Question 1

In most societies, resources are allocated by

Accepted Answer

A)   a single central planner.
B)   a small number of central planners.
C)   those firms that use resources to provide goods and services.
D)   the combined actions of millions of households and firms.E) A) and B)
F) All of the above

Question 2

When the government prevents prices from adjusting naturally to supply and demand,

Accepted Answer

A)   it equates the amount buyers want to buy with the amount sellers want to sell.
B)   it adversely affects the allocation of resources.
C)   it improves equality and efficiency.
D)   it improves efficiency but reduces equality.E) All of the above
F) B) and C)

Question 3

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 4

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) B) and C)
F) B) and D)

Question 5

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Accepted Answer

A)   the Federal Reserve is worried about inflation.
B)   the Federal Reserve is worried about unemployment.
C)   the Federal Reserve is hoping to reduce the demand for goods and services.
D)   the Federal Reserve is worried that the economy is growing too quickly.E) B) and C)
F) A) and D)

Question 6

Causes of market failure include

Accepted Answer

A)   externalities and market power.
B)   market power and incorrect forecasts of consumer demand.
C)   externalities and foreign competition.
D)   incorrect forecasts of consumer demand and foreign competition.E) C) and D)
F) B) and C)

Question 7

The principle that trade can make everyone better off applies to

Accepted Answer

A)   individuals.
B)   families.
C)   countries.
D)   All of the aboveE) A) and B)
F) All of the above

Question 8

A rationale for government involvement in a market economy is

Accepted Answer

A)   markets sometimes fail to produce a fair distribution of economic well-being.
B)   markets sometimes fail to produce an efficient allocation of resources.
C)   property rights have to be enforced.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 9

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Accepted Answer

A)   Yes, because cutting hair is profitable.
B)   No, because he may not be able to sell more services.
C)   It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.
D)   It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients.E) B) and D)
F) B) and C)

Question 10

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) A) and B)
F) B) and D)

Question 11

One effect of the government-imposed seat belt law in the U.S. has been

Accepted Answer

A)   a dramatic decrease in the number of pedestrian deaths.
B)   safer driving.
C)   an increase in the number of accidents.
D)   a dramatic decrease in the number of driver deaths.E) B) and C)
F) A) and D)

Question 12

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 13

To raise productivity, policymakers could

Accepted Answer

A)   increase spending on education.
B)   provide tax credits to firms for capital improvements.
C)   fund research and development.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 14

Which of the following statements does not apply to a market economy?

Accepted Answer

A)   Firms decide whom to hire and what to produce.
B)   The "invisible hand" usually maximizes the well­being of society as a whole.
C)   Households decide which firms to work for and what to buy with their incomes.
D)   Government policies are the primary forces that guide the decisions of firms and households.E) A) and D)
F) A) and C)

Question 15

The irregular and largely unpredictable fluctuations in economic activity are called

Accepted Answer

A)   market failure.
B)   business cycle.
C)   inflation.
D)   unemployment.E) All of the above
F) A) and B)

Question 16

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break 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 Cancun increases.
B)   The marginal cost of going to Cancun decreases.
C)   The marginal benefit of going to Ft. Lauderdale decreases.
D)   The marginal cost of going to Ft. Lauderdale decreases.E) None of the above
F) C) and D)

Question 17

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) A) and C)
F) C) and D)

Question 18

Use the following Scenario to answer the question scenario 1-1 :  
You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
-Refer to Scenario 1-1. What is your opportunity cost of studying economics?

Accepted Answer

The enjoyment you wo...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

The answer of Invisible hand is a term used by...

Exam 1: Ten Principles of Economics

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct Answer
verified

Causes of market failure include

Correct Answer
verified

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

When the government prevents prices from adjusting naturally to supply and demand,

Correct Answer
verified

In the United States, incomes have historically grown

Correct Answer
verified

In most societies, resources are allocated by

Correct Answer
verified

The principle that trade can make everyone better off applies to

Correct Answer
verified

In a market economy, economic activity is guided by

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break 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

The irregular and largely unpredictable fluctuations in economic activity are called

Correct Answer
verified

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Correct Answer
verified

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct Answer
verified

Which of the following statements does not apply to a market economy?

Correct Answer
verified

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

Correct Answer
verified

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

One effect of the government-imposed seat belt law in the U.S. has been

Correct Answer
verified

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct Answer
verified

A rationale for government involvement in a market economy is

Correct Answer
verified

To raise productivity, policymakers could

Correct Answer
verified

Exam 1: Ten Principles of Economics

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct AnswerverifiedShow Answer

Causes of market failure include

Correct AnswerverifiedShow Answer

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

When the government prevents prices from adjusting naturally to supply and demand,

Correct AnswerverifiedShow Answer

In the United States, incomes have historically grown

Correct AnswerverifiedShow Answer

In most societies, resources are allocated by

Correct AnswerverifiedShow Answer

The principle that trade can make everyone better off applies to

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe enjoyment you wo...View AnswerShow Answer

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break 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

The irregular and largely unpredictable fluctuations in economic activity are called

Correct AnswerverifiedShow Answer

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Correct AnswerverifiedShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

Which of the following statements does not apply to a market economy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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

One effect of the government-imposed seat belt law in the U.S. has been

Correct AnswerverifiedShow Answer

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

Correct AnswerverifiedShow Answer

A rationale for government involvement in a market economy is

Correct AnswerverifiedShow Answer

To raise productivity, policymakers could

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The enjoyment you wo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified