Question 1

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) A) and C)

Question 2

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)   A college student buys a deck of cards to play solitaire in her dorm room.
B)   An elderly woman plants a flower garden on the vacant lot next to her house.
C)   An executive purchases a book to read on a business trip.
D)   A ten-year-old uses his allowance to buy new Nike shoes.E) B) and C)
F) A) and D)

Question 3

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A)   minimum waste
B)   maximum benefit
C)   sameness
D)   efficiencyE) A) and B)
F) A) and C)

Question 4

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

Question 5

Sophia is planning her activities for a hot summer day.She would like to go to the local swimming pool and see the latest blockbuster movie,but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity.This illustrates the basic principle that

Accepted Answer

A)   people respond to incentives.
B)   rational people think at the margin.
C)   people face tradeoffs.
D)   improvements in efficiency sometimes come at the expense of equality.E) C) and D)
F) B) and D)

Question 6

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)   efficiency is improved, but equality is not.
B)   both wealthy people and poor people benefit directly.
C)   people work less and produce fewer goods and services.
D)   the government collects more revenue in total.E) B) and D)
F) C) and D)

Question 7

Kevin is the CEO of a large firm and a homeowner who pays a landscaper to maintain his lawn rather than do it himself.Kevin has determined that he can earn more in the hour it would take him to work on his lawn than he must pay his landscaper.This scenario is an example of which principle of economics?

Accepted Answer

A)   Trade can make everyone better off.
B)   Markets are usually a good way to organize economic activity.
C)   Governments can sometimes improve market outcomes.
D)   Prices rise when the government prinst too much money.E) B) and D)
F) None of the above

Question 8

In response to the deep economic downturn in the US in 2008 and 2009,the US

Accepted Answer

A)   reduced taxes.
B)   increased government spending.
C)   increased the supply of money.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 9

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Accepted Answer

A)   1 percent per year
B)   2 percent per year
C)   3 percent per year
D)   4 percent per yearE) All of the above
F) C) and D)

Question 10

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Accepted Answer

A)   For the first 25 houses, the average cost per house was $288,000.
B)   The marginal cost of the 26th house, if it is built, will be equal to the average cost per house.
C)   If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 11

To increase living standards,public policy should

Accepted Answer

A)   ensure that workers are well educated and have the necessary tools and technology.
B)   make unemployment benefits more generous.
C)   move workers into jobs directly from high school.
D)   ensure a greater degree of equality, taking all income-earners into account.E) A) and B)
F) A) and C)

Question 12

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Accepted Answer

A)   automakers
B)   pedestrians
C)   drivers
D)   owners of collision-repair shopsE) All of the above
F) C) and D)

Question 13

Economics is the study of how society allocates its unlimited resources.

Accepted Answer

A) True 
 B)False

Question 14

U.S.laws requiring that drivers wear seat belts have resulted in

Accepted Answer

A)   a reduction in both driver deaths and pedestrian deaths.
B)   fewer accidents and fewer deaths per accident.
C)   fewer driver deaths, fewer accidents and fewer pedestrian deaths.
D)   little change in the number of driver deaths, but more accidents and more pedestrian deaths.E) B) and C)
F) A) and B)

Question 15

Which of the following is not an example of the opportunity cost of going to school?

Accepted Answer

A)   The money a student could have earned by working if he had not gone to college.
B)   The nap a student could have enjoyed if he had not attended class.
C)   The party a student could have enjoyed if he had not stayed in to study for his exam.
D)   The money a student spends on rent for his apartment while attending school.E) B) and C)
F) A) and B)

Question 16

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 17

In considering how to allocate its scarce resources among its various members,a household considers

Accepted Answer

A)   each member's abilities.
B)   each member's efforts.
C)   each member's desires.
D)   all of the aboveE) B) and C)
F) B) and D)

Question 18

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Accepted Answer

A)   The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
B)   The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise.
C)   Only half of the cost of the parking permit is part of the opportunity cost of attending college.
D)   The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.E) None of the above
F) All of the above

Question 19

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

Question 20

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

A)   durable and nondurable goods.
B)   imports and exports.
C)   national defense and consumer goods.
D)   law enforcement and agriculture.E) A) and C)
F) C) and D)

Exam 1: Ten Principles of Economics.

To increase living standards,public policy should

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
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Which of the following words and phrases best captures the notion of equality?

Correct Answer
verified

Guns and butter are used to represent the classic societal tradeoff between spending on

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

When the government redistributes income from the wealthy to the poor,

Correct Answer
verified

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Correct Answer
verified

Which of the following is not an example of the opportunity cost of going to school?

Correct Answer
verified

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Correct Answer
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The opportunity cost of an item is

Correct Answer
verified

Correct Answer
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Economics is the study of how society allocates its unlimited resources.

Correct Answer
verified

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Correct Answer
verified

In response to the deep economic downturn in the US in 2008 and 2009,the US

Correct Answer
verified

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Correct Answer
verified

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Correct Answer
verified

Correct Answer
verified

U.S.laws requiring that drivers wear seat belts have resulted in

Correct Answer
verified

Which of these activities will most likely result in an external benefit?

Correct Answer
verified

In considering how to allocate its scarce resources among its various members,a household considers

Correct Answer
verified

Exam 1: Ten Principles of Economics.

To increase living standards,public policy should

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

Which of the following words and phrases best captures the notion of equality?

Correct AnswerverifiedShow Answer

Guns and butter are used to represent the classic societal tradeoff between spending on

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

When the government redistributes income from the wealthy to the poor,

Correct AnswerverifiedShow Answer

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Correct AnswerverifiedShow Answer

Which of the following is not an example of the opportunity cost of going to school?

Correct AnswerverifiedShow Answer

In the short run,which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Correct AnswerverifiedShow Answer

The opportunity cost of an item is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economics is the study of how society allocates its unlimited resources.

Correct AnswerverifiedShow Answer

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

Correct AnswerverifiedShow Answer

In response to the deep economic downturn in the US in 2008 and 2009,the US

Correct AnswerverifiedShow Answer

A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million.If the company builds a 26ᵗʰ house,its total cost will increase to $7.5 million.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Based on the available evidence,which of the following groups benefits most from mandatory seat belt laws?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

U.S.laws requiring that drivers wear seat belts have resulted in

Correct AnswerverifiedShow Answer

Which of these activities will most likely result in an external benefit?

Correct AnswerverifiedShow Answer

In considering how to allocate its scarce resources among its various members,a household considers

Correct AnswerverifiedShow Answer

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