Question 1

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 2

In 2008, the average American earned about $47,000 while the average Nigerian earned about $1,400. Which of the following statements is likely?

Accepted Answer

A)   The average American purchases more televisions than the average Nigerian.
B)   The average American has better nutrition and healthcare than the average Nigerian.
C)   The average American has a longer life expectancy than the average Nigerian.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 3

One of the 20th century's worst episodes of inflation occurred in

Accepted Answer

A)   the United States in the 1960s.
B)   Italy in the 1950s.
C)   Russia in the 1930s.
D)   Germany in the 1920s.E) A) and B)
F) B) and C)

Question 4

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

Question 5

Suppose that in Ireland total annual output is worth $600 million and people work 30 million hours. In Canada total annual output is worth $800 million and people work 50 million hours. Productivity is higher

Accepted Answer

A)   in Ireland. Most variation in the standard of living across countries is due to differences in productivity.
B)   in Ireland. Differences in productivity explain very little of the variation in the standard of living across countries.
C)   in Canada. Most variation in the standard of living across countries is due to differences in productivity.
D)   in Canada. Differences in productivity explain very little of the variation in the standard of living across countries.E) B) and D)
F) B) and C)

Question 6

If the wage for unskilled labor were fixed above the current wage, then we would expect

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 D)
F) A) and C)

Question 7

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   a promising young mathematician who will command a high salary once she earns her college 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 college and earn a degree
D)   a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketballE) B) and D)
F) A) and C)

Question 9

You have driven 500 miles on a vacation and then you notice that you are only 25 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

Accepted Answer

A)   both the cost of driving the first 500 and the next 25 miles.
B)   the cost of driving the first 500 miles, but not the cost of driving the next 25.
C)   the cost of driving the next 25 miles, but not the cost of driving the first 500.
D)   neither the cost of driving the first 500 miles nor the cost of driving the next 25 miles.E) A) and B)
F) C) and D)

Question 10

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Accepted Answer

A)   safety glass in all new cars.
B)   seat belts in all new cars.
C)   air bags in all new cars.
D)   stricter drunk driving laws in all states.E) None of the above
F) B) and D)

Question 11

The term "market failure"

Accepted Answer

A)   means the same thing as "market power."
B)   refers to the dissolution of a market when firms decide to quit producing a certain product.
C)   refers to the failure of a market to produce an efficient allocation of resources.
D)   refers to government's failure to enforce the property rights of households or firms that participate in a certain market.E) B) and C)
F) None of the above

Question 12

Productivity is defined as the

Accepted Answer

A)   amount of goods and services produced from each unit of labor input.
B)   number of workers required to produce a given amount of goods and services.
C)   amount of labor that can be saved by replacing workers with machines.
D)   actual amount of effort workers put into an hour of working time.E) B) and C)
F) All of the above

Question 13

Market failure can be caused by

Accepted Answer

A)   low consumer demand.
B)   equilibrium prices.
C)   externalities and market power.
D)   high prices and foreign competition.E) C) and D)
F) B) and C)

Question 14

Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?

Accepted Answer

A)   how much she spent applying to Notre Dame, and the difference between living expenses at Notre Dame and the other college
B)   how much she spent applying to Notre Dame, but not the difference between living expenses at Notre Dame and the other college
C)   the difference between living expenses at Notre Dame and her second choice, but not how much she spent applying to Notre Dame
D)   neither how much she spent applying to Notre Dame nor the difference between living expenses at Notre Dame and her second choiceE) C) and D)
F) A) and B)

Question 15

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of

Accepted Answer

A)   market power.
B)   inefficient trade.
C)   inadequate enforcement of property rights.
D)   the invisible hand at work.E) B) and C)
F) A) and B)

Question 16

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) None of the above
F) All of the above

Question 17

A rational decisionmaker takes an action if and only if

Accepted Answer

A)   the marginal benefit of the action exceeds the marginal cost of the action.
B)   the marginal cost of the action exceeds the marginal benefit of the action.
C)   the marginal cost of the action is zero.
D)   the opportunity cost of the action is zero.E) A) and D)
F) All of the above

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

Which of the following is a decision that economists study?

Accepted Answer

A)   how much people work
B)   what people buy
C)   how much money people save
D)   All of the above are correct.E) B) and D)
F) None of the above

Exam 1: Ten Principles of Economics

Trade with any nation can be mutually beneficial.

Correct AnswerverifiedShow Answer

If the wage for unskilled labor were fixed above the current wage, then we would expect

Correct AnswerverifiedShow Answer

Suppose that in Ireland total annual output is worth $600 million and people work 30 million hours. In Canada total annual output is worth $800 million and people work 50 million hours. Productivity is higher

Correct AnswerverifiedShow Answer

In 2008, the average American earned about $47,000 while the average Nigerian earned about $1,400. Which of the following statements is likely?

Correct AnswerverifiedShow Answer

A rational decisionmaker takes an action if and only if

Correct AnswerverifiedShow Answer

The term "market failure"

Correct AnswerverifiedShow Answer

Which of the following is a decision that economists study?

Correct AnswerverifiedShow Answer

Productivity is defined as the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Correct AnswerverifiedShow Answer

A marginal change is a small incremental adjustment to an existing plan of action.

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

Market failure can be caused by

Correct AnswerverifiedShow Answer

You have driven 500 miles on a vacation and then you notice that you are only 25 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

Correct AnswerverifiedShow Answer

Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of

Correct AnswerverifiedShow Answer

One of the 20th century's worst episodes of inflation occurred in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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