Question 1

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) A) and B)

Question 2

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 B)
F) A) and C)

Question 3

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

Accepted Answer

A)   only Sam is made better off by trade.
B)   only Annie is made better off by trade.
C)   both Sam and Annie are made better off by trade.
D)   neither Sam nor Annie are made better off by trade.E) C) and D)
F) A) and B)

Question 4

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

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

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 studying economics?

Accepted Answer

The enjoyment you wo...

Question 7

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

Accepted Answer

A)   productivity.
B)   an externality.
C)   market power.
D)   property rights.E) B) and C)
F) A) and D)

Question 8

Equality means distributing society's resources in the most efficient manner.

Accepted Answer

A) True 
 B)False

Question 9

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

A)   durable and nondurable goods.
B)   imports and exports.
C)   national defense and consumer goods.
D)   law enforcement and agriculture.E) C) and D)
F) B) and D)

Question 10

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A)   create a more fair distribution of income.
B)   change the way in which the economic pie is divided.
C)   enlarge the economic pie.
D)   All of the above are correct.E) B) and D)
F) A) and D)

Question 11

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

Question 12

Low rates of inflation are generally associated with

Accepted Answer

A)   low rates of government spending.
B)   small or nonexistent government budget deficits.
C)   low rates of productivity growth.
D)   low rates of growth of the quantity of money.E) B) and C)
F) All of the above

Question 13

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) B) and D)

Question 14

Give an example of government intervention that is intended to reduce an externality.

Accepted Answer

Laws that restrict t...

Question 15

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

Question 16

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Accepted Answer

A)   An individual's probability of surviving an auto accident rose.
B)   There was an increase in pedestrian deaths.
C)   There was an increase in automobile accidents.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 17

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A)   Average income in the US is higher than the average income in Ghana.
B)   The US has a higher standard of living than Ghanb.
C)   Productivity in the US is higher than productivity in Ghana.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 18

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 19

A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately.

Accepted Answer

A)   Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality.
B)   Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency.
C)   Both representatives' arguments are based primarily on efficiency.
D)   Both representatives' arguments are based primarily on equality.E) All of the above
F) C) and D)

Question 20

What do prices reflect in a market economy?

Accepted Answer

The value of a good ...

Exam 1: Ten Principles of Economics

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

Correct Answer
verified

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Correct Answer
verified

Give an example of government intervention that is intended to reduce an externality.

Correct Answer
verified
Laws that restrict t...
View Answer

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Correct Answer
verified

Correct Answer
verified

Inflation is defined as

Correct Answer
verified

When society requires that firms reduce pollution, there is

Correct Answer
verified

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

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

Equality means distributing society's resources in the most efficient manner.

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

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct Answer
verified

Evidence indicates that seat belt laws have led to

Correct Answer
verified

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

What do prices reflect in a market economy?

Correct Answer
verified
The value of a good ...
View Answer

Efficiency

Correct Answer
verified

Guns and butter are used to represent the classic societal tradeoff between spending on

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
verified

Correct Answer
verified

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Correct Answer
verified

Exam 1: Ten Principles of Economics

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

Correct AnswerverifiedShow Answer

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Correct AnswerverifiedShow Answer

Give an example of government intervention that is intended to reduce an externality.

Correct AnswerverifiedLaws that restrict t...View AnswerShow Answer

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Inflation is defined as

Correct AnswerverifiedShow Answer

When society requires that firms reduce pollution, there is

Correct AnswerverifiedShow Answer

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

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

Equality means distributing society's resources in the most efficient manner.

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

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct AnswerverifiedShow Answer

Evidence indicates that seat belt laws have led to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

What do prices reflect in a market economy?

Correct AnswerverifiedThe value of a good ...View AnswerShow Answer

Efficiency

Correct AnswerverifiedShow Answer

Guns and butter are used to represent the classic societal tradeoff between spending on

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Laws that restrict t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
The value of a good ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified