Question 1

More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ advantage in growing oranges.

Accepted Answer

A)   comparative
B)   public
C)   revenue
D)   producer
E)   planning

Question 2

The opportunity cost of working rather than going to school is

Accepted Answer

A)   the cost of food and housing.
B)   the cost of clothing and transportation.
C)   zero because the person is earning an income by working.
D)   the higher wages that come with additional education.
E)   the annual wages earned by working.

Question 3

At any quantity,when the marginal benefit equals the marginal cost,that quantity is said to be

Accepted Answer

A)   excessive.
B)   inadequate.
C)   optimal.
D)   equivalent.
E)   allocated.

Question 4

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 5

Corporate leadership sometimes waits until after presidential elections in order to make major business decisions.An economist would maintain that this is in anticipation of future

Accepted Answer

A)   forecasting.
B)   fear.
C)   scarcity.
D)   incentives.
E)   taxes.

Question 6

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

Accepted Answer

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

Question 7

It is crucial to recognize that ________ and ________ are separate evaluations made at the margin.

Accepted Answer

A)   costs; benefits
B)   buying; selling
C)   incentives; trade-offs
D)   economics; accounting
E)   trade-offs; opportunity costs

Question 8

Economics is the study of

Accepted Answer

A)   how to make money.
B)   how to allocate resources to satisfy wants and needs.
C)   capitalism.
D)   how to make workers more productive and firms more profitable.
E)   markets.

Question 9

A health insurance company may offer its policyholders a discount on their premiums if they prove that they have stopped smoking.What type of incentive is the health insurance company offering?

Accepted Answer

A)   direct
B)   indirect
C)   neutral
D)   complementary
E)   unintended

Question 10

Health insurance companies have the goal of reducing payments to doctors and hospitals.One way they have done this is by requiring individuals to pay a deductible.For example,a $1,000 deductible means that individuals are responsible for the first $1,000 in health care expenses over the course of a year.In terms of incentives,explain how the presence of a deductible reduces expenses for the health insurance company.

Accepted Answer

Deductibles act as a positive and direct...

Question 11

Which of the following statements best represents the fact that Logan cannot put in extra hours of work because of scarcity?

Accepted Answer

A)   He doesn't have enough time for additional work because he needs to spend time with his family and there are only so many hours in the day.
B)   He doesn't like going to work,so why would he work more than he has to?
C)   He doesn't think that overtime pay is high enough.
D)   He is worried that if he works extra hours,he will get bored with his job.
E)   He doesn't want his coworkers to feel pressure to work more because he is working additional hours.

Question 12

An example of a direct positive incentive is

Accepted Answer

A)   a prison sentence for committing a crime.
B)   unemployment insurance for those who are laid off.
C)   providing a workplace safety program.
D)   providing a commission for sales.
E)   threatening to fire those who do not perform well.

Question 13

Decision makers engage in marginal thinking by

Accepted Answer

A)   comparing the average cost and benefit of all units produced.
B)   comparing the sum of the cost and benefit of all units produced.
C)   ignoring benefits,which are a subjective determination.
D)   comparing the benefit of one additional unit with its cost to produce.
E)   focusing on mass production,which often keeps costs down.

Question 14

Which scenario describes studying for an economics course without applying the scarcity principle?

Accepted Answer

A)   Mary studies two hours for every one hour she is in the classroom.
B)   Jonah studies three afternoons a week until he understands the material or until dinner,whichever comes first.
C)   Lucy studies with her roommate who is also taking the course,and they discuss economic concepts during any free time they can find.
D)   Chloe studies for this course and does nothing else.
E)   Rafael talks to an economist whenever he has a chance to do so.

Question 15

The opportunity cost of a purchase is

Accepted Answer

A)   zero if the item is what someone wants most.
B)   always equal to the selling price of what someone 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 16

If the United States creates a trade agreement with Vietnam,we know that

Accepted Answer

A)   Vietnam will benefit,but trade with a less developed,Third World country will not help the United States.
B)   Vietnam can get no benefit,since its workers are not as productive as the United States'.
C)   Vietnam can get no benefit,since its businesses have less capital than the United States'.
D)   Vietnam and the United States can both benefit.
E)   physical and cultural differences between the two countries are too great to benefit from trade.

Question 17

Decisions by individuals and firms are the domain of

Accepted Answer

A)   microeconomics.
B)   macroeconomics.
C)   consumption economics.
D)   median economics.
E)   choice economics.

Question 18

Microeconomics is the study of

Accepted Answer

A)   how government activities affect the economy.
B)   individual decision-making units.
C)   collective decision making.
D)   the operation of the economy as a whole.
E)   the interaction between the government and businesses.

Question 19

When consumers discard their gasoline-powered automobiles for electric-powered ones,this partially reflects the ________ of gasoline.

Accepted Answer

A)   scarcity
B)   luxury
C)   necessity
D)   specialization
E)   incentive

Question 20

If opportunity cost is the value of the best alternative not chosen,why is a rejected option important?

Accepted Answer

Alternatives are still valuable measurin...

Exam 1: Five Foundations of Economics

An example of a direct negative incentive is

Correct Answer
verified

If the United States creates a trade agreement with Vietnam,we know that

Correct Answer
verified

An example of a direct positive incentive is

Correct Answer
verified

More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ advantage in growing oranges.

Correct Answer
verified

Which scenario describes studying for an economics course without applying the scarcity principle?

Correct Answer
verified

Decisions by individuals and firms are the domain of

Correct Answer
verified

If opportunity cost is the value of the best alternative not chosen,why is a rejected option important?

Correct Answer
verified
Alternatives are still valuable measurin...
View Answer

Decision makers engage in marginal thinking by

Correct Answer
verified

Correct Answer
verified
Deductibles act as a positive and direct...
View Answer

A health insurance company may offer its policyholders a discount on their premiums if they prove that they have stopped smoking.What type of incentive is the health insurance company offering?

Correct Answer
verified

Microeconomics is the study of

Correct Answer
verified

The opportunity cost of a purchase is

Correct Answer
verified

When consumers discard their gasoline-powered automobiles for electric-powered ones,this partially reflects the ________ of gasoline.

Correct Answer
verified

Corporate leadership sometimes waits until after presidential elections in order to make major business decisions.An economist would maintain that this is in anticipation of future

Correct Answer
verified

The opportunity cost of working rather than going to school is

Correct Answer
verified

It is crucial to recognize that and are separate evaluations made at the margin.

Correct Answer
verified

At any quantity,when the marginal benefit equals the marginal cost,that quantity is said to be

Correct Answer
verified

Economics is the study of

Correct Answer
verified

Which of the following statements best represents the fact that Logan cannot put in extra hours of work because of scarcity?

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Five Foundations of Economics

An example of a direct negative incentive is

Correct AnswerverifiedShow Answer

If the United States creates a trade agreement with Vietnam,we know that

Correct AnswerverifiedShow Answer

An example of a direct positive incentive is

Correct AnswerverifiedShow Answer

More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ advantage in growing oranges.

Correct AnswerverifiedShow Answer

Which scenario describes studying for an economics course without applying the scarcity principle?

Correct AnswerverifiedShow Answer

Decisions by individuals and firms are the domain of

Correct AnswerverifiedShow Answer

If opportunity cost is the value of the best alternative not chosen,why is a rejected option important?

Correct AnswerverifiedAlternatives are still valuable measurin...View AnswerShow Answer

Decision makers engage in marginal thinking by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDeductibles act as a positive and direct...View AnswerShow Answer

A health insurance company may offer its policyholders a discount on their premiums if they prove that they have stopped smoking.What type of incentive is the health insurance company offering?

Correct AnswerverifiedShow Answer

Microeconomics is the study of

Correct AnswerverifiedShow Answer

The opportunity cost of a purchase is

Correct AnswerverifiedShow Answer

When consumers discard their gasoline-powered automobiles for electric-powered ones,this partially reflects the ________ of gasoline.

Correct AnswerverifiedShow Answer

Corporate leadership sometimes waits until after presidential elections in order to make major business decisions.An economist would maintain that this is in anticipation of future

Correct AnswerverifiedShow Answer

The opportunity cost of working rather than going to school is

Correct AnswerverifiedShow Answer

It is crucial to recognize that ________ and ________ are separate evaluations made at the margin.

Correct AnswerverifiedShow Answer

At any quantity,when the marginal benefit equals the marginal cost,that quantity is said to be

Correct AnswerverifiedShow Answer

Economics is the study of

Correct AnswerverifiedShow Answer

Which of the following statements best represents the fact that Logan cannot put in extra hours of work because of scarcity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Alternatives are still valuable measurin...
View Answer

Correct Answer
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Correct Answer
verified
Deductibles act as a positive and direct...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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It is crucial to recognize that and are separate evaluations made at the margin.

Correct Answer
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Correct Answer
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Correct Answer
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