Question 1

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 2

Equality means distributing society's resources in the most efficient manner.

Accepted Answer

A) True 
 B)False

Question 3

Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $6200. Bill discovers that he needs to do an additional $2400 of work to make the car worth $6200 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?

Accepted Answer

A)  He should sell the car now for $3800.
B)  He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $6200.
C)  He should complete the additional work and sell the car for $6200.
D)  It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.E) A) and D)
F) C) and D)

Question 4

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Accepted Answer

A)  is more efficient and more equal for society.
B)  is more efficient but less equal for society.
C)  is more equal but less efficient for society.
D)  is less equal and less efficient for society.E) C) and D)
F) B) and D)

Question 5

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Accepted Answer

A)  There is no such thing as a free lunch.
B)  People buy more when prices are low than when prices are high.
C)  No matter how much people earn, they tend to spend more than they earn.
D)  Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.E) All of the above
F) B) and C)

Question 6

Which of the following statements about trade is false?

Accepted Answer

A)  Trade increases competition.
B)  With trade, one country wins and one country loses.
C)  Bulgaria can benefit, potentially, from trade with any other country.
D)  Trade allows people to buy a greater variety of goods and services at lower cost.E) A) and C)
F) B) and C)

Question 7

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Accepted Answer

A)  He should sell the boat as it is now for $400.
B)  He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900.
C)  He should complete the repairs and sell the boat for $900.
D)  It does not matter which action he takes; the outcome is the same either way.E) A) and B)
F) C) and D)

Question 8

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Accepted Answer

A)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Maureen's incentive to attend college.
B)  even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Maureen's incentive to attend college.
C)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college.
D)  only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen's incentive to attend college.E) A) and B)
F) B) and D)

Question 9

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Accepted Answer

A)  an increase in the number of unskilled jobs available.
B)  a decrease in the number of unskilled jobs available.
C)  a decrease in the number of workers wanting unskilled jobs.
D)  None of the above is correct.E) C) and D)
F) B) and D)

Question 10

Inflation and unemployment both increase as the money supply increases.

Accepted Answer

A) True 
 B)False

Question 11

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following claims is consistent with the views of mainstream economists?

Accepted Answer

A)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
B)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
C)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
D)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.E) A) and B)
F) All of the above

Question 13

When a society cannot produce all the goods and services people wish to have, the economy is experiencing

Accepted Answer

A)  scarcity.
B)  surpluses.
C)  inefficiencies.
D)  inequalities.E) All of the above
F) A) and C)

Question 14

Explain the concept of externality and give an example.

Accepted Answer

The impact of one pe...

Question 15

In response to the deep economic downturn in the US in 2008 and 2009, the US

Accepted Answer

A)  reduced taxes.
B)  increased government spending.
C)  increased the supply of money.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 16

Which of the following is an example of an externality?

Accepted Answer

A)  A paper mill dumps waste into the river.
B)  A neighbor's loud music disrupts sleep.
C)  A drunk driver causes an accident that injures another person.
D)  All of the above are correct.E) A) and C)
F) C) and D)

Question 17

In a market economy,

Accepted Answer

A)  households decide which firms to work for and what to buy with their incomes.
B)  firms decide whom to hire and what to make.
C)  a central planner makes decisions about production and consumption.
D)  Both a and b are correct.E) A) and B)
F) None of the above

Question 18

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.E) A) and B)
F) B) and D)

Question 19

Adam Smith's insight was that prices adjust to guide individual buyers and sellers to reach outcomes where, in many cases,

Accepted Answer

A)  opportunity cost is minimized for buyers.
B)  scarcity is reduced for society.
C)  well-being of society is maximized.
D)  opportunity cost of production is maximized.E) None of the above
F) C) and D)

Question 20

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Accepted Answer

A)  compare the total cost of your education to the total benefits of your education.
B)  compare the total cost of your education to the benefits of staying one more semester.
C)  compare the cost of staying one more semester to the benefits of staying one more semester.
D)  compare the total benefits of your education to the cost of staying one more semester.E) B) and C)
F) A) and B)

Exam 1: Ten Principles of Economics

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Correct Answer
verified

Adam Smith's insight was that prices adjust to guide individual buyers and sellers to reach outcomes where, in many cases,

Correct Answer
verified

Explain the concept of externality and give an example.

Correct Answer
verified
The impact of one pe...
View Answer

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct Answer
verified

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct Answer
verified

Which of the following statements about trade is false?

Correct Answer
verified

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 Answer
verified
The concept of working longer per year w...
View Answer

When a society cannot produce all the goods and services people wish to have, the economy is experiencing

Correct Answer
verified

Which of the following is an example of an externality?

Correct Answer
verified

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct Answer
verified

In a market economy,

Correct Answer
verified

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct Answer
verified

Inflation and unemployment both increase as the money supply increases.

Correct Answer
verified

Correct Answer
verified

Which of the following claims is consistent with the views of mainstream economists?

Correct Answer
verified

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

Correct Answer
verified

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

Correct Answer
verified

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Correct Answer
verified

Correct Answer
verified

Equality means distributing society's resources in the most efficient manner.

Correct Answer
verified

Exam 1: Ten Principles of Economics

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Correct AnswerverifiedShow Answer

Adam Smith's insight was that prices adjust to guide individual buyers and sellers to reach outcomes where, in many cases,

Correct AnswerverifiedShow Answer

Explain the concept of externality and give an example.

Correct AnswerverifiedThe impact of one pe...View AnswerShow Answer

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct AnswerverifiedShow Answer

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct AnswerverifiedShow Answer

Which of the following statements about trade is false?

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

When a society cannot produce all the goods and services people wish to have, the economy is experiencing

Correct AnswerverifiedShow Answer

Which of the following is an example of an externality?

Correct AnswerverifiedShow Answer

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Correct AnswerverifiedShow Answer

In a market economy,

Correct AnswerverifiedShow Answer

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

Inflation and unemployment both increase as the money supply increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following claims is consistent with the views of mainstream economists?

Correct AnswerverifiedShow Answer

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

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

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Equality means distributing society's resources in the most efficient manner.

Correct AnswerverifiedShow Answer

Correct Answer
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The impact of one pe...
View Answer

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The concept of working longer per year w...
View Answer

Correct Answer
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Correct Answer
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