Question 15

For which of the following problems can well-designed public policy enhance economic efficiency?

Accepted Answer

A)   both externalities and market power
B)   externalities, but not market power
C)   market power, but not externalities
D)   neither externalities nor market powerE) A) and B)
F) A) and C)

Question 16

You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Accepted Answer

A)   the amount you value the first movie + $3
B)   the amount you value the first movie + $9
C)   $3
D)   $9E) A) and B)
F) A) and C)

Question 17

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

Accepted Answer

A)   $50.
B)   $500.
C)   $50,000.
D)   This cannot be determined from the information given.E) C) and D)
F) B) and D)

Question 18

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...

Exam 1: Ten Principles of Economics

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct Answer
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Which of the following can policy do?

Correct Answer
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Efficiency means that

Correct Answer
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Correct Answer
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Causes of market failure include

Correct Answer
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Economics is the study of ______.

Correct Answer
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how societ...
View Answer

The government enforces property rights by

Correct Answer
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Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Correct Answer
verified

What are the two shortrun effects of increasing the quantity of nation's money?

Correct Answer
verified
Higher inf...
View Answer

What do prices reflect in a market economy?

Correct Answer
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The value of a good ...
View Answer

In a market economy,

Correct Answer
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For which of the following problems can well-designed public policy enhance economic efficiency?

Correct Answer
verified

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Adam Smith's book The Wealth of Nations was published in

Correct Answer
verified

Rational people make decisions at the margin by

Correct Answer
verified

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

Correct Answer
verified

Exam 1: Ten Principles of Economics

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct AnswerverifiedShow Answer

Which of the following can policy do?

Correct AnswerverifiedShow Answer

Efficiency means that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Causes of market failure include

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Economics is the study of ______.

Correct Answerverifiedhow societ...View AnswerShow Answer

The government enforces property rights by

Correct AnswerverifiedShow Answer

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Correct AnswerverifiedShow Answer

What are the two short­run effects of increasing the quantity of nation's money?

Correct AnswerverifiedHigher inf...View AnswerShow Answer

What do prices reflect in a market economy?

Correct AnswerverifiedThe value of a good ...View AnswerShow Answer

In a market economy,

Correct AnswerverifiedShow Answer

For which of the following problems can well-designed public policy enhance economic efficiency?

Correct AnswerverifiedShow Answer

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adam Smith's book The Wealth of Nations was published in

Correct AnswerverifiedShow Answer

Rational people make decisions at the margin by

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

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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how societ...
View Answer

Correct Answer
verified

Correct Answer
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What are the two shortrun effects of increasing the quantity of nation's money?

Correct Answer
verified
Higher inf...
View Answer

Correct Answer
verified
The value of a good ...
View Answer

Correct Answer
verified

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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