Question 1

A new tax on gasoline causes a reduction in the purchase of new vehicles with poor fuel economy. This is an example of what type of incentive?

Accepted Answer

A)   negative direct
B)   positive direct
C)   negative indirect
D)   positive indirect
E)   The tax does not provide an incentive.

Question 2

Instead of taking an economics course, Adam could have taken a history course that meets at the exact same time. The total cost of taking the economics course would be

Accepted Answer

A)   the tuition cost for the economics course.
B)   the fact that Adam could not take the history course at the same time.
C)   the tuition cost for the economics course plus the price of the textbook and a notebook for the economics course.
D)   the tuition cost, the cost of the textbook and notebook, and the fact that Adam could not take the history course at the same time.
E)   the price of the textbook and a notebook for the economics course.

Question 3

The allocation of limited resources within an environment of almost unlimited wants is the focus of

Accepted Answer

A)   capitalism.
B)   fiscal policy.
C)   economics.
D)   scarcity.
E)   altruism.

Question 4

The _______system encourages innovation by creating a powerful financial reward for creativity.

Accepted Answer

A)   direct incentive
B)   indirect incentive
C)   patent
D)   trade-off
E)   tax credit

Question 5

Indirect incentives create consequences.

Accepted Answer

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

Question 6

When Lucy chose a major, she likely thought about her skills. Let's say Lucy doesn't enjoy dealing with numbers. How could she explain to her parents, using logic from economics, why she chose to major in English instead of mathematics?

Accepted Answer

A)   The opportunity cost of learning mathematics is too high.
B)   The opportunity cost of learning to appreciate literature is too high.
C)   The expected value of a major in English after graduation is low.
D)   The expected value of a major in mathematics after graduation is high.
E)   The opportunity cost of going to college is too low.

Question 7

One of the first major decisions that one faces after graduation is getting an apartment. Describe how someone might employ the concepts of trade-offs, opportunity costs, and making decisions at the margin in deciding which apartment to rent.

Accepted Answer

Apartments have varying sizes, prices, a...

Question 8

_______avoids the double coincidence of wants.

Accepted Answer

A)   Bartering
B)   Mandated trade
C)   Government ownership
D)   Money
E)   Demand

Question 9

The need to study economics would cease to exist if

Accepted Answer

A)   the government stopped controlling people's actions.
B)   people were free to make decisions on their own.
C)   people put forth the effort required to attain the goods and services they wanted.
D)   people earned more than they spent.
E)   there were enough resources to produce all the goods and services people would like to obtain.

Question 10

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

Accepted Answer

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

Question 11

Disparities in opportunity cost among competitors are the cause of

Accepted Answer

A)   optimization.
B)   comparative advantage.
C)   trade-offs.
D)   command economies.
E)   marginal benefits.

Question 12

What is the indirect incentive in the unemployment insurance program?

Accepted Answer

A)   Workers get paid when they are laid off.
B)   Workers face an incentive to find a new job as quickly as possible.
C)   Workers have a reduced incentive to find a new job until the insurance runs out.
D)   Workers are paid all of their wages by the unemployment insurance program.
E)   Workers on unemployment insurance are given training opportunities.

Question 13

On which of the following concepts do economists focus their study when explaining how humans behave?

Accepted Answer

A)   fairness
B)   money
C)   emotions
D)   incentives
E)   justice

Question 14

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 15

Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive?

Accepted Answer

A)   Students who show up late to class will not be allowed in the classroom.
B)   Students who do not have a doctor's note will not be allowed to take an exam at a different time.
C)   Students can choose whether they want to attend class-there is no attendance policy.
D)   Students can choose to get a higher grade by doing extra credit work.
E)   The professor decides to teach the class by reading out of the textbook to the entire class.

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 U.S. federal government imposes a tariff on cheaper steel arriving from other countries. When producers make the decision to purchase domestic steel, what must first occur?

Accepted Answer

A)   Producers always purchase domestic steel because the quality is superior to foreign products.
B)   The price of domestic steel must be at least equal to or greater than that of foreign steel.
C)   Producers never purchase domestic steel because it can't be produced as efficiently as foreign products.
D)   The government must subsidize the manufacturing costs of domestic steel.
E)   The price of foreign steel must be at least equal to or greater than that of domestic steel.

Question 18

Benefits from trade would NOT include

Accepted Answer

A)   lower prices.
B)   less competition.
C)   more variety of goods and services in the market.
D)   the ability of producers to specialize.
E)   more employment for the country.

Question 19

The government has been considering doing away with minting pennies because they are rarely used for purchases with most people collecting them or throwing them away) . How would an economist best explain this consumer behavior?

Accepted Answer

A)   More people are using credit and debit cards, so they are not in the habit of using monetary change.
B)   Prices have increased over time, and it would take far too many pennies to buy anything of value.
C)   Prices have increased over time, and the opportunity cost of carrying around large quantities of pennies has become too large.
D)   Prices have increased over time, and the opportunity cost of carrying around pennies has fallen.
E)   People who use pennies probably aren't spending enough money; removing the penny will force people to spend more.

Question 20

The discipline of economics is largely based on encouraging individuals to engage in certain activities and discouraging them from engaging in others. Why is encouraging or discouraging individuals through incentives so important?

Accepted Answer

Economics as a discipline focuses on how...

Exam 1: Five Foundations of Economics

The need to study economics would cease to exist if

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The discipline of economics is largely based on encouraging individuals to engage in certain activities and discouraging them from engaging in others. Why is encouraging or discouraging individuals through incentives so important?

Correct AnswerverifiedEconomics as a discipline focuses on how...View AnswerShow Answer

_______avoids the double coincidence of wants.

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What is the indirect incentive in the unemployment insurance program?

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The government has been considering doing away with minting pennies because they are rarely used for purchases with most people collecting them or throwing them away) . How would an economist best explain this consumer behavior?

Correct AnswerverifiedShow Answer

An example of a direct negative incentive is

Correct AnswerverifiedShow Answer

The U.S. federal government imposes a tariff on cheaper steel arriving from other countries. When producers make the decision to purchase domestic steel, what must first occur?

Correct AnswerverifiedShow Answer

Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive?

Correct AnswerverifiedShow Answer

Indirect incentives create consequences.

Correct AnswerverifiedShow Answer

Disparities in opportunity cost among competitors are the cause of

Correct AnswerverifiedShow Answer

The allocation of limited resources within an environment of almost unlimited wants is the focus of

Correct AnswerverifiedShow Answer

Instead of taking an economics course, Adam could have taken a history course that meets at the exact same time. The total cost of taking the economics course would be

Correct AnswerverifiedShow Answer

Benefits from trade would NOT include

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Which of the following is a microeconomic question?

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

Correct AnswerverifiedShow Answer

A new tax on gasoline causes a reduction in the purchase of new vehicles with poor fuel economy. This is an example of what type of incentive?

Correct AnswerverifiedShow Answer

On which of the following concepts do economists focus their study when explaining how humans behave?

Correct AnswerverifiedShow Answer

The _______system encourages innovation by creating a powerful financial reward for creativity.

Correct AnswerverifiedShow Answer

One of the first major decisions that one faces after graduation is getting an apartment. Describe how someone might employ the concepts of trade-offs, opportunity costs, and making decisions at the margin in deciding which apartment to rent.

Correct AnswerverifiedApartments have varying sizes, prices, a...View AnswerShow Answer

When Lucy chose a major, she likely thought about her skills. Let's say Lucy doesn't enjoy dealing with numbers. How could she explain to her parents, using logic from economics, why she chose to major in English instead of mathematics?

Correct AnswerverifiedShow Answer

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Economics as a discipline focuses on how...
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Correct Answer
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Correct Answer
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Apartments have varying sizes, prices, a...
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Correct Answer
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