Question 1

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)   is a basic principle regarding individual decisionmaking.
B)   amounts to a denial of one of the basic principles regarding interactions among people.
C)   supports the idea that the "invisible hand" should guide economic activity.
D)   was promoted by the economist Adam Smith in a well-known 1776 book.E) A) and C)
F) C) and D)

Question 2

If the United States decides to trade with Yemen, we know that

Accepted Answer

A)   Yemen will benefit, but trade with a less developed country could not benefit the United States.
B)   it will not benefit Yemen because workers in the United States are more productive.
C)   Yemen and the United States can both benefit.
D)   it will not benefit either country because their cultural differences are too vast.E) A) and D)
F) C) and D)

Question 3

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 4

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Accepted Answer

A)   a market failure caused by an externality.
B)   a market failure caused by market power.
C)   a market failure caused by equality.
D)   There is no market failure in this case.E) C) and D)
F) None of the above

Question 5

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Accepted Answer

A)   $33,800.
B)   $42,600.
C)   $49,800.
D)   $57,000.E) A) and B)
F) A) and C)

Question 6

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 going to the movies?

Accepted Answer

$16.75 and...

Question 7

What are the two reasons for the government to intervene in a market?

Accepted Answer

To promote...

Question 8

During the early 1920s in Germany, prices

Accepted Answer

A)   doubled annually.
B)   doubled monthly.
C)   tripled monthly.
D)   tripled annually.E) A) and D)
F) None of the above

Question 9

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so...

Question 10

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

A)   inefficiency
B)   inequality
C)   scarcity
D)   market failureE) A) and B)
F) A) and C)

Question 11

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

Question 12

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Accepted Answer

A)   compare the total cost of your education to the total benefits of your education.
B)   compare the total cost of your education to the benefits of staying one more semester.
C)   compare the cost of staying one more semester to the benefits of staying one more semester.
D)   compare the total benefits of your education to the cost of staying one more semester.E) A) and C)
F) A) and B)

Question 13

Market economies are distinguished from other types of economies largely on the basis of

Accepted Answer

A)   the political affiliations of government officials.
B)   the process by which government officials are elected or appointed.
C)   the ways in which scarce resources are allocated.
D)   the number of retail outlets available to consumers.E) A) and C)
F) None of the above

Question 14

The "invisible hand" refers to

Accepted Answer

A)   the government.
B)   the free market.
C)   central planners.
D)   large businesses.E) A) and C)
F) None of the above

Question 15

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Accepted Answer

A)   cost of leaving was greater than the marginal benefit.
B)   benefit of leaving was greater than the marginal cost.
C)   benefit of teaching was greater than the marginal cost.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 16

Which is the most accurate statement about trade?

Accepted Answer

A)   Trade can make every nation better off.
B)   Trade makes some nations better off and others worse off.
C)   Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)   Trade helps rich nations and hurts poor nations.E) B) and C)
F) A) and D)

Question 17

Which of the following is the primary cause of inflation?

Accepted Answer

A)   an increase in the quantity of money
B)   an increase in government spending
C)   an increase in unemployment
D)   an increase in productivityE) A) and B)
F) All of the above

Question 18

The basic principles of economics suggest that

Accepted Answer

A)   markets are seldom, if ever, a good way to organize economic activity.
B)   government should become involved in markets when trade between countries is involved.
C)   government should become involved in markets when those markets fail to produce efficient or fair outcomes.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 19

The study of how society manages its scarce resources is most closely associated with which field of study?

Accepted Answer

A)   environmental studies
B)   economics
C)   management
D)   accountingE) C) and D)
F) A) and B)

Question 20

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Accepted Answer

A)   the pie gets larger, and there will be more pie overall.
B)   the pie gets smaller, and there will be less pie overall.
C)   it increases the reward for working hard, resulting in people producing more goods and services.
D)   those who earn more income pay less in taxes.E) C) and D)
F) A) and D)

Exam 1: Ten Principles of Economics

The "invisible hand" refers to

Correct Answer
verified

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Correct Answer
verified

What are the two reasons for the government to intervene in a market?

Correct Answer
verified
To promote...
View Answer

The basic principles of economics suggest that

Correct Answer
verified

Market economies are distinguished from other types of economies largely on the basis of

Correct Answer
verified

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct Answer
verified

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Correct Answer
verified

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

If the United States decides to trade with Yemen, we know that

Correct Answer
verified

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Correct Answer
verified

The study of how society manages its scarce resources is most closely associated with which field of study?

Correct Answer
verified

How does the study of economics depend upon the phenomenon of scarcity?

Correct Answer
verified
Because economics is the study of how so...
View Answer

Correct Answer
verified
$16.75 and...
View Answer

Which is the most accurate statement about trade?

Correct Answer
verified

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Correct Answer
verified

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Correct Answer
verified

Which of the following is the primary cause of inflation?

Correct Answer
verified

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct Answer
verified

During the early 1920s in Germany, prices

Correct Answer
verified

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct Answer
verified

Exam 1: Ten Principles of Economics

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Correct AnswerverifiedShow Answer

What are the two reasons for the government to intervene in a market?

Correct AnswerverifiedTo promote...View AnswerShow Answer

The basic principles of economics suggest that

Correct AnswerverifiedShow Answer

Market economies are distinguished from other types of economies largely on the basis of

Correct AnswerverifiedShow Answer

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct AnswerverifiedShow Answer

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Correct AnswerverifiedShow 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

If the United States decides to trade with Yemen, we know that

Correct AnswerverifiedShow Answer

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Correct AnswerverifiedShow Answer

The study of how society manages its scarce resources is most closely associated with which field of study?

Correct AnswerverifiedShow Answer

How does the study of economics depend upon the phenomenon of scarcity?

Correct AnswerverifiedBecause economics is the study of how so...View AnswerShow Answer

Correct Answerverified$16.75 and...View AnswerShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedShow Answer

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Correct AnswerverifiedShow Answer

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Correct AnswerverifiedShow Answer

Which of the following is the primary cause of inflation?

Correct AnswerverifiedShow Answer

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct AnswerverifiedShow Answer

During the early 1920s in Germany, prices

Correct AnswerverifiedShow Answer

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct AnswerverifiedShow Answer

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Correct Answer
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To promote...
View Answer

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Correct Answer
verified
Because economics is the study of how so...
View Answer

Correct Answer
verified
$16.75 and...
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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