Elected government officials seem biased toward favoring
A) the national interest.
B) the global interest.
C) well organized, special interest groups.
D) policies that are in the long-run interest of economists.
Suppose a pickpocket steals your $20 bill and spends all of it on pizza and beer. What
happens to GDP?
A) GDP increases by twenty dollars.
B) GDP decreases by twenty dollars.
C) Because the positive balances out the negative, GDP remains unchanged.
D) GDP decreases because somebody has clearly been made worse off.
The fee schedule capable of contributing the most net revenue to a museum’s budget
depends on
A) the cost of constructing the museum.
B) the cost of heating and lighting the museum.
C) the cost of purchasing and maintaining the museum exhibits.
D) the demand to view the museum’s collection.
E) whether the museum is publicly or privately owned.
The alternative to the use of money by the members of a society is
A) barter.
B) borrowing.
C) division of labor.
D) from each according to ability, to each according to need.
E) payment by check.
What is the great advantage of adjudication over legislation in the management of
negative externalities?
A) Adjudication has lower costs.
B) Adjudication maintains the continuity of expectations.
C) Courts are bound by the rule of law and legislatures are not.
D) Courts can act more quickly than legislatures.
E) There are no clear answers in such cases.
The production possibilities frontier illustrates
A) the maximum amount of inputs used to produce a particular output.
B) the minimum amount of inputs used to produce a particular output.
C) the maximum combination of two goods that can be produced with a given set of
resources.
D) the minimum combination of two goods that can be produced with a given set of
resources.
E) none of the above.
How can you calculate the cost per mile of owning a car?
A) Divide total costs per year of owning the car by the number of miles driven in a year.
B) Divide total costs per year of owning and operating the car by the number of miles
driven in a year.
C) Divide total costs per year of operating the car by the number of miles driven in a
year and add the result to the cost of owning the car.
D) You cannot do so in any defensible way because cars are owned per unit of time
period, not per unit of distance.
According to your textbook, rent controls on apartments
A) produce fair outcomes.
B) create problems of their own.
C) tend to promote efficiency.
D) do both B and C.
E) do none of the above.
Recessions are largely the result of
A) high wages.
B) the wishful thinking of zero economic growth advocates.
C) widespread and systemic errors from manipulated market signals.
D) none of the above.
This year Gus purchased a used 1972 vehicle from Wee-Rob-U Auto Sales. The dealer
paid $500 for it yesterday, and sold it to Gus for $3500. In principle, what happens to
GDP?
A) Nothing, because the vehicle was already accounted for in 1972.
B) Nothing, because Gus was ripped off.
C) It increases by $3000.
D) It increases by $3,500.
E) It increases by $6,500.
Which of the following policies face difficult problems of timing?
A) Fiscal policy
B) Monetary policy
C) Both of the above.
D) None of the above.
If rising costs have compelled an increase in the price of football tickets for next
season, you could safely assume the college athletic director
A) doesn’t know the difference between sunk costs and marginal costs.
B) doesn’t want fans to become angry or resentful about the price increase.
C) isn’t setting prices to maximize net revenue.
D) really has not raised prices.
E) would prefer not to raise prices but has no choice in the matter.
In most economies, resources are allocated by
A) a central planning board.
B) a dictator.
C) the combined and decentralized actions of millions of people.
D) the majority’s will.
According to the economic way of thinking, scarcity implies
A) money.
B) competition.
C) capitalism.
D) chaos.
E) all of the above.
The most widely used medium of exchange in the United States in terms of value of
transactions is
A) checkable deposits.
B) credit cards.
C) currency and coin.
D) Federal Reserve notes.
According to your textbook authors, the growth rates in sub-Saharan Africa (excluding
South Africa) have been plagued
A) exclusively by economic problems.
B) exclusively by political problems.
C) by meteorological and geographical problems.
D) by purchasing power parity problems.
If a professor gives up her job to open a shoe store, which of the following costs would
an accountant tend to ignore?
A) The $1,500 per month lease for the shoe store.
B) The $150 per month electricity bill.
C) The $4,000 per month of income forgone by not being employed as a professor.
D) The $200 business license, which, of course, is a sunk cost.
A core principle of the economic way of thinking assumes social phenomena
A) are less important than economic phenomena.
B) are more important by far than economic phenomena.
C) cannot be influenced by ethical considerations.
D) emerge from individuals’ choices.
It’s not unusual for strangers driving through a small town to find a gas station more
quickly than people driving through a major city center. According to the economic way
of thinking, gas stations in city centers appear few and far between because
A) big cities are just plain confusing to out-of-towners.
B) the real estate space available for gas stations has more valuable alternative uses.
C) the opportunity cost of placing additional gas stations in city centers is too low.
D) the owner of gas stations would rather have people drive further distances and
thereby use more gasoline.
Your textbook uses the “bite, chew, choke” story to explain
A) how restrictive monetary policy leads to a recession.
B) how expansionary monetary policy ultimately leads to a recession.
C) how restrictive fiscal policy leads to a recession.
D) how expansionary fiscal policy ultimately leads to a recession.
Price elasticity of supply is defined as
A) the quantity supplied divided by the quantity demanded.
B) the change in the quantity supplied divided by the change in the quantity demanded.
C) the percentage change in the quantity supplied divided by the percentage change in
price.
D) the percentage change in the quantity supplied divided by the percentage change in
the quantity demanded.
Suppose the market-clearing price of wheat is $2.50 per bushel. At a price above $2.50,
A) supply would equal demand.
B) quantity supplied would equal quantity demanded.
C) quantity supplied would exceed quantity demanded.
D) quantity supplied would be less than quantity demanded.
Suppose the market-clearing price of wheat is $2.50 per bushel. What would happen if
wheat farmers persuaded the government to set a legally-mandated price support of
$3.75 per bushel?
A) The price of wheat products would rise.
B) The demand for wheat would fall.
C) The quantity demanded of wheat would rise.
D) A shortage of wheat would occur.
A movement along a demand curve is most likely to be caused by
A) a change in the population.
B) a change in expectations.
C) a change in income.
D) a change in the price of a good.
Suppose the market-clearing price of guitars is $500, but the prevailing price is
currently $700. Pick the correct statement.
A) There is a shortage of guitars.
B) Guitar sellers would not be able to successfully sell all they planned to sell.
C) Guitar buyers would not be able to successfully buy all they planned to buy.
D) All of the above are true.
E) None of the above is true.
Economic theory is sometimes referred to as marginalism or marginal analysis because
A) it deals with matters not central to most people’s personal lives.
B) it emphasizes the effects of additional benefits and additional costs.
C) it has such a minor effect on political decisions.
D) it is only useful when it is added to a large stock of other knowledge.
E) it was created by abstracting from experience.
Which institution tends to increase specialization in society?
A) Barter
B) Government planning bureaus
C) Money
D) Price regulation
Fill in the blanks: People pursue ________ projects in the market and ________
projects in government.
A) their own; their own
B) their own; others’
C) private; public
D) individualistic; socialistic
The authors of your text suggest which policy as a way of reducing urban traffic
congestion?
A) A federal standard raising the minimum age for a driver’s license to 21 years old
B) Requiring motorists to pay a toll or fee based on the costs their driving imposes on
others
C) Increasing gasoline taxes
D) Requiring people to drive in car pools
According to Adam Smith, a well-governed society’s wealth is positively related to
A) the division of demand.
B) the division of labor.
C) the degree to which society can eliminate scarcity.
D) the degree to which society can encourage and promote greed.
Let’s assume producers in Canada can make 200 units of beef or 50 units of oranges,
and U.S. producers can make 50 units of beef or 200 units of oranges per time period.
Pick the true statement:
A) The U.S. has a comparative advantage in orange production because it can produce
more than Canada.
B) Canada has a comparative advantage in beef production because it can produce more
than the U.S.
C) Both of the above are true.
D) None of the above is true.