Question 1

One tradeoff society faces is between efficiency and equality.Define each term.If the U.S.government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Question 2

Teresa eats three oranges during a particular day.The marginal benefit she enjoys from eating the third orange

Accepted Answer

A)   can be thought of as the total benefit Teresa enjoys by eating three oranges minus the total benefit she would have enjoyed by eating just the first two oranges.
B)   determines Teresa's willingness to pay for the first,second,and third oranges.
C)   does not depend on how many oranges Teresa has already eaten.
D)   All of the above are correct.

Question 3

Traci is planning to sell her house,and she is considering making two upgrades to the house before listing it for sale.Replacing the carpeting will cost her $3,000 and replacing the roof will cost her $6,000.Traci expects the new carpeting to increase the value of her house by $2,500 and the new roof to increase the value of her house by $7,500.

Accepted Answer

A)   Traci should make both improvements to her house.
B)   Traci should replace the carpeting but not replace the roof.
C)   Traci should replace the roof but not replace the carpeting.
D)   Traci should not make either improvement to her house.

Question 4

Which of the following phrases best captures the notion of efficiency?

Accepted Answer

A)   absolute fairness
B)   equal distribution
C)   minimum waste
D)   equitable outcome

Question 5

Which is the most accurate statement about trade?

Accepted Answer

A)   Trade can make every nation better off.
B)   Trade makes some nations better off and others worse off.
C)   Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)   Trade helps rich nations and hurts poor nations.

Question 6

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)   is a basic principle regarding individual decisionmaking.
B)   amounts to a denial of one of the basic principles regarding interactions among people.
C)   supports the idea that the "invisible hand" should guide economic activity.
D)   was promoted by the economist Adam Smith in a well-known 1776 book.

Question 7

A rational decision maker takes an action only if the

Accepted Answer

A)   marginal benefit is less than the marginal cost.
B)   marginal benefit is greater than the marginal cost.
C)   average benefit is greater than the average cost.
D)   marginal benefit is greater than both the average cost and the marginal cost.

Question 8

In economics,the cost of something is

Accepted Answer

A)   the dollar amount of obtaining it.
B)   always measured in units of time given up to get it.
C)   what you give up to get it.
D)   often impossible to quantify,even in principle.

Question 9

The government enforces property rights by

Accepted Answer

A)   requiring property owners to pay property taxes.
B)   providing police and courts.
C)   forcing people to own property.
D)   providing public parks and recreation facilities.

Question 10

The business cycle is the

Accepted Answer

A)   relationship between unemployment and inflation.
B)   irregular fluctuations in economic activity.
C)   positive relationship between the quantity of money in an economy and inflation.
D)   predictable changes in economic activity due to changes in government spending and taxes.

Question 11

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Accepted Answer

A)   it is easier to cut the pie,and therefore the economy can produce a larger pie.
B)   those who earn more income pay less in taxes.
C)   the pie gets smaller,and there will be less pie overall.
D)   government will spend too much time cutting and it causes the economy to lose the ability to produce enough pie for everyone.

Question 12

In a market economy,economic activity is guided by

Accepted Answer

A)   the government.
B)   corporations.
C)   central planners.
D)   self-interest and prices.

Question 13

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort.This law is likely to

Accepted Answer

A)   increase efficiency and increase equality.
B)   increase efficiency but decrease equality.
C)   decrease efficiency but increase equality.
D)   decrease efficiency and decrease equality.

Question 14

Productivity is defined as the

Accepted Answer

A)   amount of goods and services produced from each unit of labor input.
B)   number of workers required to produce a given amount of goods and services.
C)   amount of labor that can be saved by replacing workers with machines.
D)   actual amount of effort workers put into an hour of working time.

Question 15

The government can potentially improve market outcomes if market inequalities or market failure exists.

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

Senator Smith wants to increase taxes on people with high incomes and use the money to help the poor.Senator Jones argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Accepted Answer

A)   we should agree with Senator Smith.
B)   we should agree with Senator Jones.
C)   a good decision requires that we recognize both viewpoints.
D)   there are no tradeoffs between equity and efficiency.

Question 18

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.

Question 19

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.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)   neither

Question 20

Benefits from trade would not include

Accepted Answer

A)   the ability of people and nations to specialize.
B)   a greater variety of goods and services becoming available.
C)   less competition.
D)   lower prices.

Exam 1: Ten Principles of Economics

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort.This law is likely to

Correct Answer
verified

Which of the following phrases best captures the notion of efficiency?

Correct Answer
verified

When government policies are enacted,

Correct Answer
verified

Correct Answer
verified

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Correct Answer
verified

Benefits from trade would not include

Correct Answer
verified

In a market economy,economic activity is guided by

Correct Answer
verified

A rational decision maker takes an action only if the

Correct Answer
verified

In economics,the cost of something is

Correct Answer
verified

Which is the most accurate statement about trade?

Correct Answer
verified

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

Correct Answer
verified

Senator Smith wants to increase taxes on people with high incomes and use the money to help the poor.Senator Jones argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Correct Answer
verified

Teresa eats three oranges during a particular day.The marginal benefit she enjoys from eating the third orange

Correct Answer
verified

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct Answer
verified

The government enforces property rights by

Correct Answer
verified

Productivity is defined as the

Correct Answer
verified

The business cycle is the

Correct Answer
verified

One tradeoff society faces is between efficiency and equality.Define each term.If the U.S.government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

Correct Answer
verified
Efficiency is the property of society ge...
View Answer

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.Which country can benefit?

Correct Answer
verified

The government can potentially improve market outcomes if market inequalities or market failure exists.

Correct Answer
verified

Exam 1: Ten Principles of Economics

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort.This law is likely to

Correct AnswerverifiedShow Answer

Which of the following phrases best captures the notion of efficiency?

Correct AnswerverifiedShow Answer

When government policies are enacted,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Correct AnswerverifiedShow Answer

Benefits from trade would not include

Correct AnswerverifiedShow Answer

In a market economy,economic activity is guided by

Correct AnswerverifiedShow Answer

A rational decision maker takes an action only if the

Correct AnswerverifiedShow Answer

In economics,the cost of something is

Correct AnswerverifiedShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Senator Smith wants to increase taxes on people with high incomes and use the money to help the poor.Senator Jones argues that such a tax will discourage successful people from working and will therefore make society worse off.An economist would say that

Correct AnswerverifiedShow Answer

Teresa eats three oranges during a particular day.The marginal benefit she enjoys from eating the third orange

Correct AnswerverifiedShow Answer

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct AnswerverifiedShow Answer

The government enforces property rights by

Correct AnswerverifiedShow Answer

Productivity is defined as the

Correct AnswerverifiedShow Answer

The business cycle is the

Correct AnswerverifiedShow Answer

One tradeoff society faces is between efficiency and equality.Define each term.If the U.S.government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow Answer

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.Which country can benefit?

Correct AnswerverifiedShow Answer

The government can potentially improve market outcomes if market inequalities or market failure exists.

Correct AnswerverifiedShow Answer

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Efficiency is the property of society ge...
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