Question 1

How good are markets at organizing economic activity?

Accepted Answer

A)   Markets are usually a good way to organize economic activity.
B)   Markets are usually inferior to central planning as a way to organize economic activity.
C)   Markets fail and are therefore not a good way to organize economic activity.
D)   Markets are a good way to organize economic activity in developed nations,but not in less developed nations.E) A) and C)
F) A) and B)

Question 2

What can cause market failure?

Accepted Answer

A)   low consumer demand
B)   government intervention and price controls
C)   externalities and market power
D)   high prices and foreign competitionE) All of the above
F) B) and C) C

Question 3

What does trade NOT achieve?

Accepted Answer

A)   increased competition
B)   equal gains for both countries involved
C)   some gains for both countries involved
D)   greater production efficiencyE) None of the above
F) A) and B) B

Question 4

How does a market economy reward people?

Accepted Answer

A)   according to their need for goods and services
B)   according to their willingness to work
C)   according to their ability to produce things that other people are willing to pay for
D)   according to their ability to produce things of cultural importanceE) C) and D)
F) All of the above

Question 5

With careful planning,we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 6

What is the effect of a trade between Canada and India?

Accepted Answer

A)   benefits for both Canada and India
B)   a losing proposition for Canada because India has cheaper labour
C)   trade between the two countries would be inefficient due to the high cost of transporting the goods
D)   a losing proposition for India because Canadian workers are more productiveE) C) and D)
F) A) and B)

Question 7

From which of the following is the word "economy" derived?

Accepted Answer

A)   environment
B)   one who manages a household
C)   one who participates in a market
D)   allocationE) B) and C)
F) A) and D)

Question 8

What does economics study?

Accepted Answer

A)   finance
B)   how society manages its scarce resources
C)   central planning
D)   government regulationE) All of the above
F) A) and D)

Question 9

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 10

According to Adam Smith,what is the success of decentralized market economies primarily due to?

Accepted Answer

A)   the basic benevolence of society
B)   society's justice (legal) system
C)   individuals' self-interest
D)   basic human survival instinctsE) A) and B)
F) None of the above

Question 11

What causes almost all variation in living standards in different countries?

Accepted Answer

A)   population growth rates
B)   endowments of natural resources
C)   proximity to foreign markets
D)   productivityE) C) and D)
F) A) and B)

Question 12

What happens when the government prevents prices from adjusting naturally to supply and demand?

Accepted Answer

A)   It stabilizes the economy by reducing market uncertainties.
B)   It adversely affects the allocation of resources.
C)   There is an improvement in equity that justifies the reduction in efficiency.
D)   There is an improvement in efficiency that justifies the reduction in equity.E) A) and B)
F) B) and D)

Question 13

To increase living standards,what should public policy do?

Accepted Answer

A)   ensure that workers are well educated and have the necessary tools and technology
B)   make unemployment benefits easier to obtain
C)   move workers into jobs directly from high school
D)   ensure that workers have access to union membership and benefitsE) B) and C)
F) A) and D)

Question 14

For most students,what is the largest single cost of a university education?

Accepted Answer

A)   the wages given up to attend school
B)   tuition,fees,and books
C)   room and board
D)   transportation,parking,and entertainmentE) All of the above
F) B) and C)

Question 15

How does trade affect the well-being of the nations involved?

Accepted Answer

A)   Trade makes every nation better off.
B)   Trade makes exporting nations better off and importing nations worse off.
C)   Trade makes a nation better off only if the nation cannot produce that good itself.
D)   Trade makes rich nations better off and poor nations worse off.E) A) and B)
F) A) and C) A

Question 16

What is the definition of productivity?

Accepted Answer

A)   the amount of goods and services produced from each hour of a worker's time
B)   the amount of labour that can be saved by replacing workers with machines
C)   the actual amount of effort workers put into an hour of working time
D)   the estimated amount of effort workers put into an hour of working timeE) A) and D)
F) A) and C)

Question 17

Mike has spent $800 purchasing and repairing an old motorcycle,which he expects to sell for $1,200.He discovers that he needs an additional repair,which will cost $200.He can sell the motorcycle as it is now for $400.What should he do?

Accepted Answer

A)   He should take the $400.
B)   He should never sell something for less than it cost.
C)   He should complete the repairs and sell the motorcycle.
D)   It doesn't matter which action he takes; the outcome is the same either way.E) A) and B)
F) A) and C)

Question 18

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job?

Accepted Answer

A)   The marginal cost of leaving was greater than the marginal benefit.
B)   The marginal benefit of leaving was greater than the marginal cost.
C)   The marginal benefit of teaching was greater than the marginal cost.
D)   The marginal cost of teaching was greater than the marginal benefit.E) A) and B)
F) B) and C)

Question 19

When the government attempts to improve equity in an economy,what is often the result?

Accepted Answer

A)   an increase in overall output in the economy
B)   additional government revenue since overall income will increase
C)   an actual reduction in equity
D)   reduced efficiency in the economyE) B) and C)
F) A) and D)

Question 20

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require?

Accepted Answer

A)   child booster seats in all new cars
B)   seat belts in all new cars
C)   air bags in all new cars
D)   stricter drunk driving lawsE) B) and D)
F) A) and C)

Exam 1: Ten Principles of Economics

How good are markets at organizing economic activity?

Correct AnswerverifiedShow Answer

What can cause market failure?

Correct AnswerverifiedC

What does trade NOT achieve?

Correct AnswerverifiedB

How does a market economy reward people?

Correct AnswerverifiedShow Answer

With careful planning,we can usually get something that we like without having to give up something else that we like.

Correct AnswerverifiedShow Answer

What is the effect of a trade between Canada and India?

Correct AnswerverifiedShow Answer

From which of the following is the word "economy" derived?

Correct AnswerverifiedShow Answer

What does economics study?

Correct AnswerverifiedShow Answer

Inflation increases the value of money.

Correct AnswerverifiedShow Answer

According to Adam Smith,what is the success of decentralized market economies primarily due to?

Correct AnswerverifiedShow Answer

What causes almost all variation in living standards in different countries?

Correct AnswerverifiedShow Answer

What happens when the government prevents prices from adjusting naturally to supply and demand?

Correct AnswerverifiedShow Answer

To increase living standards,what should public policy do?

Correct AnswerverifiedShow Answer

For most students,what is the largest single cost of a university education?

Correct AnswerverifiedShow Answer

How does trade affect the well-being of the nations involved?

Correct AnswerverifiedA

What is the definition of productivity?

Correct AnswerverifiedShow Answer

Mike has spent $800 purchasing and repairing an old motorcycle,which he expects to sell for $1,200.He discovers that he needs an additional repair,which will cost $200.He can sell the motorcycle as it is now for $400.What should he do?

Correct AnswerverifiedShow Answer

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job?

Correct AnswerverifiedShow Answer

When the government attempts to improve equity in an economy,what is often the result?

Correct AnswerverifiedShow Answer

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified