Question 1

Economics is the study of how evenly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 2

Incomes of U.S.households in the 1970s and 1980s

Accepted Answer

A)   grew rapidly,due to the widespread success of labor unions in pushing up wages during those decades.
B)   grew rapidly,due to several increases in the minimum wage during those decades.
C)   grew rapidly,due to government policies that discouraged the importation of foreign products during those decades.
D)   grew slowly,due to slow growth of the output of goods and services per hour of U.S.workers' time during those decades.E) A) and B)
F) A) and C)

Question 3

For markets to work well,there must be

Accepted Answer

A)   market power.
B)   a central planner.
C)   property rights.
D)   abundant,not scarce,resources.E) C) and D)
F) None of the above

Question 4

The "broken window fallacy"

Accepted Answer

A)   explains why inflation is so high.
B)   is a justification for the government to print more money.
C)   is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
D)   has nothing to do with public policy.E) None of the above
F) C) and D)

Question 5

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Accepted Answer

A)   populations.
B)   productivity levels.
C)   locations.
D)   none of the above;economists are puzzled by differences in standards of living around the world.E) All of the above
F) C) and D)

Question 6

Which of the following can policy do?

Accepted Answer

A)   alter incentives
B)   alter trade-offs
C)   change opportunity costs
D)   All of the above are correct.E) None of the above
F) All of the above

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) All of the above

Question 8

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A)   opportunity cost.
B)   productivity.
C)   externality.
D)   marginal benefit.E) A) and D)
F) None of the above

Question 9

President Gerald Ford referred to inflation as

Accepted Answer

A)   a blight on our nation's economy.
B)   a necessary evil to combat high unemployment.
C)   public enemy number one.
D)   a fly in the ointment.E) B) and C)
F) All of the above

Question 10

Sue drinks three sodas during a particular day.The marginal benefit she enjoys from drinking the third soda

Accepted Answer

A)   can be thought of as the total benefit Sue enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas.
B)   determines Sue's willingness to pay for the third soda.
C)   is likely different from the marginal benefit provided to Sue by the second soda.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 11

The opportunity cost of going to college is

Accepted Answer

A)   the total spent on food,clothing,books,transportation,tuition,lodging,and other expenses.
B)   the value of the best opportunity a student gives up to attend college.
C)   zero for students who are fortunate enough to have all of their college expenses paid by someone else.
D)   zero,since a college education will allow a student to earn a larger income after graduation.E) A) and C)
F) B) and C)

Question 12

Tuition is the single-largest cost of attending college for most students.

Accepted Answer

A) True 
 B)False

Question 13

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Accepted Answer

A)   safety glass in all new cars.
B)   seat belts in all new cars.
C)   air bags in all new cars.
D)   stricter drunk driving laws in all states.E) A) and D)
F) All of the above

Question 14

A worker in Thailand can earn $2 per day making cotton cloth on a hand loom.A worker in the United States can earn $80 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Accepted Answer

A)   U.S.textile workers belong to a union.
B)   There is little demand for cotton cloth in Thailand and great demand in the U.S.
C)   Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.
D)   Thailand has a low-wage policy to make its textile industry more competitive in world markets.E) A) and B)
F) A) and C)

Question 15

Which of the following principles is not one of the four principles of individual decisionmaking?

Accepted Answer

A)   People face tradeoffs.
B)   Trade can make everyone better off.
C)   People respond to incentives.
D)   Rational people think at the margin.E) None of the above
F) A) and B)

Question 16

Suppose a typical worker in France can produce 32 units of product in an eight-hour day,while a typical worker in Germany can produce 30 units of product in a 10-hour day.We can conclude that

Accepted Answer

A)   worker productivity in Germany is higher than in France.
B)   the standard of living will likely be higher in France than in Germany.
C)   productivity is 4 units per hour for the German worker and 3 units per hour for the French worker.
D)   there will be no difference between the standard of living in France and Germany.E) None of the above
F) A) and B)

Question 17

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Accepted Answer

A)   David Ricardo
B)   Thorstein Veblen
C)   John Maynard Keynes
D)   Adam SmithE) A) and D)
F) A) and C)

Question 18

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)   provide an equal distribution of goods and services to households.
B)   establish a significant role for government in the allocation of resources.
C)   solve the problem of scarcity.
D)   are more efficient.E) C) and D)
F) A) and B)

Question 19

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) A) and B)
F) None of the above

Question 20

The adage,"There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)   goods are scarce.
B)   people face tradeoffs.
C)   income must be earned.
D)   households face many decisions.E) None of the above
F) A) and D)

Exam 1: Ten Principles of Economics

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

Suppose a typical worker in France can produce 32 units of product in an eight-hour day,while a typical worker in Germany can produce 30 units of product in a 10-hour day.We can conclude that

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The amount of goods and services produced from each unit of labor input is called

Correct AnswerverifiedShow Answer

For markets to work well,there must be

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

Correct AnswerverifiedShow Answer

President Gerald Ford referred to inflation as

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Ralph Nader's book Unsafe at Any Speed caused Congress to require

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The fact that different countries experience different standards of living is largely explained by differences in those countries'

Correct AnswerverifiedShow Answer

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

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The "broken window fallacy"

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The adage,"There is no such thing as a free lunch," is used to illustrate the principle that

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One advantage market economies have over centrally-planned economies is that market economies

Correct AnswerverifiedShow Answer

Incomes of U.S.households in the 1970s and 1980s

Correct AnswerverifiedShow Answer

Sue drinks three sodas during a particular day.The marginal benefit she enjoys from drinking the third soda

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A worker in Thailand can earn $2 per day making cotton cloth on a hand loom.A worker in the United States can earn $80 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

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The opportunity cost of going to college is

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Which of the following principles is not one of the four principles of individual decisionmaking?

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Tuition is the single-largest cost of attending college for most students.

Correct AnswerverifiedShow Answer

Economics is the study of how evenly goods and services are distributed within society.

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Which of the following can policy do?

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