Question 1

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Accepted Answer

A)   an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell.
B)   an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.
C)   a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell.
D)   a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.E) All of the above
F) A) and B)

Question 2

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 3

What are the two basic types of economies?

Accepted Answer

Centrally ...

Question 4

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Accepted Answer

A)   3 percent per year
B)   5 percent per year
C)   7 percent per year
D)   9 percent per yearE) A) and B)
F) None of the above

Question 5

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Accepted Answer

A)   For the first 30 houses, the average cost per house was $250,000.
B)   The marginal cost of the 31st house, if it is built, will be $260,000.
C)   If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it.
D)   All of the above are correct.E) A) and D)
F) All of the above

Question 6

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)   Ted purchases a dilapidated house and cleans up the yard and exterior of the house.
B)   Tim purchases an iPhone and downloads new apps.
C)   Terri purchases a new SUV and drives it to work every day.
D)   Thomas purchases a suit and wears it on his interviews.E) B) and C)
F) B) and D)

Question 7

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Accepted Answer

A)   $32,000.
B)   $42,000.
C)   $50,000.
D)   $58,000.E) C) and D)
F) B) and C)

Question 8

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Accepted Answer

A)   the invisible hand.
B)   market power.
C)   government intervention.
D)   oikonomos.E) A) and C)
F) A) and B)

Question 9

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)   an electric company
B)   a farmer
C)   a grocery store
D)   a local electronics retailerE) All of the above
F) A) and B)

Question 10

Which of the following can policy do?

Accepted Answer

A)   alter incentives
B)   alter trade-offs
C)   change opportunity costs
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 11

Which of the following is not an example of a group responding to an incentive?

Accepted Answer

A)   Students attend class because of an attendance policy that reduces their grade for absences.
B)   Consumers buy more of a product when it is on sale at a reduced price.
C)   Universities offer fewer online classes when they generate more revenue than traditional classes.
D)   Employees work harder to earn higher commissions.E) All of the above
F) A) and B)

Question 12

The relatively low inflation experienced in the United States in the 1990s is attributable to

Accepted Answer

A)   slow growth of U.S. productivity during the 1990s.
B)   slow growth of the quantity of money in the U.S. in the 1990s.
C)   low levels of government spending in the U.S. in the 1980s and 1990s.
D)   the eight-year presidency of William Jefferson Clinton during the 1990s.E) B) and C)
F) A) and C)

Question 13

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.E) C) and D)
F) B) and D)

Question 14

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Accepted Answer

A)   David Ricardo
B)   Thorstein Veblen
C)   John Maynard Keynes
D)   Adam SmithE) All of the above
F) A) and C)

Question 15

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Accepted Answer

A)   an increase in the number of unskilled jobs available.
B)   a decrease in the number of unskilled jobs available.
C)   a decrease in the number of workers wanting unskilled jobs.
D)   None of the above is correct.E) A) and B)
F) B) and D)

Question 16

Which of the following is an important cause of inflation in an economy?

Accepted Answer

A)   increases in productivity in the economy
B)   the influence of positive externalities on the economy
C)   lack of property rights in the economy
D)   growth in the quantity of money in the economyE) A) and B)
F) A) and C)

Question 17

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 18

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Accepted Answer

A)   15 years.
B)   25 years.
C)   35 years.
D)   45 years.E) B) and C)
F) A) and B)

Question 19

Economics is the study of how society allocates its unlimited resources.

Accepted Answer

A) True 
 B)False

Question 20

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

Which of the following is not an example of a group responding to an incentive?

Correct Answer
verified

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct Answer
verified

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Correct Answer
verified

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Correct Answer
verified

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Correct Answer
verified

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Correct Answer
verified

Scarcity means that there is less of a good or resource available than people wish to have.

Correct Answer
verified

Which of the following is an important cause of inflation in an economy?

Correct Answer
verified

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Correct Answer
verified

What are the two basic types of economies?

Correct Answer
verified
Centrally ...
View Answer

Correct Answer
verified

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct Answer
verified

The relatively low inflation experienced in the United States in the 1990s is attributable to

Correct Answer
verified

Economics is the study of how society allocates its unlimited resources.

Correct Answer
verified

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Correct Answer
verified

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Correct Answer
verified

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Correct Answer
verified

Which of the following firms is likely to have the greatest market power?

Correct Answer
verified

Which of the following can policy do?

Correct Answer
verified

Which of these activities will most likely result in an external benefit?

Correct Answer
verified

Exam 1: Ten Principles of Economics

Which of the following is not an example of a group responding to an incentive?

Correct AnswerverifiedShow Answer

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Correct AnswerverifiedShow Answer

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Correct AnswerverifiedShow Answer

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Correct AnswerverifiedShow Answer

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Scarcity means that there is less of a good or resource available than people wish to have.

Correct AnswerverifiedShow Answer

Which of the following is an important cause of inflation in an economy?

Correct AnswerverifiedShow Answer

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Correct AnswerverifiedShow Answer

What are the two basic types of economies?

Correct AnswerverifiedCentrally ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct AnswerverifiedShow Answer

The relatively low inflation experienced in the United States in the 1990s is attributable to

Correct AnswerverifiedShow Answer

Economics is the study of how society allocates its unlimited resources.

Correct AnswerverifiedShow Answer

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Correct AnswerverifiedShow Answer

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Correct AnswerverifiedShow Answer

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the greatest market power?

Correct AnswerverifiedShow Answer

Which of the following can policy do?

Correct AnswerverifiedShow Answer

Which of these activities will most likely result in an external benefit?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Centrally ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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