Question 1

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)  The marginal benefit of going to Spain increases.
B)  The marginal cost of going to Spain increases.
C)  The marginal benefit of going to Ireland increases.
D)  The marginal cost of going to Ireland decreases.E) A) and B)
F) None of the above

Question 2

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Question 3

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

Accepted Answer

A)  how much she spent applying to Northwestern, and the difference between living expenses at Northwestern and the other university
B)  how much she spent applying to Northwestern, but not the difference between living expenses at Northwestern and the other university
C)  the difference between living expenses at Northwestern and her second choice, but not how much she spent applying to Northwestern
D)  neither how much she spent applying to Northwestern nor the difference between living expenses at Northwestern and her second choiceE) B) and D)
F) B) and C)

Question 4

In a market economy, economic activity is guided by

Accepted Answer

A)  the government.
B)  public-interest groups.
C)  central planners.
D)  self-interest and prices.E) A) and B)
F) B) and D)

Question 5

Candice 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) None of the above
F) A) and B)

Question 6

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

Question 7

Which of the following statements best characterizes a basic difference between market economies and centrally planned economies?

Accepted Answer

A)  Society relies more upon prices to allocate resources when the economy is centrally-planned than when it is market-based.
B)  The self-interest of households is reflected more fully in the outcome of a centrally-planned economy than in the outcome of a market economy.
C)  Government plays a larger role in the economic affairs of a market economy than in the economic affairs of a centrally planned economy.
D)  None of the above are correct.E) A) and B)
F) B) and D)

Question 8

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the minimum price that would induce this company to produce the 601st heart rate monitor?

Accepted Answer

Question 9

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Accepted Answer

A)  to produce good quality products so that society would benefit from the resources used
B)  to conserve on costs, so as to maintain efficiency in the economy
C)  to produce enough to meet the output target, without regard for quality or cost
D)  to produce those products that society desires mostE) C) and D)
F) A) and C)

Question 10

Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that

Accepted Answer

A)  they should leave the price at $10.
B)  it does not matter if they charge $10 or $15.
C)  they would do better charging $15 than $10.
D)  they should raise the price even more.E) A) and C)
F) All of the above

Question 11

Government policies resulting in reduced efficiency include
(i) the welfare system
(ii) unemployment insurance
(iii) progressive income tax

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) B) and D)
F) B) and C)

Question 12

High-school athletes who skip college to become professional athletes

Accepted Answer

A)  obviously do not understand the value of a college education.
B)  usually do so because they cannot get into college.
C)  understand that the opportunity cost of attending college is very high.
D)  are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.E) A) and B)
F) A) and C)

Question 13

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

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 16

Which of the following is an example of an externality?

Accepted Answer

A)  Annie purchases a new dress.
B)  Antonio's dog barks loudly during the night, waking his neighbors.
C)  Harold sells a book to Cathy, who reads the book and then gives it to James as a gift.
D)  Gloria watches a scary movie.E) A) and B)
F) None of the above

Question 17

One effect of the government-imposed seat belt law in the U.S. has been

Accepted Answer

A)  a dramatic decrease in the number of pedestrian deaths.
B)  safer driving.
C)  an increase in the number of accidents.
D)  a dramatic decrease in the number of driver deaths.E) All of the above
F) A) and B)

Question 18

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

Question 19

Incomes of U.S. households in the 1970s and 1980s

Accepted Answer

A)  grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades.
B)  grew rapidly, due to several increases in the minimum wage during those decades.
C)  grew rapidly, due to government policies that discouraged the importation of foreign products during those decades.
D)  grew slowly, due to slow growth of the output of goods and services per hour of U.S. workers' time during those decades.E) All of the above
F) C) and D)

Question 20

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) All of the above
F) A) and B)

Exam 1: Ten Principles of Economics

Correct Answer
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Which of the following is an example of an externality?

Correct Answer
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In a market economy, economic activity is guided by

Correct Answer
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A marginal change is a

Correct Answer
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After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct Answer
verified

High-school athletes who skip college to become professional athletes

Correct Answer
verified

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

Correct Answer
verified

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Correct Answer
verified

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Correct Answer
verified

Correct Answer
verified

One effect of the government-imposed seat belt law in the U.S. has been

Correct Answer
verified

Correct Answer
verified

Government policies resulting in reduced efficiency include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax

Correct Answer
verified

Which of the following statements best characterizes a basic difference between market economies and centrally planned economies?

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

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct Answer
verified
Efficiency is the property of society ge...
View 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 Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Incomes of U.S. households in the 1970s and 1980s

Correct Answer
verified

Exam 1: Ten Principles of Economics

Correct AnswerverifiedShow Answer

Which of the following is an example of an externality?

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

A marginal change is a

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct AnswerverifiedShow Answer

High-school athletes who skip college to become professional athletes

Correct AnswerverifiedShow Answer

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?

Correct AnswerverifiedShow Answer

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Correct AnswerverifiedShow Answer

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One effect of the government-imposed seat belt law in the U.S. has been

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Government policies resulting in reduced efficiency include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax

Correct AnswerverifiedShow Answer

Which of the following statements best characterizes a basic difference between market economies and centrally planned economies?

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

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow 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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Incomes of U.S. households in the 1970s and 1980s

Correct AnswerverifiedShow Answer

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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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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Correct Answer
verified
Efficiency is the property of society ge...
View 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 Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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