Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

Invisible hand is a term used by the economist ______ to describe how the decisions of households and firms lead to desirable market outcomes.

Accepted Answer

The answer of Invisible hand is a term used by...

Question 4

Rational people make decisions "at the margin" by comparing

Accepted Answer

A)   average costs and benefits.
B)   total costs and benefits.
C)   additional costs and benefits.
D)   opportunity costs and benefits.E) B) and D)
F) A) and B)

Question 5

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) C) and D)

Question 6

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight.The average cost per seat is

Accepted Answer

A)   $50.
B)   $500.
C)   $50,000.
D)   This cannot be determined from the information given.E) None of the above
F) B) and C)

Question 7

Under what conditions might government intervention in a market economy improve the economy's performance?

Accepted Answer

If there is a market failure,such as an ...

Question 8

For a very long time Treeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate

Accepted Answer

A)   could be due to slower money supply growth.We would expect unemployment to be higher.
B)   could be due to slower money supply growth.We would expect unemployment to be lower.
C)   could be due to higher money supply growth.We would expect unemployment to be higher.
D)   could be due to higher money supply growth.We would expect unemployment to be lower.E) None of the above
F) B) and C)

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

For which of the following individuals would the opportunity cost of going to college be highest?

Accepted Answer

A)   a promising young mathematician who will command a high salary once she earns her college degree
B)   a student with average grades who has never held a job
C)   a famous,highly-paid actor who wants to take time away from show business to finish college and earn a degree
D)   a student who is the best player on his college basketball team,but who lacks the skills necessary to play professional basketballE) None of the above
F) B) and C)

Question 11

Which of the following statements exemplifies a principle of individual decisionmaking?

Accepted Answer

A)   Trade can make everyone better off.
B)   Governments can sometimes improve market outcomes.
C)   The cost of something is what you give up to get it.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 12

Irregular fluctuations in economic activity are known as the

Accepted Answer

A)   business cycle.
B)   broken window fallacy.
C)   tradeoff between inflation and unemployment.
D)   ten principles of economics.E) A) and B)
F) All of the above

Question 13

The U.S.president who referred to inflation as "public enemy number one" was

Accepted Answer

A)   Richard Nixon.
B)   Gerald Ford.
C)   Jimmy Carter.
D)   Ronald Reagan.E) A) and D)
F) A) and C)

Question 14

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Accepted Answer

A)   the $30 she earns working.
B)   the $30 minus the enjoyment she would have received from watching the video.
C)   the enjoyment she would have received had she watched the video.
D)   nothing,since she would have received less than $30 of enjoyment from the video.E) B) and C)
F) C) and D)

Question 15

Trade between the United States and India

Accepted Answer

A)   benefits both the United States and India.
B)   is a losing proposition for the United States because India has cheaper labor.
C)   is a losing proposition for India because capital is much more abundant in the U.S.than in India.
D)   is a losing proposition for India because U.S.workers are more productive.E) A) and B)
F) All of the above

Question 16

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

Accepted Answer

A)   a grocery store in a metropolitan area
B)   a gas station in a suburb
C)   a pub in a college town
D)   the only hotel in a rural areaE) A) and C)
F) B) and C)

Question 17

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Accepted Answer

A)   populations.
B)   productivity levels.
C)   locations.
D)   None of the above is correct.Economists are puzzled by differences in standards of living around the world.E) A) and C)
F) B) and D)

Question 18

When United States trades with China,

Accepted Answer

A)   both countries will likely benefit.
B)   only United States will benefit.
C)   only China will benefit.
D)   neither country will benefit.E) A) and D)
F) None of the above

Question 19

Katie is planning to sell her house,and she is considering making two upgrades to the house before listing it for sale.Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000.Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000.

Accepted Answer

A)   She should make both improvements to her house.
B)   She should replace the carpeting but not replace the roof.
C)   She should replace the roof but not replace the carpeting.
D)   She should not make either improvement to her house.E) C) and D)
F) B) and C)

Question 20

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight.The average cost per seat is

Correct Answer
verified

Trade between the United States and India

Correct Answer
verified

For which of the following individuals would the opportunity cost of going to college be highest?

Correct Answer
verified

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct Answer
verified

Correct Answer
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Which of the following statements exemplifies a principle of individual decisionmaking?

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

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

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

Correct Answer
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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

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Correct Answer
verified

Under what conditions might government intervention in a market economy improve the economy's performance?

Correct Answer
verified
If there is a market failure,such as an ...
View Answer

Invisible hand is a term used by the economist ______ to describe how the decisions of households and firms lead to desirable market outcomes.

Correct Answer
verified

Irregular fluctuations in economic activity are known as the

Correct Answer
verified

Rational people make decisions "at the margin" by comparing

Correct Answer
verified

When United States trades with China,

Correct Answer
verified

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Correct Answer
verified

For a very long time Treeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate

Correct Answer
verified

The U.S.president who referred to inflation as "public enemy number one" was

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Ten Principles of Economics

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight.The average cost per seat is

Correct AnswerverifiedShow Answer

Trade between the United States and India

Correct AnswerverifiedShow Answer

For which of the following individuals would the opportunity cost of going to college be highest?

Correct AnswerverifiedShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements exemplifies a principle of individual decisionmaking?

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

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

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

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

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

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Correct AnswerverifiedShow Answer

Under what conditions might government intervention in a market economy improve the economy's performance?

Correct AnswerverifiedIf there is a market failure,such as an ...View AnswerShow Answer

Invisible hand is a term used by the economist ______ to describe how the decisions of households and firms lead to desirable market outcomes.

Correct AnswerverifiedShow Answer

Irregular fluctuations in economic activity are known as the

Correct AnswerverifiedShow Answer

Rational people make decisions "at the margin" by comparing

Correct AnswerverifiedShow Answer

When United States trades with China,

Correct AnswerverifiedShow Answer

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Correct AnswerverifiedShow Answer

For a very long time Treeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate

Correct AnswerverifiedShow Answer

The U.S.president who referred to inflation as "public enemy number one" was

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Because economics is the study of how so...
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If there is a market failure,such as an ...
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