Question 1

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 going to the movies?

Accepted Answer

$12.50 and...

Question 2

A rational decisionmaker

Accepted Answer

A)  ignores marginal changes and focuses instead on "the big picture."
B)  ignores the likely effects of government policies when he or she makes choices.
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.E) B) and C)
F) None of the above

Question 3

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 4

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 average cost?

Accepted Answer

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

Question 5

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 D)
F) A) and C)

Question 6

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Accepted Answer

A)  could be due to slower money supply growth. We would expect unemployment to be higher.
B)  could be due to slower money supply growth. We would expect unemployment to be lower.
C)  could be due to higher money supply growth. We would expect unemployment to be higher.
D)  could be due to higher money supply growth. We would expect unemployment to be lower.E) None of the above
F) C) and D)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Accepted Answer

A)  can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas.
B)  determines Bridget's willingness to pay for the third soda.
C)  is likely different from the marginal benefit provided to Bridget by the second soda.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 9

The marginal benefit Kyra gets from eating a second sandwich is

Accepted Answer

A)  the total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich.
B)  the same as the total benefit she gets from eating two sandwiches.
C)  less than the marginal cost of eating the second sandwich since she chose to eat the second sandwich.
D)  the total benefit Kyra gets from eating three sandwiches minus the total benefit she gets from eating two sandwiches.E) A) and B)
F) A) and C)

Question 10

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Accepted Answer

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

Question 11

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

Accepted Answer

A) True 
 B)False

Question 12

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

Accepted Answer

A)  the value to Barb of the option she would have chosen had Option B not been available.
B)  the value to Barb of Options A, C and D combined.
C)  the average of the values to Barb of Options A, C, and D.
D)  $100.E) None of the above
F) C) and D)

Question 13

During the early 1920s in Germany, prices

Accepted Answer

A)  doubled annually.
B)  doubled monthly.
C)  tripled monthly.
D)  tripled annually.E) All of the above
F) B) and D)

Question 14

Which of the following is a principle concerning how people interact?

Accepted Answer

A)  Markets are usually a good way to organize economic activity.
B)  Rational people think at the margin.
C)  People respond to incentives.
D)  All of the above are correct.E) All of the above
F) A) and C)

Question 15

What are the two basic types of economies?

Accepted Answer

Centrally ...

Question 16

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Accepted Answer

A)  slow productivity growth in the US.
B)  increased competition from Japan.
C)  increased competition from European countries.
D)  a rapid decrease in the quantity of money in the economy.E) B) and D)
F) All of the above

Question 17

Which of the following can lead to market failure?

Accepted Answer

A)  externalities and market power
B)  externalities but not market power
C)  market power but not externalities
D)  neither externalities nor market powerE) A) and B)
F) A) and C)

Question 18

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

Question 19

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of

Accepted Answer

A)  a market failure caused by an externality.
B)  a market failure caused by market power.
C)  a market failure caused by equality.
D)  There is no market failure in this case.E) B) and D)
F) B) and C)

Question 20

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

Exam 1: Ten Principles of Economics

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

Correct Answer
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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 average cost?

Correct Answer
verified

A rational decisionmaker

Correct Answer
verified

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

Correct Answer
verified

The principle that trade can make everyone better off applies to

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

Which of the following can lead to market failure?

Correct Answer
verified

Which of the following is a principle concerning how people interact?

Correct Answer
verified

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Correct Answer
verified

During the early 1920s in Germany, prices

Correct Answer
verified

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of

Correct Answer
verified

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Correct Answer
verified

Correct Answer
verified
$12.50 and...
View Answer

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Correct Answer
verified

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

Correct Answer
verified

The marginal benefit Kyra gets from eating a second sandwich is

Correct Answer
verified

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

Correct Answer
verified

What are the two basic types of economies?

Correct Answer
verified
Centrally ...
View Answer

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Correct Answer
verified

Correct Answer
verified

Exam 1: Ten Principles of Economics

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

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 average cost?

Correct AnswerverifiedShow Answer

A rational decisionmaker

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The principle that trade can make everyone better off applies to

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

Which of the following can lead to market failure?

Correct AnswerverifiedShow Answer

Which of the following is a principle concerning how people interact?

Correct AnswerverifiedShow Answer

Slow growth in US incomes during the 1970s and 1980s was primarily due to

Correct AnswerverifiedShow Answer

During the early 1920s in Germany, prices

Correct AnswerverifiedShow Answer

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of

Correct AnswerverifiedShow Answer

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Correct AnswerverifiedShow Answer

Correct Answerverified$12.50 and...View AnswerShow Answer

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal benefit Kyra gets from eating a second sandwich is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What are the two basic types of economies?

Correct AnswerverifiedCentrally ...View AnswerShow Answer

For a very long time the country of Zeeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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$12.50 and...
View Answer

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Centrally ...
View Answer

Correct Answer
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Correct Answer
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