Question 1

Over the past century, the average income in the United States has risen about

Accepted Answer

A)  twofold.
B)  fivefold.
C)  eightfold.
D)  tenfold.E) B) and C)
F) A) and D)

Question 2

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Accepted Answer

A)  an increase in the number of unskilled jobs available.
B)  a decrease in the number of unskilled jobs available.
C)  a decrease in the number of workers wanting unskilled jobs.
D)  None of the above is correct.E) All of the above
F) B) and D)

Question 3

Inflation is defined as

Accepted Answer

A)  a period of rising productivity in the economy.
B)  a period of rising income in the economy.
C)  an increase in the overall level of output in the economy.
D)  an increase in the overall level of prices in the economy.E) None of the above
F) C) and D)

Question 4

For a very long time the country of Zeeland 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) All of the above
F) A) and C)

Question 5

Efficiency

Accepted Answer

A)  and equality both refer to how much a society can produce with its resources.
B)  and equality both refer to how fairly the benefits from using resources are distributed between members of a society.
C)  refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
D)  refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resourcesE) A) and B)
F) A) and C)

Question 6

According to Adam Smith, the success of decentralized market economies is primarily due to

Accepted Answer

A)  the basic benevolence of society.
B)  society's legal system.
C)  individuals' pursuit of self-interest.
D)  partnerships that are forged between business and government.E) A) and B)
F) A) and C)

Question 7

Scenario 1-1
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 $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of going to the movies?

Accepted Answer

$12.50 and...

Question 8

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)  the influence of labor unions in America.
B)  tariff protection imposed by the American government.
C)  the enactment of minimum-wage laws in America.
D)  the rise in American productivity.E) None of the above
F) B) and C)

Question 9

Market power refers to the

Accepted Answer

A)  power of a single person or small group to influence market prices.
B)  ability of a person or small group to successfully market new products.
C)  power of the government to regulate a market.
D)  importance of a certain market in relation to the overall economy.E) C) and D)
F) None of the above

Question 10

The term market failure refers to

Accepted Answer

A)  a situation in which the market on its own fails to allocate resources efficiently.
B)  an unsuccessful advertising campaign which reduces demand for a product.
C)  a situation in which competition among firms becomes ruthless.
D)  a firm that is forced out of business because of losses.E) All of the above
F) B) and D)

Question 11

Which of the following is true?

Accepted Answer

A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
B)  Government policies usually improve upon both equality and efficiency.
C)  As long as the economic pie continually gets larger, no one will have to go hungry.
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.E) A) and B)
F) A) and C)

Question 12

When computing the opportunity cost of attending a basketball game you should include

Accepted Answer

A)  the price you pay for the ticket and the value of your time.
B)  the price you pay for the ticket, but not the value of your time.
C)  the value of your time, but not the price you pay for the ticket.
D)  neither the price of the ticket nor the value of your time.E) B) and C)
F) C) and D)

Question 13

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Accepted Answer

A)  an increase in the number of people wanting to live in apartments in New York City.
B)  a decrease in the number of people wanting to live in apartments in New York City.
C)  an increase in the number of apartments available for rent in New York City.
D)  None of the above is correct.E) None of the above
F) B) and C)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor...

Question 16

Which of the following statements about trade is false?

Accepted Answer

A)  Trade increases competition.
B)  With trade, one country wins and one country loses.
C)  Bulgaria can benefit, potentially, from trade with any other country.
D)  Trade allows people to buy a greater variety of goods and services at lower cost.E) None of the above
F) A) and C)

Question 17

Stephen is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A)  He should sell the car now for $3,800.
B)  He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800.
C)  He should complete the additional work and sell the car for $5,800.
D)  It does not matter which action he takes since the outcome will be the same either way.E) A) and B)
F) A) and C)

Question 18

Explain the concept of externality and give an example.

Accepted Answer

The impact of one pe...

Question 19

Which of these activities will most likely impose an external cost?

Accepted Answer

A)  An athlete works out at a gym.
B)  A secretary smokes a cigarette in a crowded break room.
C)  A young mother pushes her baby in a stroller.
D)  A construction worker eats a hotdog during his lunch break.E) None of the above
F) A) and B)

Question 20

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)  efficiency.
B)  equality.
C)  externalities.
D)  productivity.E) B) and C)
F) All of the above

Exam 1: Ten Principles of Economics

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

Explain the concept of externality and give an example.

Correct Answer
verified
The impact of one pe...
View Answer

The term market failure refers to

Correct Answer
verified

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct Answer
verified

Efficiency

Correct Answer
verified

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct Answer
verified
They reduce the reward for wor...
View Answer

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

Correct Answer
verified

Which of the following statements about trade is false?

Correct Answer
verified

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Correct Answer
verified

The historical rise in living standards of American workers is primarily a result of

Correct Answer
verified

Over the past century, the average income in the United States has risen about

Correct Answer
verified

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

Correct Answer
verified

Market power refers to the

Correct Answer
verified

According to Adam Smith, the success of decentralized market economies is primarily due to

Correct Answer
verified

Correct Answer
verified
$12.50 and...
View Answer

Correct Answer
verified

Which of these activities will most likely impose an external cost?

Correct Answer
verified

Inflation is defined as

Correct Answer
verified

When computing the opportunity cost of attending a basketball game you should include

Correct Answer
verified

Exam 1: Ten Principles of Economics

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Explain the concept of externality and give an example.

Correct AnswerverifiedThe impact of one pe...View AnswerShow Answer

The term market failure refers to

Correct AnswerverifiedShow Answer

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct AnswerverifiedShow Answer

Efficiency

Correct AnswerverifiedShow Answer

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Correct AnswerverifiedThey reduce the reward for wor...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements about trade is false?

Correct AnswerverifiedShow Answer

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

The historical rise in living standards of American workers is primarily a result of

Correct AnswerverifiedShow Answer

Over the past century, the average income in the United States has risen about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Market power refers to the

Correct AnswerverifiedShow Answer

According to Adam Smith, the success of decentralized market economies is primarily due to

Correct AnswerverifiedShow Answer

Correct Answerverified$12.50 and...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of these activities will most likely impose an external cost?

Correct AnswerverifiedShow Answer

Inflation is defined as

Correct AnswerverifiedShow Answer

When computing the opportunity cost of attending a basketball game you should include

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The impact of one pe...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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They reduce the reward for wor...
View 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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$12.50 and...
View 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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