Question 1

The phrase "no such thing as a free lunch" means

Accepted Answer

A)   people must face tradeoffs.
B)   rational people think at the margin.
C)   people respond to incentives.
D)   trade can make everyone better off.E) C) and D)
F) B) and D)

Question 2

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Accepted Answer

A)   equality is increased and efficiency is increased.
B)   equality is increased and efficiency is decreased.
C)   equality is decreased and efficiency is increased.
D)   equality is decreased and efficiency is decreased.E) None of the above
F) B) and C)

Question 3

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Accepted Answer

A)   a market failure caused by an externality.
B)   a market failure caused by market power.
C)   a market failure caused by equality.
D)   There is no market failure in this case.E) All of the above
F) B) and D)

Question 4

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is

Accepted Answer

A)   $50.
B)   $500.
C)   $50,000.
D)   This cannot be determined from the information given.E) B) and C)
F) A) and D)

Question 5

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 D)
F) A) and C)

Question 6

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A)   create a more fair distribution of income.
B)   change the way in which the economic pie is divided.
C)   enlarge the economic pie.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 7

Economics is the study of ______.

Accepted Answer

how societ...

Question 8

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."E) All of the above
F) A) and D)

Question 9

In the United States, the overall level of prices more than doubled during the

Accepted Answer

A)   1950s.
B)   1960s.
C)   1970s.
D)   1980s.E) A) and D)
F) A) and C)

Question 10

Government policies that improve equality usually increase efficiency at the same time.

Accepted Answer

A) True 
 B)False

Question 11

The term "productivity"

Accepted Answer

A)   means the same thing as "efficiency."
B)   is seldom used by economists, as its meaning is not precise.
C)   refers to the quantity of goods and services produced from each unit of labor input.
D)   refers to the variety of goods and services from which households can choose when they shop.E) None of the above
F) All of the above

Question 12

Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators.
-Refer to Scenario 1-3. What is the company's average cost?

Accepted Answer

The answer of Scenario 1-3
It costs a company $35,000 to...

Question 13

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Accepted Answer

A)   sell the ticket because the marginal benefit exceeds the marginal cost.
B)   sell the ticket because the marginal benefit exceeds the average cost.
C)   not sell the ticket because the marginal benefit is less than the marginal cost.
D)   not sell the ticket because the marginal benefit is less than the average cost.E) None of the above
F) A) and B)

Question 14

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Accepted Answer

A) True 
 B)False

Question 15

In considering how to allocate its scarce resources among its various members, a household considers

Accepted Answer

A)   each member's abilities.
B)   each member's efforts.
C)   each member's desires.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 16

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) A) and C)
F) A) and B)

Question 17

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.E) None of the above
F) B) and C)

Question 18

The business cycle is the

Accepted Answer

A)   relationship between unemployment and inflation.
B)   irregular fluctuations in economic activity.
C)   positive relationship between the quantity of money in an economy and inflation.
D)   predictable changes in economic activity due to changes in government spending and taxes.E) C) and D)
F) B) and C)

Question 19

The tradeoff between inflation and unemployment

Accepted Answer

A)   implies that policies designed to reduce unemployment also reduce inflation.
B)   was eliminated by improved economic policies in the 1900s.
C)   is a long-run tradeoff, persisting for decades, according to most economists.
D)   None of the above are correct.E) A) and D)
F) A) and C)

Question 20

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Correct AnswerverifiedShow Answer

Government policies that improve equality usually increase efficiency at the same time.

Correct AnswerverifiedShow Answer

The phrase "no such thing as a free lunch" means

Correct AnswerverifiedShow Answer

The business cycle is the

Correct AnswerverifiedShow Answer

Something that induces a person to act is called

Correct AnswerverifiedShow Answer

Economics is the study of ______.

Correct Answerverifiedhow societ...View AnswerShow Answer

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is

Correct AnswerverifiedShow Answer

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Correct AnswerverifiedShow Answer

The tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

In the United States, the overall level of prices more than doubled during the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In considering how to allocate its scarce resources among its various members, a household considers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.

Correct AnswerverifiedShow Answer

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Correct AnswerverifiedShow Answer

The term "productivity"

Correct AnswerverifiedShow Answer

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's average cost?

Correct AnswerverifiedShow Answer

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how societ...
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