Question 1

Which of the following is an example of an externality?

Accepted Answer

A)   A paper mill dumps waste into the river.
B)   A neighbor's loud music disrupts sleep.
C)   A drunk driver causes an accident that injures another person.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 2

The mainstream view among economists is that

Accepted Answer

A)   society faces a tradeoff between unemployment and inflation, but only in the short run.
B)   society faces a tradeoff between unemployment and inflation, but only in the long run.
C)   society faces a tradeoff between unemployment and inflation, both in the short run and in the long run.
D)   no tradeoff exists between unemployment and inflation, either in the short run or in the long run.E) All of the above
F) A) and D)

Question 3

The relatively low inflation experienced in the United States in the 1990s is attributable to

Accepted Answer

A)   slow growth of U.S. productivity during the 1990s.
B)   slow growth of the quantity of money in the U.S. in the 1990s.
C)   low levels of government spending in the U.S. in the 1980s and 1990s.
D)   the eight-year presidency of William Jefferson Clinton during the 1990s.E) B) and D)
F) A) and D)

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) All of the above

Question 5

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 6

What is the main difference between a centrally planned economy and a market economy?

Accepted Answer

In a market economy, decisions...

Question 7

The marginal benefit Kyra gets from eating a second sandwich is

Accepted Answer

A)   the total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich.
B)   the same as the total benefit she gets from eating two sandwiches.
C)   less than the marginal cost of eating the second sandwich since she chose to eat the second sandwich.
D)   the total benefit Kyra gets from eating three sandwiches minus the total benefit she gets from eating two sandwiches.E) A) and B)
F) None of the above

Question 8

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 D)
F) A) and B)

Question 9

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)   The marginal benefit of going to Cancun increases.
B)   The marginal cost of going to Cancun decreases.
C)   The marginal benefit of going to Ft. Lauderdale decreases.
D)   The marginal cost of going to Ft. Lauderdale decreases.E) A) and C)
F) B) and C)

Question 10

Give an example of government intervention that is intended to improve equality.

Accepted Answer

The income...

Question 11

Rational people make decisions "at the margin" by comparing

Accepted Answer

A)   average costs and benefits.
B)   total costs and benefits.
C)   additional costs and benefits.
D)   opportunity costs and benefits.E) A) and B)
F) All of the above

Question 12

Yvette buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Yvette purchased. As a result of the city's announced plan, Yvette is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. She should

Accepted Answer

A)   keep the house and live in it.
B)   go ahead with the $50,000 in repairs and sell the house for $290,000.
C)   forgo the repairs and sell the house as it is for $250,000.
D)   move the house from Pine Street to a more desirable location, regardless of the cost of doing so.E) A) and C)
F) None of the above

Question 13

Economists study how people make decisions.

Accepted Answer

A) True 
 B)False

Question 14

The marginal benefit Susie gets from purchasing a third pair of gloves is

Accepted Answer

A)   the same as the total benefit she gets from purchasing three pairs of gloves.
B)   more than the marginal cost of purchasing the third pair of gloves.
C)   the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves.
D)   the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.E) A) and B)
F) None of the above

Question 15

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 working?

Accepted Answer

The enjoyment you wo...

Question 16

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Accepted Answer

A)   decreased by about 6 percent between 2000 and 2008.
B)   remained unchanged between 2000 and 2008.
C)   increased by about 9 percent between 2000 and 2008.
D)   increased by about 18 percent between 2000 and 2008.E) C) and D)
F) B) and D)

Question 17

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Accepted Answer

A)   equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
B)   equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
C)   equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
D)   equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.E) C) and D)
F) None of the above

Question 18

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 19

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak 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)   there is insufficient information to compute average and marginal costs.E) B) and D)
F) A) and D)

Question 20

A bagel shop sells fresh baked bagels from 5

Accepted Answer

A)   Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.
B)  m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive?
C)   Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen.
D)   Throw the bagels away and produce 8 fewer dozen bagels tomorrow.
D)   Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.E) A) and B)
F) B) and D)

Exam 1: Ten Principles of Economics

The relatively low inflation experienced in the United States in the 1990s is attributable to

Correct Answer
verified

Inflation increases the value of money.

Correct Answer
verified

Give an example of government intervention that is intended to improve equality.

Correct Answer
verified
The income...
View Answer

Which of the following is an example of an externality?

Correct Answer
verified

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

Correct Answer
verified

Rational people make decisions "at the margin" by comparing

Correct Answer
verified

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct Answer
verified

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct Answer
verified

A bagel shop sells fresh baked bagels from 5

Correct Answer
verified

Economists study how people make decisions.

Correct Answer
verified

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

Correct Answer
verified

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct Answer
verified

The marginal benefit Kyra gets from eating a second sandwich is

Correct Answer
verified

The mainstream view among economists is that

Correct Answer
verified

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct Answer
verified

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Correct Answer
verified

What is the main difference between a centrally planned economy and a market economy?

Correct Answer
verified
In a market economy, decisions...
View Answer

Exam 1: Ten Principles of Economics

The relatively low inflation experienced in the United States in the 1990s is attributable to

Correct AnswerverifiedShow Answer

Inflation increases the value of money.

Correct AnswerverifiedShow Answer

Give an example of government intervention that is intended to improve equality.

Correct AnswerverifiedThe income...View AnswerShow Answer

Which of the following is an example of an externality?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rational people make decisions "at the margin" by comparing

Correct AnswerverifiedShow Answer

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow 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

The marginal benefit Susie gets from purchasing a third pair of gloves is

Correct AnswerverifiedShow Answer

A bagel shop sells fresh baked bagels from 5

Correct AnswerverifiedShow Answer

Economists study how people make decisions.

Correct AnswerverifiedShow Answer

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct AnswerverifiedShow Answer

The marginal benefit Kyra gets from eating a second sandwich is

Correct AnswerverifiedShow Answer

The mainstream view among economists is that

Correct AnswerverifiedShow Answer

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct AnswerverifiedShow Answer

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Correct AnswerverifiedShow Answer

What is the main difference between a centrally planned economy and a market economy?

Correct AnswerverifiedIn a market economy, decisions...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
The income...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
The enjoyment you wo...
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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Correct Answer
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Correct Answer
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Correct Answer
verified
In a market economy, decisions...
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