Question 1

U.S. laws requiring that drivers wear seat belts have resulted in

Accepted Answer

A)   a reduction in both driver deaths and pedestrian deaths.
B)   fewer accidents and fewer deaths per accident.
C)   fewer driver deaths, fewer accidents and fewer pedestrian deaths.
D)   little change in the number of driver deaths, but more accidents and more pedestrian deaths.

Question 2

What is another word for "marginal"?

Accepted Answer

incrementa...

Question 3

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

Accepted Answer

A)   its average cost is greater than its marginal cost.
B)   its average cost and its marginal cost are equal.
C)   its average cost is less than its marginal cost.
D)   there is insufficient information to compute average and marginal costs.

Question 4

A company that formerly produced music CDs went out of business because too many potential customers bought illegally-produced copies of the CDs 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.

Question 5

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

Accepted Answer

A)   more than $200.
B)   more than $300.
C)   more than $500.
D)   This cannot be determined from the information given.

Question 6

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)   The marginal benefit of going to Cancun increases.
B)   The marginal cost of going to Cancun decreases.
C)   The marginal benefit of going to Ft. Lauderdale decreases.
D)   The marginal cost of going to Ft. Lauderdale decreases.

Question 7

The short-run tradeoff between inflation and unemployment implies that, in the short run,

Accepted Answer

A)   a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate.
B)   an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate.
C)   policymakers are able to reduce the inflation rate and, at the same time, reduce the unemployment rate.
D)   policymakers can influence the inflation rate, but not the unemployment rate.

Question 8

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)   studies show that individuals with higher levels of income pollute less than low-income individuals.
B)   efforts to reduce pollution typically are not completely successful.
C)   laws that reduce pollution raise costs of production and reduce incomes.
D)   employing individuals to clean up pollution causes increases in employment and income.

Question 9

In the early 1920s,

Accepted Answer

A)   Germany experienced a very high rate of inflation.
B)   the quantity of German money was declining rapidly.
C)   the value of German money remained almost constant.
D)   All of the above are correct.

Question 10

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)   goods are scarce.
B)   people face tradeoffs.
C)   income must be earned.
D)   households face many decisions.

Question 11

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Zack quits his job at a consulting...

Question 12

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)   is a basic principle regarding individual decisionmaking.
B)   amounts to a denial of one of the basic principles regarding interactions among people.
C)   supports the idea that the "invisible hand" should guide economic activity.
D)   was promoted by the economist Adam Smith in a well-known 1776 book.

Question 13

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.

Question 14

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Accepted Answer

The answer of In the short run, an increase in...

Question 15

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 16

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

The answer of Invisible hand is a term used by...

Question 17

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A)   create a more fair distribution of income.
B)   change the way in which the economic pie is divided.
C)   enlarge the economic pie.
D)   All of the above are correct.

Question 18

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A)   Average income in the US is higher than the average income in Ghana.
B)   The US has a higher standard of living than Ghana.
C)   Productivity in the US is higher than productivity in Ghana.
D)   All of the above are correct.

Question 19

Explain how trade with other countries is beneficial.

Accepted Answer

Trade allows countri...

Question 20

Over the past century, the average income in the United States has risen about

Accepted Answer

A)   twofold.
B)   fivefold.
C)   eightfold.
D)   tenfold.

Exam 1: Ten Principles of Economics

In the early 1920s,

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A tradeoff exists between a clean environment and a higher level of income in that

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Explain how trade with other countries is beneficial.

Correct AnswerverifiedTrade allows countri...View AnswerShow Answer

What is another word for "marginal"?

Correct Answerverifiedincrementa...View AnswerShow Answer

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

Correct AnswerverifiedShow Answer

Invisible hand is a term used by the economist in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct AnswerverifiedShow Answer

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct AnswerverifiedShow Answer

U.S. laws requiring that drivers wear seat belts have resulted in

Correct AnswerverifiedShow Answer

The invisible hand ensures that economic prosperity is distributed equally.

Correct AnswerverifiedShow Answer

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Correct AnswerverifiedShow Answer

Over the past century, the average income in the United States has risen about

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. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.

Correct AnswerverifiedShow Answer

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct AnswerverifiedShow Answer

The short-run tradeoff between inflation and unemployment implies that, in the short run,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Correct AnswerverifiedShow Answer

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Correct AnswerverifiedShow Answer

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Trade allows countri...
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incrementa...
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