Question 1

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 D)
F) B) and C)

Question 2

Which of the following is a principle concerning how people interact?

Accepted Answer

A)   Markets are usually a good way to organize economic activity.
B)   Rational people think at the margin.
C)   People respond to incentives.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 3

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Accepted Answer

A)   David Ricardo
B)   Thorstein Veblen
C)   John Maynard Keynes
D)   Adam SmithE) A) and C)
F) A) and B)

Question 4

Explain the concept of market failure.

Accepted Answer

Market failure is a situation ...

Question 5

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Accepted Answer

A)   market power caused by a change in the country's standard of living.
B)   market power caused by a single firm controlling the newspaper production.
C)   inflation caused by increased productivity in the economy.
D)   inflation caused by an increase in the quantity of money in the economy.E) All of the above
F) A) and D)

Question 6

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

Accepted Answer

The income...

Question 7

When a government program is justified not on its merits but on the number of jobs it will create,

Accepted Answer

A)   the program is an efficient use of taxpayer dollars.
B)   it should be approved only if the unemployment rate is low.
C)   taxes should be raised to fund the program.
D)   it is known as the "broken window fallacy."E) A) and D)
F) A) and C)

Question 8

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A)   the success of labor unions.
B)   minimum-wage laws.
C)   improvements in productivity.
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 9

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A)   Michelle can attend the concert only if she takes her sister with her.
B)   Michael is hungry and homeless.
C)   Andrea must repair the tire on her bike before she can ride it to class.
D)   Dani must decide between going to Florida or Brazil for spring break.E) All of the above
F) A) and B)

Question 10

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 11

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...

Question 12

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Accepted Answer

A)   the value of a good to society, but not the cost of making it.
B)   the cost of making a good to society, but not its value.
C)   both the value of a good to society and the cost of making it.
D)   neither the value of a good to society nor the cost of making it.E) None of the above
F) A) and C)

Question 13

Which of the following is an important cause of inflation in an economy?

Accepted Answer

A)   increases in productivity in the economy
B)   the influence of positive externalities on the economy
C)   lack of property rights in the economy
D)   growth in the quantity of money in the economyE) A) and C)
F) A) and B)

Question 14

Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial

Accepted Answer

A)   only if it allows us to obtain things that we couldn't make for ourselves.
B)   because it allows specialization, which increases total output.
C)   to us if we can gain and the others involved in the trade lose.
D)   in only a limited number of circumstances because others are typically self-interested.E) All of the above
F) A) and D)

Question 15

For most students, the largest single cost of a college education is

Accepted Answer

A)   the wages given up to attend school.
B)   tuition, fees, and books.
C)   room and board.
D)   transportation, parking, and entertainment.E) A) and B)
F) B) and D)

Question 16

In a market economy, economic activity is guided by

Accepted Answer

A)   the government.
B)   central planners.
C)   large businesses.
D)   prices and self-interest.E) B) and C)
F) A) and C)

Question 17

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Accepted Answer

A)   intended to reduce unemployment.
B)   may lead to excessive inflation over time.
C)   resulted in higher taxes and an increased supply of money.
D)   Both a and b are correct.E) None of the above
F) A) and B)

Question 18

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Question 19

Which of these activities will most likely impose an external cost?

Accepted Answer

A)   Betty plants flowers in her garden.
B)   Bonnie gets a flu vaccine.
C)   Bridget drives her car after having too much alcohol to drink.
D)   Becky buys a new flat screen television.E) None of the above
F) B) and D)

Question 20

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial

Correct Answer
verified

For most students, the largest single cost of a college education is

Correct Answer
verified

Efficiency means that

Correct Answer
verified

Which of the following is an important cause of inflation in an economy?

Correct Answer
verified

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Correct Answer
verified

The increase in living standards of American workers over the past century is primarily due to

Correct Answer
verified

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Correct Answer
verified

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

Correct Answer
verified
The income...
View Answer

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Correct Answer
verified

When a government program is justified not on its merits but on the number of jobs it will create,

Correct Answer
verified

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Correct Answer
verified

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct Answer
verified

Which of the following is a principle concerning how people interact?

Correct Answer
verified

Explain the concept of market failure.

Correct Answer
verified
Market failure is a situation ...
View Answer

Which of these activities will most likely impose an external cost?

Correct Answer
verified

A marginal change is a small incremental adjustment to an existing plan of action.

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Correct Answer
verified

Correct Answer
verified

Exam 1: Ten Principles of Economics

Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial

Correct AnswerverifiedShow Answer

For most students, the largest single cost of a college education is

Correct AnswerverifiedShow Answer

Efficiency means that

Correct AnswerverifiedShow Answer

Which of the following is an important cause of inflation in an economy?

Correct AnswerverifiedShow Answer

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Correct AnswerverifiedShow Answer

The increase in living standards of American workers over the past century is primarily due to

Correct AnswerverifiedShow Answer

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe income...View AnswerShow Answer

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Correct AnswerverifiedShow Answer

When a government program is justified not on its merits but on the number of jobs it will create,

Correct AnswerverifiedShow Answer

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Correct AnswerverifiedShow Answer

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct AnswerverifiedShow Answer

Which of the following is a principle concerning how people interact?

Correct AnswerverifiedShow Answer

Explain the concept of market failure.

Correct AnswerverifiedMarket failure is a situation ...View AnswerShow Answer

Which of these activities will most likely impose an external cost?

Correct AnswerverifiedShow Answer

A marginal change is a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow Answer

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow 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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The income...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Market failure is a situation ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

Correct Answer
verified

Correct Answer
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