Question 1

In the short run, which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Accepted Answer

A)   1 percent per year
B)   2 percent per year
C)   3 percent per year
D)   4 percent per yearE) C) and D)
F) None of the above

Question 2

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)   an electric company
B)   a farmer
C)   a grocery store
D)   a local electronics retailerE) B) and C)
F) All of the above

Question 3

When the government attempts to improve equality in an economy the result is often

Accepted Answer

A)   an increase in overall output in the economy.
B)   additional government revenue since overall income will increase.
C)   a reduction in equality.
D)   a reduction in efficiency.E) C) and D)
F) B) and D)

Question 4

Which of the following firms is most likely to have market power?

Accepted Answer

A)   a grocery store in a metropolitan area
B)   a gas station in a suburb
C)   a pub in a college town
D)   the only hotel in a rural areaE) A) and B)
F) A) and C)

Question 5

Communist countries worked under the premise that

Accepted Answer

A)   markets were the best way to organize economic activity.
B)   central planners were in the best position to determine the allocation of scarce resources in the economy.
C)   households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources.
D)   allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.E) A) and D)
F) A) and C)

Question 6

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

Question 7

Which of the following could reduce economic efficiency?

Accepted Answer

A)   laws that encourage lawsuits
B)   policies that redistribute income
C)   policies that impose significant restrictions on international trade
D)   All of the above are correctE) A) and B)
F) None of the above

Question 8

Causes of market failure include

Accepted Answer

A)   externalities and market power.
B)   market power and incorrect forecasts of consumer demand.
C)   externalities and foreign competition.
D)   incorrect forecasts of consumer demand and foreign competition.E) All of the above
F) None of the above

Question 9

The tradeoff between inflation and unemployment

Accepted Answer

A)   implies that policies designed to reduce unemployment also reduce inflation.
B)   was eliminated by improved economic policies in the 1900s.
C)   is a long-run tradeoff, persisting for decades, according to most economists.
D)   None of the above are correct.E) A) and B)
F) C) and D)

Question 10

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The concept of working longer per year w...

Question 11

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by

Accepted Answer

A)   a market economy.
B)   a strong reliance on prices and individuals' self-interests.
C)   a system of large privately-owned firms.
D)   the actions of government central planners.E) C) and D)
F) None of the above

Question 12

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Accepted Answer

A)   unstable economic conditions in Eastern Europe.
B)   increased competition from abroad.
C)   a decline in the rate of increase in U.S. productivity.
D)   a strong U.S. dollar abroad, hurting U.S. exports.E) B) and C)
F) All of the above

Question 13

George has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. George 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) A) and D)
F) B) and C)

Question 14

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)   The marginal benefit of going to Spain increases.
B)   The marginal cost of going to Spain increases.
C)   The marginal benefit of going to Ireland increases.
D)   The marginal cost of going to Ireland decreases.E) B) and C)
F) B) and D)

Question 15

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

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

Question 16

In the 1990s, inflation in the United States was

Accepted Answer

A)   very close to zero.
B)   about 3 percent per year.
C)   about 6 percent per year.
D)   commonly referred to as "public enemy number one."E) None of the above
F) A) and B)

Question 17

When the France trades with Russia,

Accepted Answer

A)   both countries are likely made better off.
B)   only Russia benefits since France can produce all goods at a higher level of quality than Russia.
C)   only France benefits since Russia's low wages guarantee profitable firms in Russia regardless of trade.
D)   neither country will benefit since France is more efficient than Russia at producing all goods.E) None of the above
F) A) and C)

Question 18

The opportunity cost of an item is

Accepted Answer

A)   the number of hours needed to earn money to buy the item.
B)   what you give up to get that item.
C)   usually less than the dollar value of the item.
D)   the dollar value of the item.E) C) and D)
F) A) and C)

Question 19

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

Accepted Answer

A)   people respond to incentives.
B)   rational people think at the margin.
C)   people face tradeoffs.
D)   improvements in efficiency sometimes come at the expense of equality.E) A) and D)
F) A) and C)

Question 20

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Accepted Answer

A)   the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
B)   the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.
C)   the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.
D)   the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.E) A) and B)
F) A) and C)

Exam 1: Ten Principles of Economics

Correct Answer
verified

The opportunity cost of an item is

Correct Answer
verified

Which of the following firms is likely to have the greatest market power?

Correct Answer
verified

Communist countries worked under the premise that

Correct Answer
verified

Which of the following firms is most likely to have market power?

Correct Answer
verified

When the government attempts to improve equality in an economy the result is often

Correct Answer
verified

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

Correct Answer
verified

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct Answer
verified

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct Answer
verified
The concept of working longer per year w...
View Answer

Correct Answer
verified

Which of the following could reduce economic efficiency?

Correct Answer
verified

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by

Correct Answer
verified

In the short run, which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Correct Answer
verified

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Correct Answer
verified

Which of the following statements about trade is false?

Correct Answer
verified

The tradeoff between inflation and unemployment

Correct Answer
verified

In the 1990s, inflation in the United States was

Correct Answer
verified

Causes of market failure include

Correct Answer
verified

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct Answer
verified

When the France trades with Russia,

Correct Answer
verified

Exam 1: Ten Principles of Economics

Correct AnswerverifiedShow Answer

The opportunity cost of an item is

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the greatest market power?

Correct AnswerverifiedShow Answer

Communist countries worked under the premise that

Correct AnswerverifiedShow Answer

Which of the following firms is most likely to have market power?

Correct AnswerverifiedShow Answer

When the government attempts to improve equality in an economy the result is often

Correct AnswerverifiedShow Answer

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

Correct AnswerverifiedShow Answer

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct AnswerverifiedShow Answer

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following could reduce economic efficiency?

Correct AnswerverifiedShow Answer

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by

Correct AnswerverifiedShow Answer

In the short run, which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy?

Correct AnswerverifiedShow Answer

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Correct AnswerverifiedShow Answer

Which of the following statements about trade is false?

Correct AnswerverifiedShow Answer

The tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

In the 1990s, inflation in the United States was

Correct AnswerverifiedShow Answer

Causes of market failure include

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct AnswerverifiedShow Answer

When the France trades with Russia,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The concept of working longer per year w...
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
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Correct Answer
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Correct Answer
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Correct Answer
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