Question 1

Trade

Accepted Answer

A)  allows specialization, which increases costs.
B)  allows specialization, which reduces costs.
C)  reduces specialization, which increases costs.
D)  reduces specialization, which reduces costs.

Question 2

The "invisible hand" refers to

Accepted Answer

A)  the government.
B)  the free market.
C)  central planners.
D)  large businesses.

Question 3

What is the main difference between a centrally planned economy and a market economy?

Accepted Answer

In a market economy, decisions...

Question 4

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Accepted Answer

A)  He should sell the boat as it is now for $400.
B)  He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900.
C)  He should complete the repairs and sell the boat for $900.
D)  It does not matter which action he takes; the outcome is the same either way.

Question 5

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Accepted Answer

A)  Polish firms are faced with stricter government regulations than Romanian firms.
B)  total income is divided among fewer workers in Poland since it has a smaller labor force than Romania.
C)  Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops.
D)  productivity in Poland is higher than in Romania.

Question 6

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 minimum price that would induce this company to produce the 601st heart rate monitor?

Accepted Answer

Question 7

In communism, central planners decide which of the following?

Accepted Answer

A)  what goods and services will be produced
B)  how much will be produced
C)  who will produce and consume the goods and services
D)  All of the above are correct.

Question 8

In the long run the primary effect of increasing the quantity of money is higher prices.

Accepted Answer

A) True 
 B)False

Question 9

Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of bread on hand. Which of the following is correct?

Accepted Answer

A)  Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price.
B)  Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make.
C)  Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something.
D)  Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day.

Question 10

The "invisible hand" directs economic activity through

Accepted Answer

A)  advertising.
B)  prices.
C)  central planning.
D)  government regulations.

Question 11

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.

Question 12

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Debbie quits her job, which pays $30,000...

Question 13

Michael is a college student. He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer. This illustrates the principle that

Accepted Answer

A)  trade can make everyone better off.
B)  people face trade-offs.
C)  rational people think at the margin.
D)  people respond to incentives.

Question 14

The balance between efficiency and equality is an illustration of

Accepted Answer

A)  ​scarcity.
B)  ​trade-offs.
C)  ​the forces of supply and demand.
D)  ​none of the above.

Question 15

The balance between maximizing a society's income and an equal distribution of that income is an illustration of

Accepted Answer

A)  ​scarcity.
B)  ​trade-offs.
C)  ​the forces of supply and demand.
D)  ​none of the above.

Question 16

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.

Question 17

Based on the available evidence, which of the following groups benefits most from mandatory seat belt laws?

Accepted Answer

A)  automakers
B)  pedestrians
C)  drivers
D)  owners of collision-repair shops

Question 18

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is

Accepted Answer

A)  the $60 she earns working.
B)  the $60 minus the enjoyment she would have received from going to the park.
C)  the enjoyment she would have received had she gone to the park.
D)  nothing, since she would have received less than $60 worth of enjoyment from going to the park.

Question 19

Government policies resulting in reduced efficiency include (i) 
The welfare system
(ii) 
Unemployment insurance
(iii) 
Progressive income tax

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii)

Question 20

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.

Exam 1: Ten Principles of Economics

Correct Answer
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Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct Answer
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The "invisible hand" refers to

Correct Answer
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The balance between efficiency and equality is an illustration of

Correct Answer
verified

Correct Answer
verified

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is

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

Correct Answer
verified

The "invisible hand" directs economic activity through

Correct Answer
verified

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct Answer
verified

A rationale for government involvement in a market economy is

Correct Answer
verified

In the long run the primary effect of increasing the quantity of money is higher prices.

Correct Answer
verified

Based on the available evidence, which of the following groups benefits most from mandatory seat belt laws?

Correct Answer
verified

Trade

Correct Answer
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In a market economy, economic activity is guided by

Correct Answer
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What is the main difference between a centrally planned economy and a market economy?

Correct Answer
verified
In a market economy, decisions...
View Answer

In communism, central planners decide which of the following?

Correct Answer
verified

Government policies resulting in reduced efficiency include (i) The welfare system (ii) Unemployment insurance (iii) Progressive income tax

Correct Answer
verified

The balance between maximizing a society's income and an equal distribution of that income is an illustration of

Correct Answer
verified

Michael is a college student. He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer. This illustrates the principle that

Correct Answer
verified

Exam 1: Ten Principles of Economics

Correct AnswerverifiedShow Answer

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct AnswerverifiedShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

The balance between efficiency and equality is an illustration of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is

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

Correct AnswerverifiedShow Answer

The "invisible hand" directs economic activity through

Correct AnswerverifiedShow Answer

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Correct AnswerverifiedShow Answer

A rationale for government involvement in a market economy is

Correct AnswerverifiedShow Answer

In the long run the primary effect of increasing the quantity of money is higher prices.

Correct AnswerverifiedShow Answer

Based on the available evidence, which of the following groups benefits most from mandatory seat belt laws?

Correct AnswerverifiedShow Answer

Trade

Correct AnswerverifiedShow Answer

In a market economy, economic activity is guided by

Correct AnswerverifiedShow Answer

What is the main difference between a centrally planned economy and a market economy?

Correct AnswerverifiedIn a market economy, decisions...View AnswerShow Answer

In communism, central planners decide which of the following?

Correct AnswerverifiedShow Answer

Government policies resulting in reduced efficiency include (i) The welfare system (ii) Unemployment insurance (iii) Progressive income tax

Correct AnswerverifiedShow Answer

The balance between maximizing a society's income and an equal distribution of that income is an illustration of

Correct AnswerverifiedShow Answer

Michael is a college student. He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer. This illustrates the principle that

Correct AnswerverifiedShow Answer

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In a market economy, decisions...
View Answer

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Correct Answer
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