Question 1

Evidence indicates that seat belt laws have led to

Accepted Answer

A)   fewer pedestrian deaths.
B)   fewer automobile accidents.
C)   fewer deaths per automobile accident.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 2

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 3

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)   enhance equality.
B)   enhance efficiency.
C)   increase the reward for working hard.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 4

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)   resources are scarce.
B)   goods and services are not scarce.
C)   incomes fluctuate with business cycles.
D)   people, by nature, tend to disagree.E) A) and B)
F) A) and C)

Question 5

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Accepted Answer

A)   rent the room because the marginal benefit exceeds the marginal cost.
B)   rent the room because the marginal benefit exceeds the average cost.
C)   not rent the room because the marginal benefit is less than the marginal cost.
D)   not rent the room because the marginal benefit is less than the average cost.E) B) and C)
F) A) and C)

Question 6

The "invisible hand" directs economic activity through

Accepted Answer

A)   advertising.
B)   prices.
C)   central planning.
D)   government regulations.E) None of the above
F) B) and C)

Question 7

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 8

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Accepted Answer

A)   an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
B)   an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.
C)   a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
D)   a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.E) B) and C)
F) A) and C)

Question 9

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Accepted Answer

A)   worried about inflation.
B)   worried about unemployment.
C)   hoping to increase the demand for goods and services.
D)   worried that the economy is growing too slowly.E) A) and B)
F) B) and D)

Question 10

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

Accepted Answer

A)   scarcity.
B)   surpluses.
C)   inefficiencies.
D)   inequalities.E) None of the above
F) All of the above

Question 11

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Accepted Answer

A)   For the first 30 houses, the average cost per house was $250,000.
B)   The marginal cost of the 31st house, if it is built, will be $260,000.
C)   If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 12

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Accepted Answer

A)   the value of the knowledge she would have received had she attended class.
B)   the $24 she could have earned if she had worked at her job for those two hours.
C)   the value of her nap minus the value of attending class.
D)   nothing, since she valued sleep more than attendance at class.E) B) and C)
F) C) and D)

Question 13

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Accepted Answer

A) True 
 B)False

Question 14

Use the following Scenario to answer the question 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 15

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 16

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Accepted Answer

A)   should be counted in full, regardless of the costs of eating and sleeping elsewhere.
B)   should be counted only to the extent that they are more expensive at college than elsewhere.
C)   usually exceed the opportunity cost of going to college.
D)   plus the cost of tuition, equals the opportunity cost of going to college.E) B) and C)
F) A) and D)

Question 17

What is the most important factor that explains differences in living standards among countries?

Accepted Answer

A)   labor unions
B)   minimum wage laws
C)   productivity
D)   efficiencyE) None of the above
F) A) and D)

Question 18

Trade between countries tends to

Accepted Answer

A)   reduce both competition and specialization.
B)   reduce competition and increase specialization.
C)   increase competition and reduce specialization.
D)   increase both competition and specialization.E) A) and C)
F) All of the above

Question 19

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Accepted Answer

In Germany. Almost all variati...

Question 20

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

The overriding reason why households and societies face many decisions is that

Correct Answer
verified

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct Answer
verified

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Correct Answer
verified

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct Answer
verified

The "invisible hand" directs economic activity through

Correct Answer
verified

Trade between countries tends to

Correct Answer
verified

The invisible hand ensures that economic prosperity is distributed equally.

Correct Answer
verified

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Correct Answer
verified

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Correct Answer
verified

High-school athletes who skip college to become professional athletes

Correct Answer
verified

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct Answer
verified

Evidence indicates that seat belt laws have led to

Correct Answer
verified

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Correct Answer
verified

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Correct Answer
verified
In Germany. Almost all variati...
View Answer

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct Answer
verified

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct Answer
verified

What is the most important factor that explains differences in living standards among countries?

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Ten Principles of Economics

The overriding reason why households and societies face many decisions is that

Correct AnswerverifiedShow Answer

For a college student who wishes to calculate the true costs of going to college, the costs of room and board

Correct AnswerverifiedShow Answer

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Correct AnswerverifiedShow Answer

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Correct AnswerverifiedShow Answer

The "invisible hand" directs economic activity through

Correct AnswerverifiedShow Answer

Trade between countries tends to

Correct AnswerverifiedShow Answer

The invisible hand ensures that economic prosperity is distributed equally.

Correct AnswerverifiedShow Answer

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.

Correct AnswerverifiedShow Answer

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

High-school athletes who skip college to become professional athletes

Correct AnswerverifiedShow Answer

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct AnswerverifiedShow Answer

Evidence indicates that seat belt laws have led to

Correct AnswerverifiedShow Answer

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

Correct AnswerverifiedIn Germany. Almost all variati...View AnswerShow Answer

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct AnswerverifiedShow Answer

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct AnswerverifiedShow Answer

What is the most important factor that explains differences in living standards among countries?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The enjoyment you wo...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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In Germany. Almost all variati...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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