Question 1

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 2

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Accepted Answer

A)   trade can make everyone better off.
B)   rational people think at the margin.
C)   people face tradeoffs.
D)   people respond to incentives.E) A) and B)
F) None of the above

Question 3

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

A)   inefficiency
B)   inequality
C)   scarcity
D)   market failureE) A) and C)
F) All of the above

Question 4

Which of the following products would be considered scarce?

Accepted Answer

A)   bread
B)   baseballs autographed by Babe Ruth
C)   motorcycles
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 5

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Accepted Answer

A)   Yes, because cutting hair is profitable.
B)   No, because he may not be able to sell more services.
C)   It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.
D)   It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients.E) C) and D)
F) None of the above

Question 6

To increase living standards, public policy should

Accepted Answer

A)   ensure that workers are well educated and have the necessary tools and technology.
B)   make unemployment benefits more generous.
C)   move workers into jobs directly from high school.
D)   ensure a greater degree of equality, taking all income-earners into account.E) A) and B)
F) A) and C)

Question 7

Incomes of U.S. households in the 1970s and 1980s

Accepted Answer

A)   grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades.
B)   grew rapidly, due to several increases in the minimum wage during those decades.
C)   grew rapidly, due to government policies that discouraged the importation of foreign products during those decades.
D)   grew slowly, due to slow growth of the output of goods and services per hour of U.S. workers' time during those decades.E) B) and C)
F) All of the above

Question 8

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)   In the short run, falling inflation is associated with falling unemployment.
B)   In the short run, falling inflation is associated with rising unemployment.
C)   In the long run, falling inflation is associated with falling unemployment.
D)   In the long run, falling inflation is associated with rising unemployment.E) C) and D)
F) A) and B)

Question 9

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,

Accepted Answer

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

Question 10

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?

Accepted Answer

A)   only the one with a low level of output per person.
B)   only the one with a high level of output per person.
C)   both
D)   neitherE) C) and D)
F) B) and D)

Question 11

A rationale for government involvement in a market economy is

Accepted Answer

A)   markets sometimes fail to produce a fair distribution of economic well-being.
B)   markets sometimes fail to produce an efficient allocation of resources.
C)   property rights have to be enforced.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 12

In the short run, an increase in the money supply is likely to lead to

Accepted Answer

A)   lower unemployment and lower inflation.
B)   lower unemployment and higher inflation.
C)   higher unemployment and lower inflation.
D)   higher unemployment and higher inflation.E) All of the above
F) C) and D)

Question 13

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

Question 14

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Accepted Answer

A)   cost of leaving was greater than the marginal benefit.
B)   benefit of leaving was greater than the marginal cost.
C)   benefit of teaching was greater than the marginal cost.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 15

The term "invisible hand" was coined by

Accepted Answer

A)   Adam Smith.
B)   David Ricardo.
C)   Karl Marx.
D)   Benjamin Franklin.E) B) and D)
F) A) and B)

Question 16

To improve living standards, policymakers should

Accepted Answer

A)   impose restrictions on foreign competition.
B)   formulate policies designed to increase productivity.
C)   impose tougher immigration policies.
D)   provide tax breaks for the middle class.E) A) and B)
F) None of the above

Question 17

When government policies are enacted,

Accepted Answer

A)   equality can usually be enhanced without an efficiency loss, but efficiency can never be enhanced without a reduction in equality.
B)   efficiency can usually be enhanced without a reduction in equality, but equality can never be enhanced without an efficiency loss.
C)   it is always the case that either efficiency and equality are both enhanced, or efficiency and equality are both diminished.
D)   None of the above are correct.E) C) and D)
F) B) and C)

Question 18

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

Accepted Answer

A)   3 percent per year
B)   5 percent per year
C)   7 percent per year
D)   9 percent per yearE) C) and D)
F) B) and C)

Question 19

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of working?

Accepted Answer

The enjoyment you wo...

Question 20

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) A) and C)

Exam 1: Ten Principles of Economics

When government policies are enacted,

Correct Answer
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The term "invisible hand" was coined by

Correct Answer
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Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Correct Answer
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The tradeoff between inflation and unemployment

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

Incomes of U.S. households in the 1970s and 1980s

Correct Answer
verified

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct Answer
verified

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,

Correct Answer
verified

In the short run, an increase in the money supply is likely to lead to

Correct Answer
verified

To improve living standards, policymakers should

Correct Answer
verified

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct Answer
verified

Which of the following products would be considered scarce?

Correct Answer
verified

Scarcity means that there is less of a good or resource available than people wish to have.

Correct Answer
verified

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct Answer
verified

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

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

To increase living standards, public policy should

Correct Answer
verified

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?

Correct Answer
verified

A rationale for government involvement in a market economy is

Correct Answer
verified

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct Answer
verified

Exam 1: Ten Principles of Economics

When government policies are enacted,

Correct AnswerverifiedShow Answer

The term "invisible hand" was coined by

Correct AnswerverifiedShow Answer

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Correct AnswerverifiedShow Answer

The tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

Incomes of U.S. households in the 1970s and 1980s

Correct AnswerverifiedShow Answer

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct AnswerverifiedShow Answer

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,

Correct AnswerverifiedShow Answer

In the short run, an increase in the money supply is likely to lead to

Correct AnswerverifiedShow Answer

To improve living standards, policymakers should

Correct AnswerverifiedShow Answer

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct AnswerverifiedShow Answer

Which of the following products would be considered scarce?

Correct AnswerverifiedShow Answer

Scarcity means that there is less of a good or resource available than people wish to have.

Correct AnswerverifiedShow Answer

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Correct AnswerverifiedShow Answer

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

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

To increase living standards, public policy should

Correct AnswerverifiedShow Answer

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?

Correct AnswerverifiedShow Answer

A rationale for government involvement in a market economy is

Correct AnswerverifiedShow Answer

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct AnswerverifiedShow Answer

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The enjoyment you wo...
View Answer

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