Question 1

Raising taxes and increasing welfare payments

Accepted Answer

A)  reduces market power.
B)  proves that there is such a thing as a free lunch.
C)  improves efficiency at the expense of equity.
D)  None of these answers.
E)  improves equity at the expense of efficiency.

Question 2

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Accepted Answer

A)  fewer students will take degree courses in accounting and more will take education courses.
B)  fewer students will take degree courses in education and more will take accounting courses.
C)  fewer students will attend university.
D)  None of these answers.

Question 3

Foreign trade

Accepted Answer

A)  increases the scarcity of resources.
B)  makes a country more equitable.
C)  allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home.
D)  allows a country to avoid trade-offs.

Question 4

For which of the following individuals would the opportunity cost of going to university be highest?

Accepted Answer

A)  A promising young mathematician who will command a high salary once she earns her university degree.
B)  A student with average grades who has never held a job.
C)  A famous, highly-paid actor who wants to take time away from show business to finish university and earn a degree.
D)  A student who is the best player on his university rugby team, but who lacks the skills necessary to play professional rugby.

Question 5

Economics is the study of how

Accepted Answer

A)  society manages its unlimited resources.
B)  to reduce our wants until we are satisfied.
C)  society manages its scarce resources.
D)  to fully satisfy our unlimited wants.
E)  to avoid having to make trade-offs.

Question 6

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Accepted Answer

A) True 
 B)False

Question 7

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following involve a trade-off?

Accepted Answer

A)  Taking a nap.
B)  All of these answers involve trade-offs.
C)  Watching a soccer game on Saturday afternoon.
D)  Going to university.
E)  Buying a new car.

Question 9

Trade-offs are required because wants are unlimited and resources are

Accepted Answer

A)  economical.
B)  unlimited.
C)  efficient.
D)  marginal.
E)  scarce.

Question 10

Policymakers can affect inflation and unemployment in the short term by

Accepted Answer

A)  eliminating externalities.
B)  giving the central bank independence.
C)  changing the amount that the government spends.
D)  encouraging firms to think at the margin.

Question 11

Economics deals primarily with the concept of

Accepted Answer

A)  scarcity.
B)  money.
C)  poverty.
D)  banking.

Question 12

When are markets not a good way to organise economic activity?

Accepted Answer

Markets are a poor way to organise econo...

Question 13

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Accepted Answer

The concept of working longer per year w...

Question 14

The inflation rate is the

Accepted Answer

A)  price level.
B)  average price of goods and services in an economy.
C)  rate of growth of the price level.
D)  purchasing power of money. C

Question 15

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Accepted Answer

A) True 
 B)False

Question 16

Choices must be made in the use of resources

Accepted Answer

A)  because they are limited in supply.
B)  because they are limited in demand.
C)  only if the resources are non-renewable.
D)  because they are in infinite supply. A

Question 17

One trade-off society faces is between efficiency and equality.Define each term.If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society getting the most it can from its scarce resources. Equality is defined as the property of distributing economic prosperity evenly among the members of society. Often, these two goals conflict. When the government redistributes income from the rich to the poor, it reduces the reward for working hard. Fewer goods and services are produced, and the economic pie gets smaller. When the government tries to cut the economic pie into more equal slices, the pie gets smaller. Policies aimed at achieving a more equal distribution of economic well-being, such as the welfare system, try to help those members of society who are most in need. The individual income tax asks the financially successful to contribute more than others to support the government.

Question 18

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation, the government may c...

Question 19

Which of the following products would be least capable of producing an externality?

Accepted Answer

A)  Inoculations against disease.
B)  Cigarettes.
C)  Food.
D)  Education.
E)  Hi-fi equipment.

Question 20

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

Raising taxes and increasing welfare payments

Correct Answer
verified

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Correct Answer
verified

Foreign trade

Correct Answer
verified

For which of the following individuals would the opportunity cost of going to university be highest?

Correct Answer
verified

Economics is the study of how

Correct Answer
verified

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Correct Answer
verified

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Correct Answer
verified

Which of the following involve a trade-off?

Correct Answer
verified

Trade-offs are required because wants are unlimited and resources are

Correct Answer
verified

Policymakers can affect inflation and unemployment in the short term by

Correct Answer
verified

Economics deals primarily with the concept of

Correct Answer
verified

When are markets not a good way to organise economic activity?

Correct Answer
verified
Markets are a poor way to organise econo...
View Answer

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Correct Answer
verified
The concept of working longer per year w...
View Answer

The inflation rate is the

Correct Answer
verified
C

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Correct Answer
verified

Choices must be made in the use of resources

Correct Answer
verified
A

One trade-off society faces is between efficiency and equality.Define each term.If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct Answer
verified
To lower inflation, the government may c...
View Answer

Which of the following products would be least capable of producing an externality?

Correct Answer
verified

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Correct Answer
verified

Exam 1: What Is Economics

Raising taxes and increasing welfare payments

Correct AnswerverifiedShow Answer

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Correct AnswerverifiedShow Answer

Foreign trade

Correct AnswerverifiedShow Answer

For which of the following individuals would the opportunity cost of going to university be highest?

Correct AnswerverifiedShow Answer

Economics is the study of how

Correct AnswerverifiedShow Answer

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Correct AnswerverifiedShow Answer

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Correct AnswerverifiedShow Answer

Which of the following involve a trade-off?

Correct AnswerverifiedShow Answer

Trade-offs are required because wants are unlimited and resources are

Correct AnswerverifiedShow Answer

Policymakers can affect inflation and unemployment in the short term by

Correct AnswerverifiedShow Answer

Economics deals primarily with the concept of

Correct AnswerverifiedShow Answer

When are markets not a good way to organise economic activity?

Correct AnswerverifiedMarkets are a poor way to organise econo...View AnswerShow Answer

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

The inflation rate is the

Correct AnswerverifiedC

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Correct AnswerverifiedShow Answer

Choices must be made in the use of resources

Correct AnswerverifiedA

One trade-off society faces is between efficiency and equality.Define each term.If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct AnswerverifiedTo lower inflation, the government may c...View AnswerShow Answer

Which of the following products would be least capable of producing an externality?

Correct AnswerverifiedShow Answer

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Correct AnswerverifiedShow Answer

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Markets are a poor way to organise econo...
View Answer

Correct Answer
verified
The concept of working longer per year w...
View Answer

Correct Answer
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C

Correct Answer
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Correct Answer
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A

Correct Answer
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To lower inflation, the government may c...
View Answer

Correct Answer
verified

Correct Answer
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