ECO Quiz 1
• Question 1
1 out of 1 points
A rational decision maker takes an action only if the
Selected Answer: d.
marginal benefit is greater than the marginal cost.
Answers: a.
marginal benefit is greater than both the average cost and the marginal cost.
b.
marginal benefit is less than the marginal cost.
c.
average benefit is greater than the average cost.
d.
marginal benefit is greater than the marginal cost.
• Question 2
1 out of 1 points
After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?
Selected Answer: b.
The marginal cost of going to Ft. Lauderdale decreases.
Answers: a.
The marginal benefit of going to Ft. Lauderdale decreases.
b.
The marginal cost of going to Ft. Lauderdale decreases.
c.
The marginal benefit of going to Cancun increases.
d.
The marginal cost of going to Cancun decreases.
• Question 3
1 out of 1 points
Rational people make decisions at the margin by
Selected Answer: b.
comparing marginal costs and marginal benefits.
Answers: a.
thinking in black-and-white terms.
b.
comparing marginal costs and marginal benefits.
c.
behaving in a random fashion.
d.
following marginal traditions.
• Question 4
1 out of 1 points
A rational decisionmaker takes an action if and only if
Selected Answer: a.
the marginal benefit of the action exceeds the marginal cost of the action.
Answers: a.
the marginal benefit of the action exceeds the marginal cost of the action.
b.
the opportunity cost of the action is zero.
c.
the marginal cost of the action is zero.
d.
the marginal cost of the action exceeds the marginal benefit of the action.
• Question 5
1 out of 1 points
People are likely to respond to a policy change
Selected Answer: a.
if the policy changes either the costs or benefits of their behavior.
Answers: a.
if the policy changes either the costs or benefits of their behavior.
b.
only if the policy change changes the costs of their behavior.
c.
only if they think the policy is a good one.
d.
only if the policy change changes the benefits of their behavior.
• Question 6
1 out of 1 points
Which of the following words and phrases best captures the notion of equality?
Selected Answer: c.
sameness
Answers: a.
maximum benefit
b.
minimum waste
c.
sameness
d.
efficiency
• Question 7
1 out of 1 points
Large or persistent inflation is almost always caused by
Selected Answer: a.
excessive growth in the quantity of money.
Answers: a.
excessive growth in the quantity of money.
b.
excessive government spending.
c.
foreign competition.
d.
higher-than-normal levels of productivity.
• Question 8
1 out of 1 points
Low rates of inflation are generally associated with
Selected Answer: a.
low rates of growth of the quantity of money.
Answers: a.
low rates of growth of the quantity of money.
b.
low rates of government spending.
c.
small or nonexistent government budget deficits.
d.
low rates of productivity growth.
• Question 9
1 out of 1 points
Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is
Selected Answer: d.
worried about inflation.
Answers: a.
hoping to increase the demand for goods and services.
b.
worried that the economy is growing too slowly.
c.
worried about unemployment.
d.
worried about inflation.
• Question 10
1 out of 1 points
Market failure occurs when no individual has the ability to substantially influence market prices.
Selected Answer: False
Answers: True
False
• Question 11
1 out of 1 points
The business cycle refers to fluctuations in economic activity such as employment and production.
Selected Answer: True
Answers: True
False
• Question 12
1 out of 1 points
If wages for accountants rose, then accountants’ leisure time would have a lower opportunity cost.
Selected Answer: False
Answers: True
False
• Question 13
1 out of 1 points
The phenomenon of scarcity stems from the fact that
Selected Answer: a.
resources are limited.
Answers: a.
resources are limited.
b.
governments restrict production of too many goods and services.
c.
in most economies, wealthy people consume disproportionate quantities of goods and services.
d.
most economies’ production methods are not very good.
• Question 14
1 out of 1 points
What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?
Selected Answer: d.
scarcity
Answers: a.
inequality
b.
inefficiency
c.
market failure
d.
scarcity
• Question 15
1 out of 1 points
The word “economy” comes from the Greek word oikonomos, which means
Selected Answer: c.
“one who manages a household.”
Answers: a.
“one who makes decisions.”
b.
“production.”
c.
“one who manages a household.”
d.
“environment.”
• Question 16
1 out of 1 points
Central planning refers to
Selected Answer: c.
government guiding economic activity. Today many countries that had this system have abandoned it.
Answers: a.
markets guiding economic activity. Today many countries that had this system have abandoned it.
b.
government guiding economic activity. Today many countries that did not have this system have implemented it.
c.
government guiding economic activity. Today many countries that had this system have abandoned it.
d.
markets guiding economic activity. Today many countries that did not have this system have implemented it.
• Question 17
1 out of 1 points
The economy of the former Soviet Union is best described as a
Selected Answer: c.
centrally-planned economy.
Answers: a.
hybrid economy.
b.
market economy.
c.
centrally-planned economy.
d.
primitive economy.
• Question 18
1 out of 1 points
Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie’s bread and pastries,
Selected Answer: a.
both Sam and Annie are made better off by trade.
Answers: a.
both Sam and Annie are made better off by trade.
b.
neither Sam nor Annie are made better off by trade.
c.
only Sam is made better off by trade.
d.
only Annie is made better off by trade.
• Question 19
1 out of 1 points
The “invisible hand” refers to
Selected Answer: c.
how the decisions of households and firms lead to desirable market outcomes.
Answers: a.
the control that large firms have over the economy.
b.
how central planners made economic decisions.
c.
how the decisions of households and firms lead to desirable market outcomes.
d.
government regulations without which the economy would be less efficient.
• Question 20
1 out of 1 points
The ability of an individual to own and exercise control over scarce resources is called
Selected Answer: a.
property rights.
Answers: a.
property rights.
b.
market failure.
c.
market power.
d.
externality.
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