Question 1

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 2

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 C)

Question 3

The "invisible hand" refers to

Accepted Answer

A)   the government.
B)   the free market.
C)   central planners.
D)   large businesses.E) A) and D)
F) A) and B)

Question 4

People are likely to respond to a policy change

Accepted Answer

A)   only if they think the policy is a good one.
B)   only if the policy change changes the costs of their behavior.
C)   only if the policy change changes the benefits of their behavior.
D)   if the policy changes either the costs or benefits of their behavior.E) B) and C)
F) None of the above

Question 5

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

Accepted Answer

A)   efficiency is improved, but equality is not.
B)   equality is improved, but efficiency is not.
C)   both efficiency and equality are improved.
D)   neither efficiency nor equality are improved.E) C) and D)
F) A) and C)

Question 6

Which of the following principles is not one of the four principles of individual decisionmaking?

Accepted Answer

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

Question 7

Bill is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $6,200. Bill discovers that he needs to do an additional $2,400 of work to make the car worth $6,200 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

Accepted Answer

A)   He should sell the car now for $3,800.
B)   He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $6,200.
C)   He should complete the additional work and sell the car for $6,200.
D)   It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.E) B) and D)
F) A) and D)

Question 8

Which of the following is an example of an externality?

Accepted Answer

A)   Annie purchases a new dress.
B)   Antonio's dog barks loudly during the night, waking his neighbors.
C)   Harold sells a book to Cathy, who reads the book and then gives it to James as a gift.
D)   Gloria watches a scary movie.E) A) and C)
F) B) and C)

Question 9

A rational decision maker takes an action only if the

Accepted Answer

A)   marginal benefit is less than the marginal cost.
B)   marginal benefit is greater than the marginal cost.
C)   average benefit is greater than the average cost.
D)   marginal benefit is greater than both the average cost and the marginal cost.E) All of the above
F) B) and D)

Question 10

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)   In the short run, falling inflation is associated with falling unemployment.
B)   In the short run, falling inflation is associated with rising unemployment.
C)   In the long run, falling inflation is associated with falling unemployment.
D)   In the long run, falling inflation is associated with rising unemployment.E) A) and B)
F) B) and C)

Question 11

Which of the following is correct concerning opportunity cost?

Accepted Answer

A)   Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.
B)   To compute opportunity costs, you should subtract benefits from costs.
C)   Opportunity costs and the idea of trade-offs are not closely related.
D)   Rational people should compare various options without considering opportunity costs.E) A) and B)
F) A) and C)

Question 12

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it

Accepted Answer

A)   charged any ticket price above $0 for the four remaining seats.
B)   charged at least $11.25 for each of the four remaining seats.
C)   charged at least $45 for each of the four remaining seats.
D)   paid four people to occupy the four remaining seats.E) A) and B)
F) None of the above

Question 13

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Accepted Answer

A)   efficiency.
B)   equality.
C)   externalities.
D)   productivity.E) B) and C)
F) All of the above

Question 14

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Accepted Answer

The answer of Consider two countries, Muria and Zenya. In...

Question 15

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between

Accepted Answer

A)   guns and butter.
B)   efficiency and equality.
C)   inflation and unemployment.
D)   work and leisure.E) B) and D)
F) B) and C)

Question 16

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

Accepted Answer

A)   Ted purchases a dilapidated house and cleans up the yard and exterior of the house.
B)   Tim purchases an iPhone and downloads new apps.
C)   Terri purchases a new SUV and drives it to work every day.
D)   Thomas purchases a suit and wears it on his interviews.E) All of the above
F) None of the above

Question 17

To increase living standards, public policy should

Accepted Answer

A)   ensure that workers are well educated and have the necessary tools and technology.
B)   make unemployment benefits more generous.
C)   move workers into jobs directly from high school.
D)   ensure a greater degree of equality, taking all income-earners into account.E) B) and C)
F) C) and D)

Question 18

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision 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 Spain increases.
B)   The marginal cost of going to Spain increases.
C)   The marginal benefit of going to Ireland increases.
D)   The marginal cost of going to Ireland decreases.E) None of the above
F) All of the above

Question 19

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

Question 20

Cole 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. Cole discovers that he needs to do an additional $200 worth 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 Cole 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) B) and D)
F) None of the above

Exam 1: Ten Principles of Economics

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

Correct Answer
verified

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Correct Answer
verified

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Correct Answer
verified

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it

Correct Answer
verified

Correct Answer
verified

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between

Correct Answer
verified

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct Answer
verified

Correct Answer
verified

A rational decision maker takes an action only if the

Correct Answer
verified

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

Correct Answer
verified

The "invisible hand" refers to

Correct Answer
verified

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

Correct Answer
verified

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct Answer
verified

Which of the following is correct concerning opportunity cost?

Correct Answer
verified

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

Correct Answer
verified

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct Answer
verified

People are likely to respond to a policy change

Correct Answer
verified

Which of the following is an example of an externality?

Correct Answer
verified

To increase living standards, public policy should

Correct Answer
verified

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct Answer
verified

Exam 1: Ten Principles of Economics

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

Correct AnswerverifiedShow Answer

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision 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

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

Correct AnswerverifiedShow Answer

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between

Correct AnswerverifiedShow Answer

Which of the following principles is not one of the four principles of individual decisionmaking?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A rational decision maker takes an action only if the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct AnswerverifiedShow Answer

Which of the following is correct concerning opportunity cost?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

Correct AnswerverifiedShow Answer

People are likely to respond to a policy change

Correct AnswerverifiedShow Answer

Which of the following is an example of an externality?

Correct AnswerverifiedShow Answer

To increase living standards, public policy should

Correct AnswerverifiedShow Answer

If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75.

Correct AnswerverifiedShow Answer

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