Question 1

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Accepted Answer

A)   we should agree with Senator Brown.
B)   we should agree with Senator Johnson.
C)   a good decision requires that we recognize both viewpoints.
D)   there are no tradeoffs between equity and efficiency.E) A) and B)
F) A) and C)

Question 2

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

Question 3

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

Accepted Answer

A)   For the first 24 houses, the average cost per house was $205,000.
B)   The marginal cost of the 25th house, if it is built, will equal $250,000.
C)   If the company can sell the 25th house for at least $202,000, then it should build it.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 4

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

Question 5

Economics is the study of how evenly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False  False

Question 6

Productivity is defined as the

Accepted Answer

A)   amount of goods and services produced from each unit of labor input.
B)   number of workers required to produce a given amount of goods and services.
C)   amount of labor that can be saved by replacing workers with machines.
D)   actual amount of effort workers put into an hour of working time.E) None of the above
F) B) and C)

Question 7

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Accepted Answer

A)   "unimportant."
B)   "slow."
C)   "edge."
D)   "irrational."E) None of the above
F) B) and D)

Question 8

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

Question 9

Which of the following phrases best captures the notion of efficiency?

Accepted Answer

A)   absolute fairness
B)   equal distribution
C)   minimum waste
D)   equitable outcomeE) C) and D)
F) B) and D)

Question 10

Consider Paul's decision to go to college. If he goes to college, he will spend $90,000 on tuition, $15,000 on room and board, and $7,000 on books. If he does not go to college, he will earn $22,000 working at a construction job and he will spend $11,000 on room and board. Paul's cost of going to college is

Accepted Answer

A)   $96,000.
B)   $110,000.
C)   $114,000.
D)   $123,000.E) None of the above
F) All of the above

Question 11

A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?

Accepted Answer

A)   People face tradeoffs.
B)   The cost of something is what you give up to get it.
C)   Rational people think at the margin.
D)   People respond to incentives.E) B) and C)
F) C) and D)

Question 12

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Accepted Answer

A)   equality is increased and efficiency is increased.
B)   equality is increased and efficiency is decreased.
C)   equality is decreased and efficiency is increased.
D)   equality is decreased and efficiency is decreased.E) B) and D)
F) B) and C) B

Question 13

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) All of the above

Question 14

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation, the government may c...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Accepted Answer

A) True 
 B)False

Question 18

Resources are

Accepted Answer

A)   scarce for households but plentiful for economies.
B)   plentiful for households but scarce for economies.
C)   scarce for households and scarce for economies.
D)   plentiful for households and plentiful for economies.E) B) and D)
F) A) and B)

Question 19

For most students, the largest single cost of a college education is

Accepted Answer

A)   the wages given up to attend school.
B)   tuition, fees, and books.
C)   room and board.
D)   transportation, parking, and entertainment.E) B) and C)
F) A) and D)

Question 20

When Ukraine trades with Italy,

Accepted Answer

A)   both countries are likely made better off.
B)   only Italy benefits since Ukraine can produce all goods at a higher level of quality than Italy.
C)   only Ukraine benefits since Italy's low wages guarantee that Italian firms will be profitable regardless of trade.
D)   neither country will benefit since Ukraine is more efficient than Italy in the production of all goods.E) A) and B)
F) All of the above A

Exam 1: Ten Principles of Economics

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Correct Answer
verified

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

Correct Answer
verified

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

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

Economics is the study of how evenly goods and services are distributed within society.

Correct Answer
verified
False

Productivity is defined as the

Correct Answer
verified

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Correct Answer
verified

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

Correct Answer
verified

Which of the following phrases best captures the notion of efficiency?

Correct Answer
verified

Correct Answer
verified

A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?

Correct Answer
verified

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Correct Answer
verified
B

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

Correct Answer
verified

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct Answer
verified
To lower inflation, the government may c...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Correct Answer
verified

Resources are

Correct Answer
verified

For most students, the largest single cost of a college education is

Correct Answer
verified

When Ukraine trades with Italy,

Correct Answer
verified
A

Exam 1: Ten Principles of Economics

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

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

Economics is the study of how evenly goods and services are distributed within society.

Correct AnswerverifiedFalse

Productivity is defined as the

Correct AnswerverifiedShow Answer

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following phrases best captures the notion of efficiency?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?

Correct AnswerverifiedShow Answer

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct AnswerverifiedTo lower inflation, the government may c...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Correct AnswerverifiedShow Answer

Resources are

Correct AnswerverifiedShow Answer

For most students, the largest single cost of a college education is

Correct AnswerverifiedShow Answer

When Ukraine trades with Italy,

Correct AnswerverifiedA

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified
To lower inflation, the government may c...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A