Question 1

An example of a direct negative incentive is:

Accepted Answer

A)  providing a commission for sales.
B)  awarding a promotion for hard work.
C)  threatening to fire those who do not perform well.
D)  providing an orientation for new employees.
E)  providing generous benefits and pay for employees.

Question 2

According to economists,one reason few professional athletes have PhD's is that the:

Accepted Answer

A)  opportunity cost of going to graduate school is too high.
B)  marginal benefit of going to graduate school is too high.
C)  marginal cost of going to graduate school is too high.
D)  comparative cost of going to graduate school is too high.
E)  explicit cost of going to graduate school would be too high.

Question 3

Which of the following is not a type of incentive?

Accepted Answer

A)  positive
B)  negative
C)  complementary
D)  indirect
E)  direct

Question 4

When most economists wake up in the morning,their first decision is whether or not to hit the snooze bar on the alarm clock.What statement best represents their thought process as a rational decision-maker?

Accepted Answer

A)  I had a really late night grading exams,and I deserve 10 more minutes of sleep.
B)  The total amount of work I have to do today is rather small,so the total benefit to going to work for a full 8 hours is also small.
C)  The total amount of work I have to do today is rather small,so the marginal cost of going to work 10 minutes late is small.
D)  The total amount of work I have to do today is rather small,so the marginal benefit of sleeping 10 more minutes is rather large.
E)  The marginal benefit of sleeping 10 more minutes is greater than the marginal benefit of 10 more minutes of work.

Question 5

A parent that pays a child an allowance for doing chores is providing a(n) :

Accepted Answer

A)  positive incentive.
B)  negative incentive.
C)  neutral incentive.
D)  complementary incentive.
E)  unintended incentive.

Question 6

The United States is able to experience economic growth to the extent that:

Accepted Answer

A)  specialization and trade are encouraged.
B)  the government involves itself in the economy.
C)  trade is restricted.
D)  jobs are protected from outsourcing.
E)  consumers are encouraged to buy domestically produced goods.

Question 7

What is meant when one says that decisions are made at the margin? Provide an example of how you have made a decision at the margin.

Accepted Answer

When decisions are made at the margin,on...

Question 8

Rational decision-making under conditions of scarcity requires individuals to:

Accepted Answer

A)  place a monetary value on everything.
B)  know the prices of all goods they might buy.
C)  be alert to price reductions on desired products.
D)  understand that trade-offs are necessary.
E)  earn as much income as possible.

Question 9

The government places warnings on cigarette and liquor packages.These warnings serve as a(n) :

Accepted Answer

A)  positive incentive.
B)  negative incentive.
C)  indirect incentive.
D)  opportunity cost.
E)  way to make cigarettes and liquor more scarce.

Question 10

The government controls for many indirect incentives in safety net social programs by:

Accepted Answer

A)  limiting payment to a specified time period.
B)  providing only a partial payment.
C)  allowing individuals to apply to only a certain number of safety net social programs.
D)  requiring individuals to repay the benefits they received.
E)  establishing income limits for those who apply for safety net social programs.

Question 11

In 2009,the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise.How would an economist understand the decision that consumers faced?

Accepted Answer

A)  Consumers would compare the marginal benefits to the marginal costs of replacing their car,and this program made sure that marginal benefits would exceed marginal costs.
B)  Consumers would compare the marginal benefits to the marginal costs of replacing their car,and this program made sure that marginal costs would exceed marginal benefits.
C)  The Cash for Clunkers program increased the opportunity cost of replacing a car.
D)  The Cash for Clunkers program served as a negative incentive to replacing a fuel-inefficient car.
E)  The Cash for Clunkers program served as an indirect incentive to replacing a fuel-inefficient car.

Question 12

An activity's marginal benefit is ________ at the optimal quantity.

Accepted Answer

A)  zero
B)  greater than zero
C)  less than zero
D)  equal to the marginal cost
E)  greater than the marginal cost

Question 13

Google has started a project to scan all books and make those that are not copyrighted available to people free of charge.Why is it important that only books without a copyright are available?

Accepted Answer

A)  If all books were scanned and available free of charge,copyright holders would face a positive incentive to continue writing and publishing books.
B)  If all books were scanned and available free of charge,copyright holders would face a negative incentive to continue writing and publishing books.
C)  If only copyrighted texts were scanned and available free of charge,copyright holders would face an indirect incentive to continue writing and publishing books.
D)  If only non-copyrighted books were scanned and available free of charge,copyright holders would face a negative incentive to continue writing and publishing books.
E)  If only non-copyrighted books were scanned and available free of charge,copyright holders would face an indirect incentive to continue writing and publishing books.

Question 14

A dangerous habit among those who own cell phones is driving while talking or texting.While a great deal has been done to inform drivers of the risks of doing multiple tasks while driving,this informational campaign has been ineffective in the face of increased ownership of cell phones.If you were a policymaker,what types of negative incentives would you suggest to discourage individuals from driving,talking,and texting at the same time?

Accepted Answer

Some possible answers would include maki...

Question 15

Microeconomics is the branch of economics that focuses on the:

Accepted Answer

A)  entire economy.
B)  production side of the economy.
C)  consumption side of the economy.
D)  involvement of the government in the entire economy.
E)  choices and decision-making of individuals and firms.

Question 16

Which of the following is a microeconomic question?

Accepted Answer

A)  What are the total production levels in the economy?
B)  How can we best encourage economic growth?
C)  What is the overall price level in the economy?
D)  What are the variables that determine the price of a specific good?
E)  How can we reduce the unemployment rate among Hispanic men?

Question 17

The cost of a trade-off is known as the ________ of that decision.

Accepted Answer

A)  marginal cost
B)  net cost
C)  opportunity cost
D)  comparative cost
E)  explicit cost

Question 18

Public buildings in the United States are required to be accessible to the disabled and,as a result,almost all have an elevator.What would be an example of a positive direct incentive for those who can use stairs?

Accepted Answer

A)  Using the stairs will make it seem that you care about your health and that you aren't lazy.
B)  Using the stairs will increase the risk of tripping and falling.
C)  Using the stairs will take more time than taking the elevator and will increase the risk of missing an important meeting.
D)  Using the stairs will give you some exercise and make you healthier.
E)  Using the stairs will put elevator repair professionals out of work.

Question 19

The opportunity cost of a purchase is:

Accepted Answer

A)  zero if the item is what you want most.
B)  always equal to the selling price of what you purchased.
C)  always greater for people who are out of work than for people who are working.
D)  the alternative good or service that one sacrifices because a different good was purchased.
E)  the lowest possible price.

Question 20

Comparative advantage emerges because of the presence of:

Accepted Answer

A)  trade.
B)  differing opportunity costs.
C)  marginal benefits equaling marginal costs.
D)  scarcity.
E)  incentives.

Exam 1: The Five Foundations of Economics

An activity's marginal benefit is ________ at the optimal quantity.

Correct Answer
verified

Which of the following is a microeconomic question?

Correct Answer
verified

The opportunity cost of a purchase is:

Correct Answer
verified

Google has started a project to scan all books and make those that are not copyrighted available to people free of charge.Why is it important that only books without a copyright are available?

Correct Answer
verified

Public buildings in the United States are required to be accessible to the disabled and,as a result,almost all have an elevator.What would be an example of a positive direct incentive for those who can use stairs?

Correct Answer
verified

Which of the following is not a type of incentive?

Correct Answer
verified

The cost of a trade-off is known as the ________ of that decision.

Correct Answer
verified

According to economists,one reason few professional athletes have PhD's is that the:

Correct Answer
verified

Rational decision-making under conditions of scarcity requires individuals to:

Correct Answer
verified

A parent that pays a child an allowance for doing chores is providing a(n) :

Correct Answer
verified

The United States is able to experience economic growth to the extent that:

Correct Answer
verified

The government places warnings on cigarette and liquor packages.These warnings serve as a(n) :

Correct Answer
verified

Comparative advantage emerges because of the presence of:

Correct Answer
verified

Correct Answer
verified
Some possible answers would include maki...
View Answer

When most economists wake up in the morning,their first decision is whether or not to hit the snooze bar on the alarm clock.What statement best represents their thought process as a rational decision-maker?

Correct Answer
verified

An example of a direct negative incentive is:

Correct Answer
verified

In 2009,the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise.How would an economist understand the decision that consumers faced?

Correct Answer
verified

The government controls for many indirect incentives in safety net social programs by:

Correct Answer
verified

Microeconomics is the branch of economics that focuses on the:

Correct Answer
verified

What is meant when one says that decisions are made at the margin? Provide an example of how you have made a decision at the margin.

Correct Answer
verified
When decisions are made at the margin,on...
View Answer

Exam 1: The Five Foundations of Economics

An activity's marginal benefit is ________ at the optimal quantity.

Correct AnswerverifiedShow Answer

Which of the following is a microeconomic question?

Correct AnswerverifiedShow Answer

The opportunity cost of a purchase is:

Correct AnswerverifiedShow Answer

Google has started a project to scan all books and make those that are not copyrighted available to people free of charge.Why is it important that only books without a copyright are available?

Correct AnswerverifiedShow Answer

Public buildings in the United States are required to be accessible to the disabled and,as a result,almost all have an elevator.What would be an example of a positive direct incentive for those who can use stairs?

Correct AnswerverifiedShow Answer

Which of the following is not a type of incentive?

Correct AnswerverifiedShow Answer

The cost of a trade-off is known as the ________ of that decision.

Correct AnswerverifiedShow Answer

According to economists,one reason few professional athletes have PhD's is that the:

Correct AnswerverifiedShow Answer

Rational decision-making under conditions of scarcity requires individuals to:

Correct AnswerverifiedShow Answer

A parent that pays a child an allowance for doing chores is providing a(n) :

Correct AnswerverifiedShow Answer

The United States is able to experience economic growth to the extent that:

Correct AnswerverifiedShow Answer

The government places warnings on cigarette and liquor packages.These warnings serve as a(n) :

Correct AnswerverifiedShow Answer

Comparative advantage emerges because of the presence of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSome possible answers would include maki...View AnswerShow Answer

When most economists wake up in the morning,their first decision is whether or not to hit the snooze bar on the alarm clock.What statement best represents their thought process as a rational decision-maker?

Correct AnswerverifiedShow Answer

An example of a direct negative incentive is:

Correct AnswerverifiedShow Answer

In 2009,the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise.How would an economist understand the decision that consumers faced?

Correct AnswerverifiedShow Answer

The government controls for many indirect incentives in safety net social programs by:

Correct AnswerverifiedShow Answer

Microeconomics is the branch of economics that focuses on the:

Correct AnswerverifiedShow Answer

What is meant when one says that decisions are made at the margin? Provide an example of how you have made a decision at the margin.

Correct AnswerverifiedWhen decisions are made at the margin,on...View AnswerShow Answer

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verified

Correct Answer
verified

Correct Answer
verified
Some possible answers would include maki...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When decisions are made at the margin,on...
View Answer