Question 1

Which actor in the simplified circular flow model is on the supply side of the goods market?

Accepted Answer

A)   Firms
B)   Households
C)   Markets for factors of production
D)   GovernmentE) B) and C)
F) A) and D) A

Question 2

Which actor in the simplified circular flow model buys or rents land, labor, and capital?

Accepted Answer

A)   Firms
B)   Households
C)   Markets for factors of production
D)   GovernmentE) B) and C)
F) A) and D)

Question 3

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Accepted Answer

A)   innovation.
B)   efficiency.
C)   sustainability.
D)   economic quantity.E) A) and B)
F) All of the above B

Question 4

Muhammad Yunus, founder of Grameen Bank, was a pioneer in implementing group responsibility to lend to the poor. Why wasn't someone else already doing it?

Accepted Answer

A)   The government regulated against group responsibility.
B)   The idea of group responsibility was genuinely new.
C)   Group responsibility lending was not profitable.
D)   It was easy for groups to provide false social security numbers for members that did not exist.E) None of the above
F) A) and B)

Question 5

Which actor in the simplified circular flow model is on the supply side of the factor market?

Accepted Answer

A)   Firms
B)   Households
C)   Market for goods and services
D)   GovernmentE) B) and C)
F) A) and D)

Question 6

Which of the following is an example of a positive incentive?

Accepted Answer

A)   Deciding not to play golf due to rain
B)   Making a donation to the Red Cross
C)   Hiring 10 new workers as you expand your operations
D)   Offering a reward to anyone who finds your missing petE) B) and C)
F) A) and D)

Question 7

Which of the following is a problem created by scarcity?

Accepted Answer

A)   The college course you need to take in the fall is only offered at times that conflict with your work schedule.
B)   The White House eliminates tours for the public due to budget constraints.
C)   Your cell phone battery is low and you decline a phone call from a friend to conserve energy.
D)   All of these are problems created by scarcity.E) A) and B)
F) B) and D)

Question 8

Trade-offs:

Accepted Answer

A)   are associated with every decision.
B)   do not exist if we receive something for free.
C)   always result in market failure.
D)   can be avoided through economic planning.E) B) and C)
F) B) and D)

Question 9

Which of the following is a topic that would be studied in macroeconomics?

Accepted Answer

A)   Gasoline price changes
B)   Unemployment rates over time
C)   Taxation strategies of major corporations
D)   Consumer participation in FacebookE) B) and C)
F) A) and B)

Question 10

Which of the following is a basic tenant of the economic concept of scarcity?

Accepted Answer

A)   Developing countries will always have a battle to fight hunger.
B)   Resources are often wasted, which results in shortages.
C)   Income must be redistributed through taxation in order to address income disparity.
D)   Limited resources require economies to make choices among production alternatives.E) B) and C)
F) A) and B) D

Question 11

Households are vital to the circular flow model in which two ways?

Accepted Answer

A)   They supply factors of production and purchase goods and services.
B)   They export and import goods and services.
C)   They vote for political officers and pay taxes.
D)   They facilitate exchange between consumers and firms and supply funds.E) All of the above
F) A) and B)

Question 12

If you generate a new idea that has not yet been implemented by others, and the idea offers a more profitable use of some resource, it is likely an example of:

Accepted Answer

A)   innovation.
B)   market failure.
C)   intervention.
D)   a goal other than profit.E) All of the above
F) A) and B)

Question 13

Which of the following statements about an economic model is true?

Accepted Answer

A)   An economic model should include all possible details.
B)   An economic model always accurately predicts cause and effect.
C)   An economic model should make clear assumptions.
D)   An economic model should never use simplifying assumptions.E) All of the above
F) C) and D)

Question 14

The two broad fields that make up the subject of economics are:

Accepted Answer

A)   microeconomics and macroeconomics.
B)   personal investments and business investments.
C)   fiscal policy and monetary policy.
D)   imports and exports.E) A) and B)
F) A) and C)

Question 15

Suppose that a policy maker knows there are currently 1,000 cars purchased each year in the city. In order to build a new park next year, which will cost $500,000, the policy maker decides to impose a tax of $500 on each car purchased. Which of the following scenarios is most likely to occur?

Accepted Answer

A)   The $500 tax will disincentivize car purchases, and fewer than $500,000 will be raised.
B)   The $500 tax will have no effect on car purchases, and the $500,000 will be raised.
C)   Knowing the purpose of the $500 tax, more people will be incentivized to make car purchases, and the park will be funded.
D)   The $500 tax is a sunk cost and thus will be ignored by people making car purchases.E) A) and C)
F) C) and D)

Question 16

A university posts a notice that anyone who registers for classes after the deadline will be charged an additional $30 fee. This is an example of:

Accepted Answer

A)   a trade-off.
B)   a disincentive.
C)   marginal cost.
D)   group responsibility.E) C) and D)
F) A) and B)

Question 17

Scarcity reflects our inability to satisfy wants due to:

Accepted Answer

A)   an unequal distribution of resources.
B)   limited resources.
C)   inefficient political systems.
D)   unemployed workers.E) All of the above
F) B) and D)

Question 18

The additional cost associated with producing or consuming the next unit of a good or service is known as the:

Accepted Answer

A)   variable cost.
B)   marginal cost.
C)   utility cost.
D)   sunk cost.E) A) and D)
F) A) and C)

Question 19

For which reason might you incorrectly conclude that an idea no other person has implemented is highly profitable?

Accepted Answer

A)   You've misjudged people's wants and constraints.
B)   You've miscalculated the trade-offs people face.
C)   You've misunderstood how people will respond to incentives.
D)   All of these might lead you to incorrectly believe an idea is profitable.E) A) and D)
F) A) and B)

Question 20

A local fast-food restaurant mails coupons for a free sandwich to every home in the community. Natasha, who is on a diet, receives one of the coupons. Which of the following is an opportunity cost of redeeming the sandwich coupon for Natasha?

Accepted Answer

A)   Lost wages due to spending time going out to eat rather than eating the Healthy Choice meal she brought to work
B)   The benefit she would receive from sticking to her "get fit for the summer" diet plan
C)   The benefit she would receive from eating a "Blastin' Burger," one of her favorite fast food options
D)   There is no opportunity cost of redeeming the coupon because the sandwich is free.E) A) and C)
F) B) and C)

Exam 1: Economicsand Life

Which actor in the simplified circular flow model is on the supply side of the goods market?

Correct AnswerverifiedA

Which actor in the simplified circular flow model buys or rents land, labor, and capital?

Correct AnswerverifiedShow Answer

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Correct AnswerverifiedB

Muhammad Yunus, founder of Grameen Bank, was a pioneer in implementing group responsibility to lend to the poor. Why wasn't someone else already doing it?

Correct AnswerverifiedShow Answer

Which actor in the simplified circular flow model is on the supply side of the factor market?

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive incentive?

Correct AnswerverifiedShow Answer

Which of the following is a problem created by scarcity?

Correct AnswerverifiedShow Answer

Trade-offs:

Correct AnswerverifiedShow Answer

Which of the following is a topic that would be studied in macroeconomics?

Correct AnswerverifiedShow Answer

Which of the following is a basic tenant of the economic concept of scarcity?

Correct AnswerverifiedD

Households are vital to the circular flow model in which two ways?

Correct AnswerverifiedShow Answer

If you generate a new idea that has not yet been implemented by others, and the idea offers a more profitable use of some resource, it is likely an example of:

Correct AnswerverifiedShow Answer

Which of the following statements about an economic model is true?

Correct AnswerverifiedShow Answer

The two broad fields that make up the subject of economics are:

Correct AnswerverifiedShow Answer

Suppose that a policy maker knows there are currently 1,000 cars purchased each year in the city. In order to build a new park next year, which will cost $500,000, the policy maker decides to impose a tax of $500 on each car purchased. Which of the following scenarios is most likely to occur?

Correct AnswerverifiedShow Answer

A university posts a notice that anyone who registers for classes after the deadline will be charged an additional $30 fee. This is an example of:

Correct AnswerverifiedShow Answer

Scarcity reflects our inability to satisfy wants due to:

Correct AnswerverifiedShow Answer

The additional cost associated with producing or consuming the next unit of a good or service is known as the:

Correct AnswerverifiedShow Answer

For which reason might you incorrectly conclude that an idea no other person has implemented is highly profitable?

Correct AnswerverifiedShow Answer

A local fast-food restaurant mails coupons for a free sandwich to every home in the community. Natasha, who is on a diet, receives one of the coupons. Which of the following is an opportunity cost of redeeming the sandwich coupon for Natasha?

Correct AnswerverifiedShow Answer

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