Question 1

Large or persistent inflation is almost always caused by

Accepted Answer

A)  excessive government spending.
B)  excessive growth in the quantity of money.
C)  foreign competition.
D)  higher-than-normal levels of productivity.E) All of the above
F) C) and D)

Question 2

Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?

Accepted Answer

A)  Trade can make everyone better off.
B)  Markets are usually a good way to organize economic activity.
C)  Governments can sometimes improve market outcomes.
D)  Prices rise when the government prints too much money.E) B) and D)
F) All of the above

Question 3

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 D)

Question 4

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 D)
F) None of the above

Question 5

Resources are

Accepted Answer

A)  scarce for households but plentiful for economies.
B)  plentiful for households but scarce for economies.
C)  scarce for households and scarce for economies.
D)  plentiful for households and plentiful for economies.E) All of the above
F) A) and B)

Question 6

Cole is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Cole discovers that he needs to do an additional $200 worth of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should Cole do?

Accepted Answer

A)  He should sell the cabinet now for $100.
B)  He should keep the cabinet since it wouldn't be rational to spend $380 restoring a cabinet and then sell it for only $360.
C)  He should complete the additional work and sell the cabinet for $360.
D)  It does not matter which action he takes since the outcome will be the same either way.E) A) and D)
F) All of the above

Question 7

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A)  Average income in the US is higher than the average income in Ghana.
B)  The US has a higher standard of living than Ghana.
C)  Productivity in the US is higher than productivity in Ghana.
D)  All of the above are correct.E) B) and C)
F) All of the above

Question 8

Economists use the term ______ to refer to an increase in the overall level of prices in the economy.

Accepted Answer

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

Question 9

One effect of the government-imposed seat belt law in the U.S. has been

Accepted Answer

A)  a dramatic decrease in the number of pedestrian deaths.
B)  safer driving.
C)  an increase in the number of accidents.
D)  a dramatic decrease in the number of driver deaths.E) B) and D)
F) B) and C)

Question 10

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) A

Question 11

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

Question 12

Inflation and unemployment both increase as the money supply increases.

Accepted Answer

A) True 
 B)False

Question 13

For most students, the earnings they give up to attend college are

Accepted Answer

A)  a minor cost when compared to the costs of tuition, room and board, and the like.
B)  the single largest cost of their education.
C)  about equal to the costs of room and board at college.
D)  not considered true costs by an economist.E) A) and B)
F) A) and C) B

Question 14

In a particular country in 2008, the average worker had to work 40 hours to produce 100 units of output. In that same country in 2018, the average worker needed to work 35 hours to produce 94.5 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  increased by 2 percent between 2008 and 2018.
B)  increased by 8 percent between 2008 and 2018.
C)  remained unchanged between 2008 and 2018.
D)  decreased by 2 percent between 2008 and 2018.E) B) and C)
F) A) and D)

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

The U.S. president who referred to inflation as "public enemy number one" was

Accepted Answer

A)  Richard Nixon.
B)  Gerald Ford.
C)  Jimmy Carter.
D)  Ronald Reagan.E) A) and C)
F) B) and D) B

Question 17

Economists are particularly adept at understanding that people respond to

Accepted Answer

A)  laws.
B)  incentives.
C)  punishments more than rewards.
D)  rewards more than punishments.E) A) and B)
F) All of the above

Question 18

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)  efficiency is improved, but equality is not.
B)  equality is improved, but efficiency is not.
C)  both efficiency and equality are improved.
D)  neither efficiency nor equality are improved.E) A) and B)
F) A) and C)

Question 19

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

Question 20

When the government attempts to improve equality in an economy the result is often

Accepted Answer

A)  an increase in overall output in the economy.
B)  additional government revenue since overall income will increase.
C)  a reduction in equality.
D)  a reduction in efficiency.E) A) and D)
F) B) and C)

Exam 1: Ten Principles of Economics

Large or persistent inflation is almost always caused by

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

Correct Answer
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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
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Resources are

Correct Answer
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Correct Answer
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US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Correct Answer
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Economists use the term ______ to refer to an increase in the overall level of prices in the economy.

Correct Answer
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One effect of the government-imposed seat belt law in the U.S. has been

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

Correct Answer
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A

Correct Answer
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Inflation and unemployment both increase as the money supply increases.

Correct Answer
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For most students, the earnings they give up to attend college are

Correct Answer
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B

In a particular country in 2008, the average worker had to work 40 hours to produce 100 units of output. In that same country in 2018, the average worker needed to work 35 hours to produce 94.5 units of output. In that country, the productivity of the average worker

Correct Answer
verified

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

Correct Answer
verified

The U.S. president who referred to inflation as "public enemy number one" was

Correct Answer
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B

Economists are particularly adept at understanding that people respond to

Correct Answer
verified

When the government redistributes income from the wealthy to the poor,

Correct Answer
verified

The business cycle is measured by the

Correct Answer
verified

When the government attempts to improve equality in an economy the result is often

Correct Answer
verified

Exam 1: Ten Principles of Economics

Large or persistent inflation is almost always caused by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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

Resources are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Correct AnswerverifiedShow Answer

Economists use the term ______ to refer to an increase in the overall level of prices in the economy.

Correct AnswerverifiedShow Answer

One effect of the government-imposed seat belt law in the U.S. has been

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

Inflation and unemployment both increase as the money supply increases.

Correct AnswerverifiedShow Answer

For most students, the earnings they give up to attend college are

Correct AnswerverifiedB

In a particular country in 2008, the average worker had to work 40 hours to produce 100 units of output. In that same country in 2018, the average worker needed to work 35 hours to produce 94.5 units of output. In that country, the productivity of the average worker

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The U.S. president who referred to inflation as "public enemy number one" was

Correct AnswerverifiedB

Economists are particularly adept at understanding that people respond to

Correct AnswerverifiedShow Answer

When the government redistributes income from the wealthy to the poor,

Correct AnswerverifiedShow Answer

The business cycle is measured by the

Correct AnswerverifiedShow Answer

When the government attempts to improve equality in an economy the result is often

Correct AnswerverifiedShow Answer

Correct Answer
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A

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B

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B

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