Question 1

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

Accepted Answer

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

Question 2

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

Accepted Answer

A)  the improvement in his grades from studying for the hour.
B)  the improvement in his grades from studying minus the enjoyment of watching TV.
C)  the enjoyment he would have received if he had watched TV with his friends.
D)  zero. Since Hamid chose to study rather than to watch TV, the value of studying must have been greater to him than the value of watching TV.E) All of the above
F) B) and D)

Question 3

Government policies can change the costs and benefits that people face. Those policies have the potential to

Accepted Answer

A)  alter people's behavior.
B)  alter people's decisions at the margin.
C)  produce results that policymakers did not intend.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 4

A rational decision maker takes an action only if the

Accepted Answer

A)  marginal benefit is less than the marginal cost.
B)  marginal benefit is greater than the marginal cost.
C)  average benefit is greater than the average cost.
D)  marginal benefit is greater than both the average cost and the marginal cost.E) C) and D)
F) All of the above

Question 5

Which of the following is true about how the "invisible hand" influences economic activity through prices when a product has lower demand than supply?​

Accepted Answer

A)  ​The price must decrease, causing more buyers to buy and less sellers to sell.
B)  ​The price must decrease, causing more buyers to buy and more sellers to sell.
C)  ​The price must increase, causing less buyers to buy and more sellers to sell.
D)  ​The price must increase, causing less buyers to buy and less sellers to sell.E) B) and D)
F) All of the above

Question 6

When calculating the cost of college, which of the following should you probably not include?

Accepted Answer

A)  The cost of tuition
B)  The cost of books required for college classes
C)  The income you would have earned had you not gone to college
D)  The cost of rent for your off-campus apartment.E) B) and C)
F) A) and D)

Question 7

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The concept of working longer per year w...

Question 8

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

Question 9

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Accepted Answer

A)  the 1970's and the 1990's
B)  the 1970's but not the 1990's
C)  the 1990's but not the 1970's
D)  neither the 1970's nor the 1990'sE) All of the above
F) None of the above

Question 10

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 11

Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calculation of your opportunity cost?

Accepted Answer

A)  the cost of tuition and books to attend the graduate program
B)  the $30,000 salary that you could have earned if you retained your job at the bank
C)  the $45,000 salary that you will be able to earn after having completed your graduate program
D)  the value of insurance coverage and other employee benefits you would have received if you retained your job at the bankE) All of the above
F) B) and C)

Question 12

The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour.​

Accepted Answer

A) True 
 B)False

Question 13

The property of society getting the most it can from its scarce resources is called

Accepted Answer

A)  efficiency.
B)  equality.
C)  externality.
D)  productivity.E) B) and D)
F) None of the above

Question 14

Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $6200. Bill discovers that he needs to do an additional $2400 of work to make the car worth $6200 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?

Accepted Answer

A)  He should sell the car now for $3800.
B)  He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $6200.
C)  He should complete the additional work and sell the car for $6200.
D)  It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.E) All of the above
F) A) and B)

Question 15

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 16

The principle that trade can make everyone better off applies to

Accepted Answer

A)  individuals.
B)  families.
C)  countries.
D)  All of the aboveE) A) and D)
F) A) and B)

Question 17

Ashley eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana

Accepted Answer

A)  can be thought of as the total benefit Ashley enjoys by eating two bananas minus the total benefit she would have enjoyed by eating just the first banana.
B)  determines Ashley's marginal cost of the first and second bananas.
C)  does not depend on how many bananas Ashley has already eaten.
D)  cannot be determined unless we know how much she paid for the bananas.E) A) and C)
F) C) and D)

Question 18

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Accepted Answer

A)  trade can make everyone better off.
B)  people face trade-offs.
C)  rational people think at the margin.
D)  decisions made at the margin are not particularly important.E) A) and D)
F) All of the above

Question 19

Economics is the study of how society manages its

Accepted Answer

A)  limited wants and unlimited resources.
B)  unlimited wants and unlimited resources.
C)  limited wants and limited resources.
D)  unlimited wants and limited resources.E) None of the above
F) All of the above

Question 20

The term ______ refers to a small incremental adjustment to an existing plan of action.

Accepted Answer

The answer of The term ______ refers to a small...

Exam 1: Ten Principles of Economics

Economics is the study of how society manages its

Correct Answer
verified

The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour.

Correct Answer
verified

Which of the following is true about how the "invisible hand" influences economic activity through prices when a product has lower demand than supply?

Correct Answer
verified

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Correct Answer
verified

The property of society getting the most it can from its scarce resources is called

Correct Answer
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In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct Answer
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When calculating the cost of college, which of the following should you probably not include?

Correct Answer
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Correct Answer
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The enjoyment you wo...
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When a society cannot produce all the goods and services people wish to have, the economy is experiencing

Correct Answer
verified

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Correct Answer
verified

Ashley eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana

Correct Answer
verified

The principle that trade can make everyone better off applies to

Correct Answer
verified

The term ______ refers to a small incremental adjustment to an existing plan of action.

Correct Answer
verified

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct Answer
verified
The concept of working longer per year w...
View Answer

A rational decision maker takes an action only if the

Correct Answer
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Correct Answer
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Correct Answer
verified

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

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

Government policies can change the costs and benefits that people face. Those policies have the potential to

Correct Answer
verified

Exam 1: Ten Principles of Economics

Economics is the study of how society manages its

Correct AnswerverifiedShow Answer

The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour.​

Correct AnswerverifiedShow Answer

Which of the following is true about how the "invisible hand" influences economic activity through prices when a product has lower demand than supply?​

Correct AnswerverifiedShow Answer

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Correct AnswerverifiedShow Answer

The property of society getting the most it can from its scarce resources is called

Correct AnswerverifiedShow Answer

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct AnswerverifiedShow Answer

When calculating the cost of college, which of the following should you probably not include?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Correct AnswerverifiedShow Answer

Ashley eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana

Correct AnswerverifiedShow Answer

The principle that trade can make everyone better off applies to

Correct AnswerverifiedShow Answer

The term ______ refers to a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

A rational decision maker takes an action only if the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

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

Government policies can change the costs and benefits that people face. Those policies have the potential to

Correct AnswerverifiedShow Answer

Correct Answer
verified

The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour.

Correct Answer
verified

Which of the following is true about how the "invisible hand" influences economic activity through prices when a product has lower demand than supply?

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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The enjoyment you wo...
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The concept of working longer per year w...
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