Question 1

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)   every person is entitled to life, liberty, and the pursuit of happiness.
B)   individuals are best left to their own devices without the government guiding their actions.
C)   the government plays a central role in organizing a market economy.
D)   because of human nature a strong legal system is necessary for a market system to survive.E) C) and D)
F) All of the above

Question 2

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Accepted Answer

A)   an increase in the number of people wanting to live in apartments in New York City.
B)   a decrease in the number of people wanting to live in apartments in New York City.
C)   an increase in the number of apartments available for rent in New York City.
D)   None of the above is correct.E) A) and D)
F) C) and D)

Question 3

In the United States, incomes have historically grown

Accepted Answer

A)   about 0.5 percent per year.
B)   about 2 percent per year.
C)   about 4 percent per year.
D)   about 6 percent per year.E) C) and D)
F) All of the above

Question 4

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) C) and D)
F) All of the above

Question 5

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) All of the above
F) None of the above

Question 6

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)   The marginal benefit of going to Spain increases.
B)   The marginal cost of going to Spain increases.
C)   The marginal benefit of going to Ireland increases.
D)   The marginal cost of going to Ireland decreases.E) All of the above
F) C) and D)

Question 7

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)   efficiency is improved, but equality is not.
B)   both wealthy people and poor people benefit directly.
C)   people work less and produce fewer goods and services.
D)   the government collects more revenue in total.E) C) and D)
F) None of the above

Question 8

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Accepted Answer

A)   increase efficiency and increase equality.
B)   increase efficiency but decrease equality.
C)   decrease efficiency but increase equality.
D)   decrease efficiency and decrease equality.E) B) and D)
F) B) and C)

Question 9

Bill is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $6,200. Bill discovers that he needs to do an additional $2,400 of work to make the car worth $6,200 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A)   He should sell the car now for $3,800.
B)   He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $6,200.
C)   He should complete the additional work and sell the car for $6,200.
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 C)
F) A) and D)

Question 10

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 11

The government can potentially improve market outcomes if market inequalities or market failure exists.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   worker productivity in Bangladesh is higher than in India.
B)   the standard of living will likely be higher in India than in Bangladesh.
C)   productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India.
D)   there will be no difference between the standard of living in India and Bangladesh.E) B) and D)
F) B) and C)

Question 13

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 14

What do prices reflect in a market economy?

Accepted Answer

The value of a good ...

Question 15

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Accepted Answer

A)   rent the room because the marginal benefit exceeds the marginal cost.
B)   rent the room because the marginal benefit exceeds the average cost.
C)   not rent the room because the marginal benefit is less than the marginal cost.
D)   not rent the room because the marginal benefit is less than the average cost.E) B) and C)
F) B) and D)

Question 16

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Accepted Answer

A)   1960s.
B)   1970s.
C)   1980s.
D)   1990s.E) A) and B)
F) A) and C)

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

Question 18

Making rational decisions "at the margin" means that people

Accepted Answer

A)   make those decisions that do not impose a marginal cost.
B)   evaluate how easily a decision can be reversed if problems arise.
C)   compare the marginal costs and marginal benefits of each decision.
D)   always calculate the dollar costs for each decision.E) None of the above
F) A) and D)

Question 19

Rational people make decisions "at the margin" by comparing

Accepted Answer

A)   average costs and benefits.
B)   total costs and benefits.
C)   additional costs and benefits.
D)   opportunity costs and benefits.E) B) and C)
F) A) and B)

Question 20

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors.
-Refer to Scenario 1-6. What is the company's marginal cost?

Accepted Answer

The answer of Scenario 1-6
It costs a company $30,000 to...

Exam 1: Ten Principles of Economics

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Correct Answer
verified

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Correct Answer
verified

In the United States, incomes have historically grown

Correct Answer
verified

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct Answer
verified

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct Answer
verified

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct Answer
verified

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Correct Answer
verified

Scenario 1-6 It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. -Refer to Scenario 1-6. What is the company's marginal cost?

Correct Answer
verified

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct Answer
verified

What do prices reflect in a market economy?

Correct Answer
verified
The value of a good ...
View Answer

When the government redistributes income from the wealthy to the poor,

Correct Answer
verified

Making rational decisions "at the margin" means that people

Correct Answer
verified

Rational people make decisions "at the margin" by comparing

Correct Answer
verified

In the early 1920s,

Correct Answer
verified

The government can potentially improve market outcomes if market inequalities or market failure exists.

Correct Answer
verified

Exam 1: Ten Principles of Economics

If the government were to intervene and set the rent for apartments in New York City below the market rent, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Correct AnswerverifiedShow Answer

In the United States, incomes have historically grown

Correct AnswerverifiedShow Answer

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Correct AnswerverifiedShow Answer

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should

Correct AnswerverifiedShow Answer

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Correct AnswerverifiedShow Answer

Scenario 1-6 It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. -Refer to Scenario 1-6. What is the company's marginal cost?

Correct AnswerverifiedShow Answer

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Correct AnswerverifiedShow Answer

What do prices reflect in a market economy?

Correct AnswerverifiedThe value of a good ...View AnswerShow Answer

When the government redistributes income from the wealthy to the poor,

Correct AnswerverifiedShow Answer

Making rational decisions "at the margin" means that people

Correct AnswerverifiedShow Answer

Rational people make decisions "at the margin" by comparing

Correct AnswerverifiedShow Answer

In the early 1920s,

Correct AnswerverifiedShow Answer

The government can potentially improve market outcomes if market inequalities or market failure exists.

Correct AnswerverifiedShow Answer

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The value of a good ...
View Answer

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