question

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

answer

C. efficiency and equality.

question

When society requires that firms reduce pollution, there is A. a tradeoff because of reduced incomes to the firms' owners and workers. B. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. C. a tradeoff only if some firms are forced to close. D. no tradeoff, since everyone benefits from reduced pollution.

answer

A. a tradeoff because of reduced incomes to the firms' owners and workers.

question

Slow growth in US incomes during the 1970s and 1980s was primarily due to A. increased competition from Japan. B. a rapid decrease in the quantity of money in the economy. C. slow productivity growth in the US. D. increased competition from European countries.

answer

C. slow productivity growth in the US.

question

The income of a typical worker in a country is most closely linked to which of the following? A. productivity B. market power C. population D. government policies

answer

A. productivity

question

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have? A. inefficiency B. market failure C. scarcity D. inequality

answer

C. scarcity

question

Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of A. a market failure caused by market power. B. There is no market failure in this case. C. a market failure caused by an externality. D. a market failure caused by equality.

answer

C. a market failure caused by an externality

question

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

answer

B. equality is improved, but efficiency is not.

question

In the long run the primary effect of increasing the quantity of money is higher prices. a. TRUE b. FALSE

answer

a. TRUE

question

Economics is the study of how evenly goods and services are distributed within society. a. TRUE b. FALSE

answer

b. FALSE

question

Germany could have avoided the high inflation that it experienced in the 1920s by A. not increasing taxes so much on the German middle class. B. not allowing the quantity of money to increase so rapidly. C. using government policies to stimulate the economy more so than what was done. D. not directing so many of its resources toward preparation for World War II.

answer

B. not allowing the quantity of money to increase so rapidly

question

When society gets the most it can from its scarce resources, then the outcome is called A. efficacious. B. normal. C. efficient. D. equitable.

answer

C. efficient

question

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate? A. Trade can make everyone better off B. Rational people think at the margin C. Markets are usually a good way to organize economic activity D. People respond to incentives

answer

D. People respond to incentives

question

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome, A. a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide. B. an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide. C. a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide. D. an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.

answer

B. an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide

question

The ability of an individual to own and exercise control over scarce resources is called A. property rights. B. externality. C. market power. D. market failure.

answer

A. property rights.

question

Trade between countries tends to A. increase competition and reduce specialization. B. increase both competition and specialization. C. reduce both competition and specialization. D. reduce competition and increase specialization.

answer

B. increase both competition and specialization.

question

For most students, the earnings they give up to attend college are A. the single largest cost of their education. B. about equal to the costs of room and board at college. C. not considered true costs by an economist. D. a minor cost when compared to the costs of tuition, room and board, and the like.

answer

A. the single largest cost of their education.

question

If Faith attends college, it will take her four years, during which time she will earn no income. She will pay $50,000 for tuition, $12,000 for room and board, and $5,000 for books. If she spends the four years working rather than attending college, she will pay $18,000 for room and board, pay no intuition, and buy no books. Based on this information, Faith's economic cost of attending college would be $67,000 if, over the four years, she could earn A. $18,000 instead of attending college. B. $12,000 instead of attending college. C. $14,000 instead of attending college. D. $16,000 instead of attending college.

answer

A. $18,000 instead of attending college.

question

The principle that "trade can make everyone better off" applies to interactions and trade between A. families. B. states within the United States. C. nations. D. All of the above are correct.

answer

D. All of the above are correct

question

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that A. there will be no difference between the standard of living in India and Bangladesh. B. the standard of living will likely be higher in India than in Bangladesh. C. worker productivity in Bangladesh is higher than in India. D. productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India.

answer

B. the standard of living will likely be higher in India than in Bangladesh.

question

In an economy in which decisions are guided by prices and individual self-interest, there is A. the potential to achieve efficiency in production. B. a strong need for government intervention in the market. C. less efficiency than would be observed in a centrally-planned economy. D. more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.

answer

A. the potential to achieve efficiency in production.

question

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity. a. TRUE b. FALSE

answer

a. TRUE

question

Which of the following words and phrases best captures the notion of equality? A. maximum benefit B. efficiency C. minimum waste D. sameness

answer

D. sameness

question

When calculating the cost of college, which of the following should you probably not include? A. The cost of tuition B. The income you would have earned had you not gone to college C. The cost of rent for your off-campus apartment. D. The cost of books required for college classes

answer

C. The cost of rent for your off-campus apartment.

question

Which of the following principles is not one of the four principles of individual decisionmaking? A. Trade can make everyone better off. B. Rational people think at the margin. C. People face tradeoffs. D. People respond to incentives.

answer

A. Trade can make everyone better off.

question

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by A. unstable economic conditions in Eastern Europe. B. a strong U.S. dollar abroad, hurting U.S. exports. C. increased competition from abroad. D. a decline in the rate of increase in U.S. productivity.

answer

D. a decline in the rate of increase in U.S. productivity.

question

Economists study how people make decisions. a. TRUE b. FALSE

answer

a. TRUE

question

The principle that "people face tradeoffs" applies to A. societies. B. individuals. C. families. D. All of the above are correct.

answer

D. All of the above are correct

question

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

answer

B. a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate.

question

The term market failure refers to A. a situation in which competition among firms becomes ruthless. B. an unsuccessful advertising campaign which reduces demand for a product. C. a situation in which the market on its own fails to allocate resources efficiently. D. a firm which is forced out of business because of losses.

answer

C. a situation in which the market on its own fails to allocate resources efficiently.

question

The fact that different countries experience different standards of living is largely explained by differences in those countries' A. locations. B. productivity levels. C. populations. D. None of the above is correct. Economists are puzzled by differences in standards of living around the world.

answer

B. productivity levels.

question

Inflation is defined as A. an increase in the overall level of prices in the economy. B. an increase in the overall level of output in the economy. C. a period of rising productivity in the economy. D. a period of rising income in the economy.

answer

A. an increase in the overall level of prices in the economy.

question

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources. a. TRUE b. FALSE

answer

a. TRUE

question

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

answer

b. FALSE

question

The "invisible hand" refers to A. large businesses. B. central planners. C. the government. D. the free market.

answer

D. the free market

question

Government policies designed to equalize the distribution of economic well-being include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax A. (ii) only B. (i), (ii), and (iii) C. (i) and (ii) only D. (i) only

answer

B. (i), (ii), and (iii)

question

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to A. change the way in which the economic pie is divided. B. create a more fair distribution of income. C. enlarge the economic pie. D. All of the above are correct.

answer

C. enlarge the economic pie.

question

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 A. inefficient trade. B. the invisible hand at work. C. market power. D. inadequate enforcement of property rights.

answer

D. inadequate enforcement of property rights.

question

The classic tradeoff between "guns and butter" states that when a society spends more on national defense, it has less to spend on consumer goods to raise the standard of living. a. TRUE b. FALSE

answer

a. TRUE

question

The government can potentially improve market outcomes if market inequalities or market failure exists. a. TRUE b. FALSE

answer

a. TRUE

question

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as A. property rights. B. productivity. C. market power. D. an externality.

answer

D. an externality

question

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources. a. TRUE b. FALSE

answer

a. TRUE

question

The primary determinant of a country's standard of living is A. the country's ability to prevail over foreign competition. B. the average age of the country's labor force. C. the country's ability to produce goods and services. D. the total supply of money in the economy.

answer

C. the country's ability to produce goods and services.

question

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to A. decrease efficiency but increase equality. B. increase efficiency and increase equality. C. decrease efficiency and decrease equality. D. increase efficiency but decrease equality.

answer

A. decrease efficiency but increase equality.

question

The adage, "There is no such thing as a free lunch," means A. even people on welfare have to pay for food. B. the cost of living is always increasing. C. people face tradeoffs. D. all costs are included in the price of a product.

answer

C. people face tradeoffs.

question

Scarcity means that there is less of a good or resource available than people wish to have. a. TRUE b. FALSE

answer

a. TRUE

question

Which of the following is a principle concerning how people interact? A. Rational people think at the margin. B. Markets are usually a good way to organize economic activity. C. People respond to incentives. D. All of the above are correct.

answer

B. Markets are usually a good way to organize economic activity

question

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely? A. The average American purchases more televisions than the average Nigerian. B. The average American has a longer life expectancy than the average Nigerian. C. The average American has better nutrition and healthcare than the average Nigerian. D. All of the above are correct.

answer

D. All of the above are correct

question

The English word that comes from the Greek word for "one who manages a household" is A. economy. B. producer. C. consumer. D. market.

answer

A. economy

question

The word "economy" comes from the Greek word oikonomos, which means A. "one who makes decisions." B. "one who manages a household." C. "production." D. "environment."

answer

B. "one who manages a household."

question

Economics is the study of how evenly goods and services are distributed within society. a. TRUE b. FALSE

answer

b. FALSE

Micro-Economics Chapter 1 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards