Question 1

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Tracy quits her job, which pays $25,000...

Question 2

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A)   opportunity cost.
B)   productivity.
C)   externality.
D)   marginal benefit.E) A) and B)
F) All of the above

Question 3

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Accepted Answer

A)   $33,800.
B)   $42,600.
C)   $49,800.
D)   $57,000.E) B) and D)
F) B) and C)

Question 4

You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Accepted Answer

A)   the amount you value the first movie + $3
B)   the amount you value the first movie + $9
C)   $3
D)   $9E) All of the above
F) A) and B)

Question 5

In response to the deep economic downturn in the US in 2008 and 2009, the US

Accepted Answer

A)   reduced taxes.
B)   increased government spending.
C)   increased the supply of money.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 6

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) C) and D)
F) A) and D)

Question 7

Low rates of inflation are generally associated with

Accepted Answer

A)   low rates of government spending.
B)   small or nonexistent government budget deficits.
C)   low rates of productivity growth.
D)   low rates of growth of the quantity of money.E) B) and C)
F) All of the above

Question 8

In the short run, which of the following is not correct?

Accepted Answer

A)   Increasing the money supply increases the demand for goods and services.
B)   Increasing the money supply encourages firms to hire more workers.
C)   Lowering the money supply leads to a higher level of unemployment.
D)   Policies that encourage higher employment will also induce a lower rate of inflation.E) A) and B)
F) C) and D)

Question 9

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Debbie quits her job, which pays $30,000...

Question 10

Which is the most accurate statement about trade?

Accepted Answer

A)   Trade can make every nation better off.
B)   Trade makes some nations better off and others worse off.
C)   Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)   Trade helps rich nations and hurts poor nations.E) A) and D)
F) None of the above

Question 11

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 12

In the short-run, society faces a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   twofold.
B)   fivefold.
C)   eightfold.
D)   tenfold.E) B) and C)
F) None of the above

Question 14

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

Question 15

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Accepted Answer

A)   equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
B)   equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
C)   equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
D)   equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.E) B) and D)
F) A) and B)

Question 16

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Accepted Answer

A) True 
 B)False

Question 17

Trade between the United States and Guatemala

Accepted Answer

A)   benefits both the United States and Guatemala.
B)   is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor.
C)   is a losing proposition for Guatemala because capital is much more abundant in the U.S. than in Guatemala.
D)   is a losing proposition for Guatemala because U.S. workers are more productive than Guatemalan workers.E) A) and B)
F) A) and C)

Question 18

A marginal change is a

Accepted Answer

A)   change that involves little, if anything, that is important.
B)   large, significant adjustment.
C)   change for the worse, and so it is usually a short-term change.
D)   small, incremental adjustment.E) All of the above
F) A) and C)

Question 19

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Accepted Answer

A)   "unimportant."
B)   "slow."
C)   "edge."
D)   "irrational."E) A) and B)
F) A) and C)

Question 20

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) A) and B)
F) B) and C)

Exam 1: Ten Principles of Economics

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

Correct Answer
verified

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

The amount of goods and services produced from each unit of labor input is called

Correct Answer
verified

In the short run, which of the following is not correct?

Correct Answer
verified

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct Answer
verified

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

Correct Answer
verified

Trade between the United States and Guatemala

Correct Answer
verified

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Correct Answer
verified

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct Answer
verified

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct Answer
verified

Which is the most accurate statement about trade?

Correct Answer
verified

A marginal change is a

Correct Answer
verified

Market power and externalities are two possible causes of market failure.

Correct Answer
verified

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

Correct Answer
verified

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct Answer
verified

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Correct Answer
verified

Correct Answer
verified

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Correct Answer
verified

Low rates of inflation are generally associated with

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Ten Principles of Economics

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

Correct AnswerverifiedShow Answer

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

The amount of goods and services produced from each unit of labor input is called

Correct AnswerverifiedShow Answer

In the short run, which of the following is not correct?

Correct AnswerverifiedShow Answer

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trade between the United States and Guatemala

Correct AnswerverifiedShow Answer

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Correct AnswerverifiedShow Answer

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Correct AnswerverifiedShow Answer

In the short-run, society faces a tradeoff between inflation and unemployment.

Correct AnswerverifiedShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedShow Answer

A marginal change is a

Correct AnswerverifiedShow Answer

Market power and externalities are two possible causes of market failure.

Correct AnswerverifiedShow Answer

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

Correct AnswerverifiedShow Answer

In response to the deep economic downturn in the US in 2008 and 2009, the US

Correct AnswerverifiedShow Answer

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

Correct AnswerverifiedShow Answer

Low rates of inflation are generally associated with

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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