Question 1

In the United States, the overall level of prices more than doubled during the

Accepted Answer

A)   1950s.
B)   1960s.
C)   1970s.
D)   1980s.E) A) and D)
F) A) and C)

Question 2

Which of the following is not an example of a group responding to an incentive?

Accepted Answer

A)   Students attend class because of an attendance policy that reduces their grade for absences.
B)   Consumers buy more of a product when it is on sale at a reduced price.
C)   Universities offer fewer online classes when they generate more revenue than traditional classes.
D)   Employees work harder to earn higher commissions.E) None of the above
F) A) and B)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Something that induces a person to act is called

Accepted Answer

A)   a trade-off.
B)   a policy.
C)   an incentive.
D)   an opportunity cost.E) None of the above
F) A) and B)

Question 5

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 6

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)   goods are scarce.
B)   people face tradeoffs.
C)   income must be earned.
D)   households face many decisions.E) A) and B)
F) A) and C)

Question 7

Economists use the word equality to describe a situation in which

Accepted Answer

A)   each member of society has the same income.
B)   each member of society has access to abundant quantities of goods and services, regardless of his or her income.
C)   society is getting the maximum benefits from its scarce resources.
D)   society's resources are used efficiently.E) A) and D)
F) B) and C)

Question 8

What are the two basic types of economies?

Accepted Answer

Centrally ...

Question 9

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

Accepted Answer

A)   People respond to incentives
B)   Rational people think at the margin
C)   Trade can make everyone better off
D)   Markets are usually a good way to organize economic activityE) A) and B)
F) B) and C)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Accepted Answer

A)   Polish firms are faced with stricter government regulations than Romanian firms.
B)   total income is divided among fewer workers in Poland since it has a smaller labor force than Romania.
C)   Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops.
D)   productivity in Poland is higher than in Romania.E) A) and D)
F) B) and C)

Question 12

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 13

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Accepted Answer

A)   He should sell the boat as it is now for $400.
B)   He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900.
C)   He should complete the repairs and sell the boat for $900.
D)   It does not matter which action he takes; the outcome is the same either way.E) B) and C)
F) A) and D)

Question 14

When society requires that firms reduce pollution, there is

Accepted Answer

A)   a tradeoff because of reduced incomes to the firms' owners and workers.
B)   a tradeoff only if some firms are forced to close.
C)   no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
D)   no tradeoff, since everyone benefits from reduced pollution.E) A) and C)
F) None of the above

Question 15

Which of the following statements about market economies is correct?

Accepted Answer

A)   In a market economy, no one is looking out for the economic well-being of society as a whole.
B)   Market economies are characterized by decentralized decision making and self-interested decision makers.
C)   Market economies have proven remarkably successful in promoting overall economic well-being.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 16

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)   every person is entitled to life, liberty, and the pursuit of happiness.
B)   individuals are best left to their own devices without the government guiding their actions.
C)   the government plays a central role in organizing a market economy.
D)   because of human nature a strong legal system is necessary for a market system to survive.E) None of the above
F) B) and C)

Question 17

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)   market.
B)   consumer.
C)   producer.
D)   economy.E) None of the above
F) B) and C)

Question 18

In a market economy, who makes the decisions that guide most economic activity?

Accepted Answer

A)   firms only
B)   households only
C)   firms and households
D)   governmentE) A) and B)
F) C) and D)

Question 19

The primary determinant of a country's standard of living is

Accepted Answer

A)   the country's ability to prevail over foreign competition.
B)   the country's ability to produce goods and services.
C)   the total supply of money in the economy.
D)   the average age of the country's labor force.E) B) and C)
F) A) and B)

Question 20

The "broken window fallacy"

Accepted Answer

A)   explains why inflation is so high.
B)   is a justification for the government to print more money.
C)   is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
D)   has nothing to do with public policy.E) A) and B)
F) None of the above

Exam 1: Ten Principles of Economics

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct Answer
verified

Which of the following is not an example of a group responding to an incentive?

Correct Answer
verified

What are the two basic types of economies?

Correct Answer
verified
Centrally ...
View Answer

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Correct Answer
verified

In the United States, the overall level of prices more than doubled during the

Correct Answer
verified

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

Correct Answer
verified

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

Correct Answer
verified

When society requires that firms reduce pollution, there is

Correct Answer
verified

The "broken window fallacy"

Correct Answer
verified

Which of the following statements about market economies is correct?

Correct Answer
verified

Something that induces a person to act is called

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

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

Correct Answer
verified

Economists use the word equality to describe a situation in which

Correct Answer
verified

The English word that comes from the Greek word for "one who manages a household" is

Correct Answer
verified

Correct Answer
verified

The primary determinant of a country's standard of living is

Correct Answer
verified

In a market economy, who makes the decisions that guide most economic activity?

Correct Answer
verified

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Ten Principles of Economics

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct AnswerverifiedShow Answer

Which of the following is not an example of a group responding to an incentive?

Correct AnswerverifiedShow Answer

What are the two basic types of economies?

Correct AnswerverifiedCentrally ...View AnswerShow Answer

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Correct AnswerverifiedShow Answer

In the United States, the overall level of prices more than doubled during the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

Correct AnswerverifiedShow Answer

When society requires that firms reduce pollution, there is

Correct AnswerverifiedShow Answer

The "broken window fallacy"

Correct AnswerverifiedShow Answer

Which of the following statements about market economies is correct?

Correct AnswerverifiedShow Answer

Something that induces a person to act is called

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

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

Correct AnswerverifiedShow Answer

Economists use the word equality to describe a situation in which

Correct AnswerverifiedShow Answer

The English word that comes from the Greek word for "one who manages a household" is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The primary determinant of a country's standard of living is

Correct AnswerverifiedShow Answer

In a market economy, who makes the decisions that guide most economic activity?

Correct AnswerverifiedShow Answer

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Centrally ...
View Answer

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

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