Question 1

What should happen to crime rates when the unemployment rate rises?

Accepted Answer

A)   Crime rates should fall because the economic gains to property crime will be lower when incomes are lower.
B)   Crime rates should rise because the opportunity cost of crime (i.e., getting a legitimate job)  has fallen.
C)   Crime rates should fall because the opportunity cost of crime (i.e., getting a legitimate job)  has risen.
D)   Crime rates should rise because the trade-offs have been eliminated.E) A) and B)
F) A) and C)

Question 2

Self-sufficiency:

Accepted Answer

A)   is the key to prosperity.
B)   is not a popular idea.
C)   results in poverty and death.
D)   means being able and willing to trade.E) None of the above
F) A) and B)

Question 3

Markets align self-interest with the social interest as long as the government doesn't interfere.

Accepted Answer

A) True 
 B)False

Question 4

The general manager of a Major League Baseball team reasons that hiring an all-star-caliber third baseman would allow the team to win 13 more games per season, generating more fan interest and higher ticket sales. The estimated increase in ticket and merchandise sales is $10.5 million per year, but it would cost the team $12 million a year to hire an all-star-caliber third baseman. Using marginal cost-benefit thinking, the general manager will not hire the all-star-caliber third baseman.

Accepted Answer

A) True 
 B)False

Question 5

Air travel from Chicago to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

Accepted Answer

A)   $1 per hour.
B)   $7 per hour.
C)   $12 per hour.
D)   $120 per hour.E) A) and C)
F) A) and D)

Question 6

People are rational and sometimes respond in unpredictable ways to incentives.

Accepted Answer

A) True 
 B)False

Question 7

The Zimbabwean government printed money as fast as it could for years. As a result:

Accepted Answer

A)   prices fell rapidly in Zimbabwe.
B)   the Zimbabwean economy grew rapidly.
C)   Zimbabwe experienced mild inflation.
D)   Zimbabwe experienced inflation at a rate of billions of percent per month.E) B) and C)
F) C) and D)

Question 8

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

Accepted Answer

A) True 
 B)False

Question 9

Dropping out of college to devote time to a promising business start-up is most directly an application of the principle of:

Accepted Answer

A)   gains from trade.
B)   returns from specialization.
C)   marginal thinking.
D)   opportunity cost.E) A) and C)
F) A) and B)

Question 10

When deciding how much to study for an economics class, students should study until:

Accepted Answer

A)   the total benefits exceed the total costs.
B)   the total costs equal the total benefits.
C)   the marginal benefits exceed marginal costs.
D)   the marginal costs exceed marginal benefits.E) A) and C)
F) None of the above

Question 11

Each of the following ideas is central to economics, EXCEPT:

Accepted Answer

A)   "good institutions can eliminate economic trade-offs."
B)   "people react to incentives."
C)   "specialization and trade benefit everyone."
D)   "prices rise when the government prints too much money."E) None of the above
F) B) and C)

Question 12

Economies MUST experience both booms and busts. All economists can do is work to limit the extent of the economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 13

Everyone can benefit from trade through increased specialization, division of knowledge, and productivity.

Accepted Answer

A) True 
 B)False

Question 14

In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1)  chat with friends, (2)  study economics, or (3)  eat lunch. This student's opportunity cost of chatting with friends is:

Accepted Answer

A)   the total value of studying economics and eating lunch.
B)   the value of studying economics.
C)   the value of chatting with friends.
D)   There is no opportunity cost because students do not pay their friends to chat with them.E) A) and B)
F) None of the above

Question 15

Economists assume that people respond to:

Accepted Answer

A)   other people.
B)   social interest.
C)   benevolence.
D)   incentives.E) A) and B)
F) None of the above

Question 16

How do self-interested businesses benefit society?

Accepted Answer

The goal of business is to maximize prof...

Question 17

Central banks can cause inflation.

Accepted Answer

A) True 
 B)False

Question 18

Understanding economic growth is one of the most important tasks of economics.

Accepted Answer

A) True 
 B)False

Question 19

What factor is responsible for ending malaria in the United States?

Accepted Answer

A)   inflation
B)   wealth
C)   the gold standard
D)   yardstick competitionE) A) and B)
F) B) and D)

Question 20

According to Milton Friedman, "Inflation is always and everywhere a:

Accepted Answer

A)   capitalist problem."
B)   communist problem."
C)   monetary phenomenon."
D)   situation caused by haphazard technological growth."E) B) and C)
F) None of the above

Exam 1: The Big Ideas

In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is:

Correct Answer
verified

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

Correct Answer
verified

Dropping out of college to devote time to a promising business start-up is most directly an application of the principle of:

Correct Answer
verified

What should happen to crime rates when the unemployment rate rises?

Correct Answer
verified

Economists assume that people respond to:

Correct Answer
verified

Everyone can benefit from trade through increased specialization, division of knowledge, and productivity.

Correct Answer
verified

People are rational and sometimes respond in unpredictable ways to incentives.

Correct Answer
verified

Markets align self-interest with the social interest as long as the government doesn't interfere.

Correct Answer
verified

Central banks can cause inflation.

Correct Answer
verified

Correct Answer
verified

Each of the following ideas is central to economics, EXCEPT:

Correct Answer
verified

When deciding how much to study for an economics class, students should study until:

Correct Answer
verified

What factor is responsible for ending malaria in the United States?

Correct Answer
verified

Self-sufficiency:

Correct Answer
verified

How do self-interested businesses benefit society?

Correct Answer
verified
The goal of business is to maximize prof...
View Answer

According to Milton Friedman, "Inflation is always and everywhere a:

Correct Answer
verified

The Zimbabwean government printed money as fast as it could for years. As a result:

Correct Answer
verified

Economies MUST experience both booms and busts. All economists can do is work to limit the extent of the economic fluctuations.

Correct Answer
verified

Air travel from Chicago to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

Correct Answer
verified

Understanding economic growth is one of the most important tasks of economics.

Correct Answer
verified

Exam 1: The Big Ideas

In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is:

Correct AnswerverifiedShow Answer

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

Correct AnswerverifiedShow Answer

Dropping out of college to devote time to a promising business start-up is most directly an application of the principle of:

Correct AnswerverifiedShow Answer

What should happen to crime rates when the unemployment rate rises?

Correct AnswerverifiedShow Answer

Economists assume that people respond to:

Correct AnswerverifiedShow Answer

Everyone can benefit from trade through increased specialization, division of knowledge, and productivity.

Correct AnswerverifiedShow Answer

People are rational and sometimes respond in unpredictable ways to incentives.

Correct AnswerverifiedShow Answer

Markets align self-interest with the social interest as long as the government doesn't interfere.

Correct AnswerverifiedShow Answer

Central banks can cause inflation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each of the following ideas is central to economics, EXCEPT:

Correct AnswerverifiedShow Answer

When deciding how much to study for an economics class, students should study until:

Correct AnswerverifiedShow Answer

What factor is responsible for ending malaria in the United States?

Correct AnswerverifiedShow Answer

Self-sufficiency:

Correct AnswerverifiedShow Answer

How do self-interested businesses benefit society?

Correct AnswerverifiedThe goal of business is to maximize prof...View AnswerShow Answer

According to Milton Friedman, "Inflation is always and everywhere a:

Correct AnswerverifiedShow Answer

The Zimbabwean government printed money as fast as it could for years. As a result:

Correct AnswerverifiedShow Answer

Economies MUST experience both booms and busts. All economists can do is work to limit the extent of the economic fluctuations.

Correct AnswerverifiedShow Answer

Air travel from Chicago to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

Correct AnswerverifiedShow Answer

Understanding economic growth is one of the most important tasks of economics.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The goal of business is to maximize prof...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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