Question 1

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

Accepted Answer

A)   the value to Barb of the option she would have chosen had Option B not been available.
B)   the value to Barb of Options A, C and D combined.
C)   the average of the values to Barb of Options A, C, and D.
D)   $100.E) A) and D)
F) A) and C)

Question 2

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.E) A) and C)
F) A) and D)

Question 3

Rational people make decisions "at the margin" by comparing .

Accepted Answer

marginal c...

Question 4

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 5

An example of a firm with market power is a

Accepted Answer

A)   delicatessen in New York.
B)   cable TV provider in Tulsb.
C)   clothing store in Chicago.
D)   family farm in Kansas.E) C) and D)
F) A) and D)

Question 6

The income of a typical worker in a country is most closely linked to which of the following?

Accepted Answer

A)   population
B)   productivity
C)   market power
D)   government policiesE) B) and C)
F) A) and B)

Question 7

In the short run, an increase in the money supply is likely to lead to

Accepted Answer

A)   lower unemployment and lower inflation.
B)   lower unemployment and higher inflation.
C)   higher unemployment and lower inflation.
D)   higher unemployment and higher inflation.E) A) and B)
F) A) and C)

Question 8

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Accepted Answer

A)   create a more fair distribution of income.
B)   change the ingredients that are used to "bake" the economic pie.
C)   enlarge the economic pie.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 9

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

Accepted Answer

A)   People respond to incentives.
B)   Rational people think at the margin.
C)   Trade can make everyone better off.
D)   Markets are usually a good way to organize economic activity.E) B) and D)
F) C) and D)

Question 10

Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?

Accepted Answer

A)   Trade can make everyone better off.
B)   Markets are usually a good way to organize economic activity.
C)   Governments can sometimes improve market outcomes.
D)   Prices rise when the government prints too much money.E) A) and D)
F) C) and D)

Question 11

Something that induces a person to act is called

Accepted Answer

A)   a trade-off.
B)   a policy.
C)   an incentive.
D)   an opportunity cost.E) A) and B)
F) A) and C)

Question 12

In the early 1920s,

Accepted Answer

A)   Germany experienced a very high rate of inflation.
B)   the quantity of German money was declining rapidly.
C)   the value of German money remained almost constant.
D)   All of the above are correct.E) A) and D)
F) All of the above

Question 13

The cost of an action is measured in terms of foregone opportunities.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a subject that economists study?

Accepted Answer

A)   the growth in average income
B)   the fraction of the population that cannot find work
C)   the rate at which prices are rising
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 15

In a market economy, economic activity is guided by

Accepted Answer

A)   the government.
B)   central planners.
C)   large businesses.
D)   prices and self-interest.E) None of the above
F) A) and D)

Question 16

Adam Smith's book The Wealth of Nations was published in

Accepted Answer

A)   1692.
B)   1776.
C)   1816.
D)   1936.E) None of the above
F) A) and B)

Question 17

In a market economy, economic activity is guided by

Accepted Answer

A)   the government.
B)   corporations.
C)   central planners.
D)   self-interest and prices.E) All of the above
F) B) and C)

Question 18

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Melinda quits her job at a bank,...

Question 19

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

A)   inefficiency
B)   inequality
C)   scarcity
D)   market failureE) B) and D)
F) All of the above

Question 20

Large or persistent inflation is almost always caused by

Accepted Answer

A)   excessive government spending.
B)   excessive growth in the quantity of money.
C)   foreign competition.
D)   higher-than-normal levels of productivity.E) All of the above
F) C) and D)

Exam 1: Ten Principles of Economics

Which of the following is a subject that economists study?

Correct Answer
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What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct Answer
verified

Correct Answer
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Rational people make decisions "at the margin" by comparing .

Correct Answer
verified
marginal c...
View Answer

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Correct Answer
verified

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

Correct Answer
verified

Adam Smith's book The Wealth of Nations was published in

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

In the early 1920s,

Correct Answer
verified

In the short run, an increase in the money supply is likely to lead to

Correct Answer
verified

Scarcity means that there is less of a good or resource available than people wish to have.

Correct Answer
verified

The income of a typical worker in a country is most closely linked to which of the following?

Correct Answer
verified

The government enforces property rights by

Correct Answer
verified

Something that induces a person to act is called

Correct Answer
verified

The cost of an action is measured in terms of foregone opportunities.

Correct Answer
verified

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

Correct Answer
verified

An example of a firm with market power is a

Correct Answer
verified

Large or persistent inflation is almost always caused by

Correct Answer
verified

Exam 1: Ten Principles of Economics

Which of the following is a subject that economists study?

Correct AnswerverifiedShow Answer

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Rational people make decisions "at the margin" by comparing .

Correct Answerverifiedmarginal c...View AnswerShow Answer

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Correct AnswerverifiedShow Answer

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adam Smith's book The Wealth of Nations was published in

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

In the early 1920s,

Correct AnswerverifiedShow Answer

In the short run, an increase in the money supply is likely to lead to

Correct AnswerverifiedShow Answer

Scarcity means that there is less of a good or resource available than people wish to have.

Correct AnswerverifiedShow Answer

The income of a typical worker in a country is most closely linked to which of the following?

Correct AnswerverifiedShow Answer

The government enforces property rights by

Correct AnswerverifiedShow Answer

Something that induces a person to act is called

Correct AnswerverifiedShow Answer

The cost of an action is measured in terms of foregone opportunities.

Correct AnswerverifiedShow Answer

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

Correct AnswerverifiedShow Answer

An example of a firm with market power is a

Correct AnswerverifiedShow Answer

Large or persistent inflation is almost always caused by

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
marginal c...
View Answer

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