Question 1

When the "invisible hand" guides economic activity,prices of products reflect

Accepted Answer

A)   only the values that society places on those products.
B)   only the costs to society of producing those products.
C)   both the values that society places on those products and the costs to society of producing those products.
D)   none of the above;when the "invisible hand" guides economic activity,prices of products are set by the government in a manner that is thought to be "fair."

Question 2

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Accepted Answer

A)   cost of teaching increased.
B)   benefit of teaching increased.
C)   cost of teaching decreased.
D)   cost of a corporate job increased.

Question 3

The decisions of firms and households are guided by prices and self-interest in a

Accepted Answer

A)   command economy.
B)   centrally-planned economy.
C)   market economy.
D)   All of the above are correct.

Question 4

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Accepted Answer

A)   guns and butter.
B)   efficiency and equality.
C)   inflation and unemployment.
D)   work and leisure.

Question 5

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)   studies show that individuals with higher levels of income pollute less than low-income individuals.
B)   efforts to reduce pollution typically are not completely successful.
C)   laws that reduce pollution raise costs of production and reduce incomes.
D)   employing individuals to clean up pollution causes increases in employment and income.

Question 6

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 7

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A)   minimum waste
B)   maximum benefit
C)   sameness
D)   efficiency

Question 8

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)   efficiency.
B)   equality.
C)   externalities.
D)   productivity.

Question 9

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)   the influence of labor unions in America.
B)   tariff protection imposed by the American government.
C)   the enactment of minimum-wage laws in America.
D)   the rise in American productivity.

Question 10

The principle that "trade can make everyone better off" applies to interactions and trade between

Accepted Answer

A)   families.
B)   states within the United States.
C)   nations.
D)   All of the above are correct.

Question 11

If the price of a gallon of milk were fixed above the current price,then we would expect

Accepted Answer

A)   an increase in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell.
B)   an increase in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell.
C)   a decrease in the number of gallons of milk people want to buy and an increase in the number of gallons of milk dairy farmers want to sell.
D)   a decrease in the number of gallons of milk people want to buy and a decrease in the number of gallons of milk dairy farmers want to sell.

Question 12

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 13

U.S.laws requiring that drivers wear seat belts have resulted in

Accepted Answer

A)   a reduction in both driver deaths and pedestrian deaths.
B)   fewer accidents and fewer deaths per accident.
C)   fewer driver deaths,fewer accidents and fewer pedestrian deaths.
D)   little change in the number of driver deaths,but more accidents and more pedestrian deaths.

Question 14

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)   every person is entitled to life,liberty,and the pursuit of happiness.
B)   individuals are best left to their own devices without the government guiding their actions.
C)   the government plays a central role in organizing a market economy.
D)   because of human nature a strong legal system is necessary for a market system to survive.

Question 15

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 area

Question 16

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

Accepted Answer

A)   Your full room-and-board expenses should always be included.
B)   None of your room-and-board expenses should ever be included.
C)   You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college.
D)   You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.

Question 17

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Accepted Answer

A)   This loss of jobs has been detrimental to our economy.
B)   The government should provide subsidies to encourage more people to become farmers.
C)   This reduction in the number of farmers explains the increase in the price of food.
D)   Economists understand this is progress because the proportion of the population that used to be farmers is now employed in other professions.

Question 18

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 19

A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand?

Accepted Answer

A)   Yes,because making tables is profitable.
B)   No,because she may not be able to sell the additional tables.
C)   It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables.
D)   It depends on the average cost of producing more tables and the average revenue she will earn from selling more tables.

Question 20

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

When you calculate your true costs of going to college,what portion of your room-and-board expenses should be included?

Correct AnswerverifiedShow Answer

Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless the marginal

Correct AnswerverifiedShow Answer

When the "invisible hand" guides economic activity,prices of products reflect

Correct AnswerverifiedShow Answer

A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand?

Correct AnswerverifiedShow Answer

A tradeoff exists between a clean environment and a higher level of income in that

Correct AnswerverifiedShow Answer

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Correct AnswerverifiedShow Answer

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

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

U.S.laws requiring that drivers wear seat belts have resulted in

Correct AnswerverifiedShow Answer

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct AnswerverifiedShow Answer

The principle that "trade can make everyone better off" applies to interactions and trade between

Correct AnswerverifiedShow Answer

Which of the following words and phrases best captures the notion of equality?

Correct AnswerverifiedShow Answer

The decisions of firms and households are guided by prices and self-interest in a

Correct AnswerverifiedShow Answer

If the price of a gallon of milk were fixed above the current price,then we would expect

Correct AnswerverifiedShow Answer

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Correct AnswerverifiedShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

Correct AnswerverifiedShow Answer

The historical rise in living standards of American workers is primarily a result of

Correct AnswerverifiedShow Answer

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct AnswerverifiedShow Answer

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct AnswerverifiedShow Answer

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The concept of working longer per year w...
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