Question 1

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) None of the above
F) All of the above

Question 2

Economics is the study of how evenly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 6

The failure of communism in a large number of countries is at least partly explained by

Accepted Answer

A)   the fact that those countries relied absolutely on the invisible hand.
B)   the fact that those countries did little or nothing to restrict trade with other countries.
C)   the lack of information, on the part of central planners in those countries, about tastes and preferences in their economies.
D)   the lack of information, on the part of central planners in those countries, about how much authority the government had in affecting economic outcomes.E) All of the above
F) B) and D)

Question 7

The business cycle is the

Accepted Answer

A)   relationship between unemployment and inflation.
B)   irregular fluctuations in economic activity.
C)   positive relationship between the quantity of money in an economy and inflation.
D)   predictable changes in economic activity due to changes in government spending and taxes.E) C) and D)
F) All of the above

Question 8

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A)   minimum waste
B)   maximum benefit
C)   sameness
D)   efficiencyE) A) and B)
F) None of the above

Question 9

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The concept of working longer per year w...

Question 10

The term "invisible hand" was coined by

Accepted Answer

A)   Adam Smith.
B)   David Ricardo.
C)   Karl Marx.
D)   Benjamin Franklin.E) A) and B)
F) A) and C)

Question 11

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Accepted Answer

A)   the value of a good to society, but not the cost of making it.
B)   the cost of making a good to society, but not its value.
C)   both the value of a good to society and the cost of making it.
D)   neither the value of a good to society nor the cost of making it.E) A) and B)
F) A) and C)

Question 12

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Accepted Answer

A)   An individual's probability of surviving an auto accident rose.
B)   There was an increase in pedestrian deaths.
C)   There was an increase in automobile accidents.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 13

Which of the following is correct?

Accepted Answer

A)   The word economy comes from the Greek word for "rational thinker."
B)   Economists study the management of scarce resources.
C)   Because economists believe that people pursue their best interests, they are not interested in how people interact.
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 14

Which of the following is true?

Accepted Answer

A)   Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
B)   Government policies usually improve upon both equality and efficiency.
C)   As long as the economic pie continually gets larger, no one will have to go hungry.
D)   Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.E) All of the above
F) B) and D)

Question 15

Which of the following statements exemplifies a principle of individual decisionmaking?

Accepted Answer

A)   Trade can make everyone better off.
B)   Governments can sometimes improve market outcomes.
C)   The cost of something is what you give up to get it.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 16

In considering how to allocate its scarce resources among its various members, a household considers

Accepted Answer

A)   each member's abilities.
B)   each member's efforts.
C)   each member's desires.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 17

Communist countries worked under the premise that

Accepted Answer

A)   markets were the best way to organize economic activity.
B)   central planners were in the best position to determine the allocation of scarce resources in the economy.
C)   households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources.
D)   allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.E) A) and D)
F) None of the above

Question 18

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)   most economies' production methods are not very good.
B)   in most economies, wealthy people consume disproportionate quantities of goods and services.
C)   governments restrict production of too many goods and services.
D)   resources are limited.E) All of the above
F) None of the above

Question 19

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following could reduce economic efficiency?

Accepted Answer

A)   laws that encourage lawsuits
B)   policies that redistribute income
C)   policies that impose significant restrictions on international trade
D)   All of the above are correctE) A) and B)
F) All of the above

Exam 1: Ten Principles of Economics

The business cycle is the

Correct Answer
verified

Which of the following could reduce economic efficiency?

Correct Answer
verified

In considering how to allocate its scarce resources among its various members, a household considers

Correct Answer
verified

The term "invisible hand" was coined by

Correct Answer
verified

The failure of communism in a large number of countries is at least partly explained by

Correct Answer
verified

Which of the following is correct concerning opportunity cost?

Correct Answer
verified

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Correct Answer
verified

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct Answer
verified

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct Answer
verified
The concept of working longer per year w...
View Answer

Which of the following is true?

Correct Answer
verified

Correct Answer
verified

Which of the following statements exemplifies a principle of individual decisionmaking?

Correct Answer
verified

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

Correct Answer
verified

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Correct Answer
verified

The phenomenon of scarcity stems from the fact that

Correct Answer
verified

Which of the following words and phrases best captures the notion of equality?

Correct Answer
verified

Communist countries worked under the premise that

Correct Answer
verified

Economics is the study of how evenly goods and services are distributed within society.

Correct Answer
verified

Exam 1: Ten Principles of Economics

The business cycle is the

Correct AnswerverifiedShow Answer

Which of the following could reduce economic efficiency?

Correct AnswerverifiedShow Answer

In considering how to allocate its scarce resources among its various members, a household considers

Correct AnswerverifiedShow Answer

The term "invisible hand" was coined by

Correct AnswerverifiedShow Answer

The failure of communism in a large number of countries is at least partly explained by

Correct AnswerverifiedShow Answer

Which of the following is correct concerning opportunity cost?

Correct AnswerverifiedShow Answer

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Correct AnswerverifiedShow Answer

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Trade can make everyone better off except in the case where one person is better at doing everything.

Correct AnswerverifiedShow Answer

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements exemplifies a principle of individual decisionmaking?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

Which of the following words and phrases best captures the notion of equality?

Correct AnswerverifiedShow Answer

Communist countries worked under the premise that

Correct AnswerverifiedShow Answer

Economics is the study of how evenly goods and services are distributed within society.

Correct AnswerverifiedShow Answer

Correct Answer
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The concept of working longer per year w...
View Answer

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