Question 1

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A)   Melissa needs to pay her rent and her electric bill.
B)   Kevin must choose between buying a new flat screen television and buying his textbooks for this semester.
C)   Robert must decide between studying for his psychology exam and working at his part-time job.
D)   Lisa can spend her money on a new smart phone or on a weekend trip.E) All of the above
F) A) and D)

Question 2

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)   an electric company
B)   a farmer
C)   a grocery store
D)   a local electronics retailerE) B) and C)
F) A) and B)

Question 3

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Accepted Answer

A)   This loss of jobs has been detrimental to our economy.
B)   The government should provide subsidies to encourage more people to become farmers.
C)   This reduction in the number of farmers explains the increase in the price of food.
D)   This is progress because freed-up labor is used to produce other goods.E) A) and B)
F) A) and C)

Question 4

Trade between countries tends to

Accepted Answer

A)   reduce both competition and specialization.
B)   reduce competition and increase specialization.
C)   increase competition and reduce specialization.
D)   increase both competition and specialization.E) All of the above
F) None of the above

Question 5

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 working?

Accepted Answer

The enjoyment you wo...

Question 6

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

Question 7

A marginal change is a

Accepted Answer

A)   change that involves little, if anything, that is important.
B)   large, significant adjustment.
C)   change for the worse, and so it is usually a short-term change.
D)   small, incremental adjustment.E) C) and D)
F) None of the above

Question 8

Stephen is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5,800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A)   He should sell the car now for $3,800.
B)   He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800.
C)   He should complete the additional work and sell the car for $5,800.
D)   It does not matter which action he takes since the outcome will be the same either way.E) All of the above
F) A) and B)

Question 9

Market failure is the ability of a single person to have a substantial influence on market prices.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the company's marginal cost?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 11

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)   the influence of labor unions in America.
B)   tariff protection imposed by the American government.
C)   the enactment of minimum-wage laws in America.
D)   the rise in American productivity.E) B) and C)
F) A) and D)

Question 12

To raise productivity, policymakers could

Accepted Answer

A)   increase spending on education.
B)   provide tax credits to firms for capital improvements.
C)   fund research and development.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 13

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 14

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Accepted Answer

A)   Only Country A can benefit.
B)   Only Country B can benefit.
C)   Both Country A and Country B can benefit.
D)   Neither Country A nor Country B can benefit.E) C) and D)
F) None of the above

Question 15

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Accepted Answer

A) True 
 B)False

Question 16

The term "invisible hand" was coined by

Accepted Answer

A)   Adam Smith.
B)   David Ricardo.
C)   Karl Marx.
D)   Benjamin Franklin.E) None of the above
F) A) and D)

Question 17

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Accepted Answer

A)   trade can make everyone better off.
B)   rational people think at the margin.
C)   people face tradeoffs.
D)   people respond to incentives.E) B) and C)
F) A) and D)

Question 18

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 19

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)   studies show that individuals with higher levels of income pollute less than low-income individuals.
B)   efforts to reduce pollution typically are not completely successful.
C)   laws that reduce pollution raise costs of production and reduce incomes.
D)   employing individuals to clean up pollution causes increases in employment and income.E) A) and C)
F) None of the above

Question 20

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A)   opportunity cost.
B)   productivity.
C)   externality.
D)   marginal benefit.E) A) and B)
F) C) and D)

Exam 1: Ten Principles of Economics

Trade between countries tends to

Correct Answer
verified

Correct Answer
verified

The term "invisible hand" was coined by

Correct Answer
verified

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

Correct Answer
verified

The amount of goods and services produced from each unit of labor input is called

Correct Answer
verified

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

The historical rise in living standards of American workers is primarily a result of

Correct Answer
verified

Market failure is the ability of a single person to have a substantial influence on market prices.

Correct Answer
verified

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct Answer
verified

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

Correct Answer
verified

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Correct Answer
verified

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct Answer
verified

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Correct Answer
verified

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct Answer
verified

A tradeoff exists between a clean environment and a higher level of income in that

Correct Answer
verified

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Correct Answer
verified

To raise productivity, policymakers could

Correct Answer
verified

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's marginal cost?

Correct Answer
verified

A marginal change is a

Correct Answer
verified

Which of the following firms is likely to have the greatest market power?

Correct Answer
verified

Exam 1: Ten Principles of Economics

Trade between countries tends to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term "invisible hand" was coined by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The amount of goods and services produced from each unit of labor input is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

The historical rise in living standards of American workers is primarily a result of

Correct AnswerverifiedShow Answer

Market failure is the ability of a single person to have a substantial influence on market prices.

Correct AnswerverifiedShow Answer

Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?

Correct AnswerverifiedShow Answer

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct AnswerverifiedShow Answer

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Correct AnswerverifiedShow Answer

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct AnswerverifiedShow Answer

A tradeoff exists between a clean environment and a higher level of income in that

Correct AnswerverifiedShow Answer

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Correct AnswerverifiedShow Answer

To raise productivity, policymakers could

Correct AnswerverifiedShow Answer

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's marginal cost?

Correct AnswerverifiedShow Answer

A marginal change is a

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the greatest market power?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified