Question 1

Mark is refinishing an antique china cabinet and has already spent $180 on the restoration.He expects to be able to sell the cabinet for $360.Mark discovers that he needs to do an additional $200 of work to make the cabinet worth $360 to potential buyers.He could also sell the cabinet now,without completing the additional work,for $100.What should he do?

Accepted Answer

A)   He should sell the cabinet now for $100.
B)   He should keep the cabinet since it wouldn't be rational to spend $380 restoring a cabinet and then sell it for only $360.
C)   He should complete the additional work and sell the cabinet for $360.
D)   It does not matter which action he takes since the outcome will be the same either way.E) A) and B)
F) A) and C)

Question 2

Most economists believe that an increase in the quantity of money results in

Accepted Answer

A)   an increase in the demand for goods and services.
B)   lower unemployment in the short run.
C)   higher inflation in the long run.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 3

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)   most economies' production methods are not very good.
B)   in most economies, wealthy people consume disproportionate quantities of goods and services.
C)   governments restrict production of too many goods and services.
D)   resources are limited.E) A) and B)
F) A) and C)

Question 4

The business cycle is measured by the

Accepted Answer

A)   production of goods and services.
B)   number of people employed.
C)   the interest rate.
D)   Both a and b are correct.E) All of the above
F) A) and B)

Question 5

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.A likely explanation of these facts is that

Accepted Answer

A)   the United Kingdom has a better education system than Turkey.
B)   the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.
C)   workers in Turkey are more productive than workers in the United Kingdom.
D)   there are more instances of market power in Turkey than in the United Kingdom.E) A) and B)
F) C) and D)

Question 6

You are considering staying in college another semester so that you can complete a major in economics.In deciding whether or not to stay you should

Accepted Answer

A)   compare the total cost of your education to the total benefits of your education.
B)   compare the total cost of your education to the benefits of staying one more semester.
C)   compare the cost of staying one more semester to the benefits of staying one more semester.
D)   compare the total benefits of your education to the cost of staying one more semester.E) A) and B)
F) A) and C)

Question 7

The opportunity cost of going to college is

Accepted Answer

A)   the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
B)   the value of the best opportunity a student gives up to attend college.
C)   zero for students who are fortunate enough to have all of their college expenses paid by someone else.
D)   zero, since a college education will allow a student to earn a larger income after graduation.E) B) and C)
F) B) and D)

Question 8

In a market economy,economic activity is guided by

Accepted Answer

A)   the government.
B)   corporations.
C)   central planners.
D)   self-interest and prices.E) None of the above
F) C) and D)

Question 9

England can benefit from trade

Accepted Answer

A)   only with nations that can produce goods England cannot produce.
B)   only with less developed nations.
C)   only with nations outside of Europe.
D)   with any nation.E) A) and D)
F) A) and C)

Question 10

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 11

Evidence indicates that seat belt laws have led to

Accepted Answer

A)   fewer pedestrian deaths.
B)   fewer automobile accidents.
C)   fewer deaths per automobile accident.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 12

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)   market.
B)   consumer.
C)   producer.
D)   economy.E) A) and C)
F) A) and B)

Question 13

Which of the following statements best characterizes a basic difference between market economies and centrally-planned economies?

Accepted Answer

A)   Society relies more upon prices to allocate resources when the economy is centrally-planned than when it is market-based.
B)   The self-interest of households is reflected more fully in the outcome of a centrally-planned economy than in the outcome of a market economy.
C)   Government plays a larger role in the economic affairs of a market economy than in the economic affairs of a centrally-planned economy.
D)   None of the above are correct.E) C) and D)
F) B) and C)

Question 14

Which of the following could reduce economic efficiency?

Accepted Answer

A)   laws that encourage lawsuits
B)   policies that redistribute income
C)   policies that impose significant restrictions on international trade
D)   All of the above are correctE) A) and B)
F) B) and D)

Question 15

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) All of the above
F) None of the above

Question 16

If the price of visiting a doctor were fixed below the current price,then we would expect

Accepted Answer

A)   an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
B)   an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.
C)   a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
D)   a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.E) B) and D)
F) All of the above

Question 17

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Accepted Answer

A)   the $30 she earns working.
B)   the $30 minus the enjoyment she would have received from watching the video.
C)   the enjoyment she would have received had she watched the video.
D)   nothing, since she would have received less than $30 of enjoyment from the video.E) A) and C)
F) All of the above

Question 18

The economy of the former Soviet Union is best described as a

Accepted Answer

A)   primitive economy.
B)   market economy.
C)   hybrid economy.
D)   centrally-planned economy.E) A) and C)
F) C) and D)

Question 19

A bagel shop sells fresh baked bagels from 5 a.m.until 7 p.m.every day.The shop does not sell day-old bagels,so all unsold bagels are thrown away at 7 p.m.each day.The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away.If the manager has 8 dozen bagels left at 6:30 p.m.on a particular day,which of the following alternatives is most attractive?

Accepted Answer

A)   Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.
B)   Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen.
C)   Throw the bagels away and produce 8 fewer dozen bagels tomorrow.
D)   Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.E) None of the above
F) B) and D)

Question 20

College-age athletes who drop out of college to play professional sports

Accepted Answer

A)   are not rational decision makers.
B)   are well aware that their opportunity cost of attending college is very high.
C)   are concerned more about present circumstances than their future.
D)   underestimate the value of a college education.E) A) and B)
F) A) and C)

Exam 1: Ten Principles of Economics.

Which of the following statements best characterizes a basic difference between market economies and centrally-planned economies?

Correct Answer
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Evidence indicates that seat belt laws have led to

Correct Answer
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The phenomenon of scarcity stems from the fact that

Correct Answer
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England can benefit from trade

Correct Answer
verified

The business cycle is measured by the

Correct Answer
verified

The economy of the former Soviet Union is best described as a

Correct Answer
verified

In most societies,resources are allocated by

Correct Answer
verified

You are considering staying in college another semester so that you can complete a major in economics.In deciding whether or not to stay you should

Correct Answer
verified

Correct Answer
verified

If the price of visiting a doctor were fixed below the current price,then we would expect

Correct Answer
verified

In a market economy,economic activity is guided by

Correct Answer
verified

College-age athletes who drop out of college to play professional sports

Correct Answer
verified

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Correct Answer
verified

The opportunity cost of going to college is

Correct Answer
verified

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.A likely explanation of these facts is that

Correct Answer
verified

Which of the following could reduce economic efficiency?

Correct Answer
verified

Most economists believe that an increase in the quantity of money results in

Correct Answer
verified

The English word that comes from the Greek word for "one who manages a household" is

Correct Answer
verified

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct Answer
verified

Correct Answer
verified

Exam 1: Ten Principles of Economics.

Which of the following statements best characterizes a basic difference between market economies and centrally-planned economies?

Correct AnswerverifiedShow Answer

Evidence indicates that seat belt laws have led to

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

England can benefit from trade

Correct AnswerverifiedShow Answer

The business cycle is measured by the

Correct AnswerverifiedShow Answer

The economy of the former Soviet Union is best described as a

Correct AnswerverifiedShow Answer

In most societies,resources are allocated by

Correct AnswerverifiedShow Answer

You are considering staying in college another semester so that you can complete a major in economics.In deciding whether or not to stay you should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price of visiting a doctor were fixed below the current price,then we would expect

Correct AnswerverifiedShow Answer

In a market economy,economic activity is guided by

Correct AnswerverifiedShow Answer

College-age athletes who drop out of college to play professional sports

Correct AnswerverifiedShow Answer

Denise decides to spend three hours working overtime rather than watching a video with her friends.She earns $10 an hour.Her opportunity cost of working is

Correct AnswerverifiedShow Answer

The opportunity cost of going to college is

Correct AnswerverifiedShow Answer

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.A likely explanation of these facts is that

Correct AnswerverifiedShow Answer

Which of the following could reduce economic efficiency?

Correct AnswerverifiedShow Answer

Most economists believe that an increase in the quantity of money results in

Correct AnswerverifiedShow Answer

The English word that comes from the Greek word for "one who manages a household" is

Correct AnswerverifiedShow Answer

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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