Question 1

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Accepted Answer

A)   the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
B)   the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.
C)   the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.
D)   the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.E) C) and D)
F) All of the above

Question 2

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

Question 3

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) None of the above
F) A) and D)

Question 4

Market failure can be caused by

Accepted Answer

A)   low consumer demand.
B)   equilibrium prices.
C)   externalities and market power.
D)   high prices and foreign competition.E) B) and D)
F) A) and B)

Question 5

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Accepted Answer

The answer of In the short run, an increase in...

Question 6

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 7

The opportunity cost of an item is

Accepted Answer

A)   the number of hours needed to earn money to buy the item.
B)   what you give up to get that item.
C)   usually less than the dollar value of the item.
D)   the dollar value of the item.E) A) and B)
F) All of the above

Question 8

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Debbie quits her job, which pays $30,000...

Question 9

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor...

Question 10

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 D)
F) C) and D)

Question 11

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

Question 12

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 going to the movies?

Accepted Answer

The answer of Scenario 1-2
Suppose that you have a choice...

Question 13

Which of the following is an example of an externality?

Accepted Answer

A)   Annie purchases a new dress.
B)   Antonio's dog barks loudly during the night, waking his neighbors.
C)   Harold sells a book to Cathy, who reads the book and then gives it to James as a gift.
D)   Gloria watches a scary movie.E) B) and D)
F) A) and C)

Question 14

Which of the following could reduce economic efficiency?

Accepted Answer

A)   laws that encourage lawsuits
B)   policies that redistribute income
C)   policies that impose significant restrictions on international trade
D)   All of the above are correctE) A) and B)
F) B) and C)

Question 15

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)   efficiency.
B)   equality.
C)   externalities.
D)   productivity.E) A) and C)
F) A) and D)

Question 16

The principle that "people face tradeoffs" applies to

Accepted Answer

A)   individuals.
B)   families.
C)   societies.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 17

Low rates of inflation are generally associated with

Accepted Answer

A)   low rates of government spending.
B)   small or nonexistent government budget deficits.
C)   low rates of productivity growth.
D)   low rates of growth of the quantity of money.E) None of the above
F) A) and B)

Question 18

Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points.
-Refer to Scenario 1-4. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo...

Question 19

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Accepted Answer

A)   scarcity.
B)   surpluses.
C)   inefficiencies.
D)   inequalities.E) B) and D)
F) A) and B)

Question 20

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) All of the above
F) None of the above

Exam 1: Ten Principles of Economics

The principle that "people face tradeoffs" applies to

Correct Answer
verified

The opportunity cost of an item is

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
verified

Efficiency means that

Correct Answer
verified

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Correct Answer
verified

In a market economy,

Correct Answer
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Which of the following could reduce economic efficiency?

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

Correct Answer
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Market failure can be caused by

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

Correct Answer
verified

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct Answer
verified

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

Correct Answer
verified

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct Answer
verified

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct Answer
verified
They reduce the reward for wor...
View Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct Answer
verified

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct Answer
verified

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Correct Answer
verified

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

Correct Answer
verified

Which of the following is an example of an externality?

Correct Answer
verified

Exam 1: Ten Principles of Economics

The principle that "people face tradeoffs" applies to

Correct AnswerverifiedShow Answer

The opportunity cost of an item is

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

Efficiency means that

Correct AnswerverifiedShow Answer

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Correct AnswerverifiedShow Answer

In a market economy,

Correct AnswerverifiedShow Answer

Which of the following could reduce economic efficiency?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Market failure can be caused by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct AnswerverifiedShow Answer

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct AnswerverifiedThey reduce the reward for wor...View AnswerShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct AnswerverifiedShow Answer

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of an externality?

Correct AnswerverifiedShow Answer

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The enjoyment you wo...
View 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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They reduce the reward for wor...
View 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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