Question 1

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Accepted Answer

A)   the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
B)   the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.
C)   the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.
D)   the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.E) B) and C)
F) None of the above

Question 2

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

Question 3

The primary determinant of a country's standard of living is

Accepted Answer

A)   the country's ability to prevail over foreign competition.
B)   the country's ability to produce goods and services.
C)   the total supply of money in the economy.
D)   the average age of the country's labor force.E) None of the above
F) All of the above

Question 4

The adage, "There is no such thing as a free lunch," means

Accepted Answer

A)   even people on welfare have to pay for food.
B)   the cost of living is always increasing.
C)   people face tradeoffs.
D)   all costs are included in the price of a product.E) All of the above
F) C) and D)

Question 5

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Accepted Answer

A)   more than $40, as the average benefit will exceed the marginal cost.
B)   more than $40, as the marginal benefit will exceed the marginal cost.
C)   more than $80, as the average benefit will exceed the marginal cost.
D)   more than $80, as the marginal benefit will exceed the marginal cost.E) B) and D)
F) B) and C)

Question 6

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Accepted Answer

A) True 
 B)False

Question 7

During the early 1920s in Germany, prices

Accepted Answer

A)   doubled annually.
B)   doubled monthly.
C)   tripled monthly.
D)   tripled annually.E) A) and D)
F) B) and C)

Question 8

The term "invisible hand" was coined by

Accepted Answer

A)   Adam Smith.
B)   David Ricardo.
C)   Karl Marx.
D)   Benjamin Franklin.E) None of the above
F) A) and B)

Question 9

What are the two possible causes of market failure?

Accepted Answer

Externalit...

Question 10

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 C)
F) B) and D)

Question 11

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 produced and consumed the goods and services
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 12

The phrase "no such thing as a free lunch" means

Accepted Answer

A)   people must face tradeoffs.
B)   rational people think at the margin.
C)   people respond to incentives.
D)   trade can make everyone better off.E) None of the above
F) A) and D)

Question 13

Which of these activities will most likely impose an external cost?

Accepted Answer

A)   An athlete works out at a gym.
B)   A secretary smokes a cigarette in a crowded break room.
C)   A young mother pushes her baby in a stroller.
D)   A construction worker eats a hotdog during his lunch break.E) A) and D)
F) A) and C)

Question 14

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)   efficiency is improved, but equality is not.
B)   both wealthy people and poor people benefit directly.
C)   people work less and produce fewer goods and services.
D)   the government collects more revenue in total.E) C) and D)
F) B) and C)

Question 15

What are the two reasons for the government to intervene in a market?

Accepted Answer

To promote...

Question 16

Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

Accepted Answer

A) True 
 B)False

Question 17

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 C)
F) B) and D)

Question 18

When the government attempts to improve equality in an economy the result is often

Accepted Answer

A)   an increase in overall output in the economy.
B)   additional government revenue since overall income will increase.
C)   a reduction in equality.
D)   a reduction in efficiency.E) A) and B)
F) All of the above

Question 19

In the United States, incomes have historically grown

Accepted Answer

A)   about 0.5 percent per year.
B)   about 2 percent per year.
C)   about 4 percent per year.
D)   about 6 percent per year.E) None of the above
F) A) and B)

Question 20

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) None of the above

Exam 1: Ten Principles of Economics

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct Answer
verified

What are the two reasons for the government to intervene in a market?

Correct Answer
verified
To promote...
View 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 Answer
verified

The adage, "There is no such thing as a free lunch," means

Correct Answer
verified

During the early 1920s in Germany, prices

Correct Answer
verified

The term "invisible hand" was coined by

Correct Answer
verified

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct Answer
verified

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Correct Answer
verified

What are the two possible causes of market failure?

Correct Answer
verified
Externalit...
View Answer

In communism, central planners decide which of the following?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

When the government redistributes income from the wealthy to the poor,

Correct Answer
verified

In the United States, incomes have historically grown

Correct Answer
verified

Correct Answer
verified

Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

Correct Answer
verified

The phrase "no such thing as a free lunch" means

Correct Answer
verified

Which of these activities will most likely impose an external cost?

Correct Answer
verified

When the government attempts to improve equality in an economy the result is often

Correct Answer
verified

The primary determinant of a country's standard of living is

Correct Answer
verified

Exam 1: Ten Principles of Economics

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

Correct AnswerverifiedShow Answer

What are the two reasons for the government to intervene in a market?

Correct AnswerverifiedTo promote...View AnswerShow 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

The adage, "There is no such thing as a free lunch," means

Correct AnswerverifiedShow Answer

During the early 1920s in Germany, prices

Correct AnswerverifiedShow Answer

The term "invisible hand" was coined by

Correct AnswerverifiedShow Answer

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Correct AnswerverifiedShow Answer

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Correct AnswerverifiedShow Answer

What are the two possible causes of market failure?

Correct AnswerverifiedExternalit...View AnswerShow Answer

In communism, central planners decide which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the government redistributes income from the wealthy to the poor,

Correct AnswerverifiedShow Answer

In the United States, incomes have historically grown

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

Correct AnswerverifiedShow Answer

The phrase "no such thing as a free lunch" means

Correct AnswerverifiedShow Answer

Which of these activities will most likely impose an external cost?

Correct AnswerverifiedShow Answer

When the government attempts to improve equality in an economy the result is often

Correct AnswerverifiedShow Answer

The primary determinant of a country's standard of living is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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To promote...
View 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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Externalit...
View 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
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Correct Answer
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Correct Answer
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