Question 1

For society, a good is not scarce if:

Accepted Answer

A)   all members of society can have all they want of it
B)   at least one individual in society can obtain all he or she wants of the good
C)   firms are producing at full capacity
D)   those who have enough income can buy all they want of the goodE) A) and B)
F) None of the above

Question 2

In Australia, it would be possible to justify a higher income tax on the rich by potential gains in:

Accepted Answer

A)   efficiency
B)   equity
C)   market power
D)   business ethicsE) C) and D)
F) A) and D)

Question 3

Which of the following is NOT included in the decisions that every society must make?

Accepted Answer

A)   what goods will be produced
B)   what determines consumer preferences
C)   who will produce goods
D)   who will consume the goodsE) B) and C)
F) A) and B)

Question 4

When a society cannot produce all the resources that people wish to have, it is called:

Accepted Answer

A)   a trade-off
B)   a market
C)   efficiency
D)   scarcityE) C) and D)
F) None of the above

Question 5

The main motivation behind the 'invisible hand' is:

Accepted Answer

A)   the threat of government intervention
B)   business ethics
C)   self-interest
D)   the legal systemE) C) and D)
F) A) and B)

Question 6

Trade between Australia and New Zealand:

Accepted Answer

A)   is a losing proposition for New Zealand because Australian workers are more productive
B)   is a losing proposition for Australia because New Zealand has cheaper labour
C)   is like a sports contest - one side wins and the other side loses
D)   benefits both Australia and New ZealandE) A) and C)
F) B) and C)

Question 7

A situation in which a market left on its own fails to allocate resources efficiently is known as:

Accepted Answer

A)   scarcity
B)   opportunity cost
C)   market failure
D)   market powerE) B) and D)
F) A) and C)

Question 8

The opportunity cost of going to university is:

Accepted Answer

A)   the total spent on food, clothing, books, transportation, tuition, lodging and other expenses
B)   zero for students who to have all of their university expenses paid by someone else
C)   the value of the best opportunity a student gives up to attend university
D)   zero, as a university education allows a student to earn more after graduationE) B) and D)
F) All of the above

Question 9

Market power refers to the:

Accepted Answer

A)   relative importance of a market to the overall economy
B)   ability of a person or group of people to successfully market new products
C)   power of the government to regulate a market
D)   power of a small group of people to influence pricesE) None of the above
F) All of the above

Question 10

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 11

Tim decides to spend an hour looking at cat videos on YouTube instead of going to the gym. The opportunity cost of him looking at cat videos is:

Accepted Answer

A)   the improvement in his knowledge of the best cat videos on the internet
B)   the fitness and fun he would have had at the gym
C)   the money he would have spent on gym class
D)   zero, since Tim chose to watch cat videos, which reflects his preferencesE) All of the above
F) B) and C)

Question 12

Jack must decide whether to go skiing or work on the weekend. He decides to go skiing, which costs him $500. His opportunity cost of going skiing is:

Accepted Answer

A)   the number of hours needed to earn money to pay for the ski trip
B)   what else he could have done with his time if he was neither skiing nor working
C)   the danger that he will get injured while skiing
D)   how much he could have earned if he worked insteadE) None of the above
F) All of the above

Question 13

According to Peltzman, one effect of a government-imposed seatbelt law has been:

Accepted Answer

A)   fewer pedestrian deaths
B)   safer driving
C)   an increase in the number of accidents
D)   that everyone now wears seatbeltsE) B) and D)
F) A) and B)

Question 14

Scarcity means that society has less to offer than people wish to have.

Accepted Answer

A) True 
 B)False

Question 15

If Australian workers are more productive than New Zealand workers, one would expect:

Accepted Answer

A)   the two countries to trade with each other
B)   Australia to have higher wages than New Zealand
C)   Australia to have more trade barriers than New Zealand
D)   Australia to provide aid to New ZealandE) A) and D)
F) A) and C)

Question 16

What is the general rule for rational decision making?

Accepted Answer

An action is taken o...

Question 17

There has been some discussion about changes to unemployment benefits that will result in recently graduated students not receiving payments until six months after they finish their studies. How might the changes affect people's decision-making on finishing university?

Accepted Answer

Changes in the unemployment benefits sys...

Question 18

An example of an externality is:

Accepted Answer

A)   a drought reducing wheat production in Australia
B)   an increase in the price of bread after a sales tax is imposed
C)   a new road that increases noise levels in adjacent houses
D)   a firm that loses market share after a new firm enters the marketE) A) and C)
F) All of the above

Question 19

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)   In the long run, the value of money falls and productivity increases
B)   In the short run, reducing inflation is associated with rising prices
C)   In the long run, the Phillips curve does not describe the relationship between inflation and unemployment
D)   In the long run, the Phillips curve does describe the relationship between inflation and unemploymentE) A) and B)
F) A) and C)

Question 20

Public policies to reduce emissions from cars do not affect the private costs and benefits of driving cars.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

What is the general rule for rational decision making?

Correct AnswerverifiedAn action is taken o...View AnswerShow Answer

For society, a good is not scarce if:

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An example of an externality is:

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There has been some discussion about changes to unemployment benefits that will result in recently graduated students not receiving payments until six months after they finish their studies. How might the changes affect people's decision-making on finishing university?

Correct AnswerverifiedChanges in the unemployment benefits sys...View AnswerShow Answer

The main motivation behind the 'invisible hand' is:

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Scarcity means that society has less to offer than people wish to have.

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Jack must decide whether to go skiing or work on the weekend. He decides to go skiing, which costs him $500. His opportunity cost of going skiing is:

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Trade between Australia and New Zealand:

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If Australian workers are more productive than New Zealand workers, one would expect:

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The opportunity cost of going to university is:

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When a society cannot produce all the resources that people wish to have, it is called:

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Tim decides to spend an hour looking at cat videos on YouTube instead of going to the gym. The opportunity cost of him looking at cat videos is:

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Which of the following is NOT included in the decisions that every society must make?

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Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct AnswerverifiedShow Answer

In Australia, it would be possible to justify a higher income tax on the rich by potential gains in:

Correct AnswerverifiedShow Answer

According to Peltzman, one effect of a government-imposed seatbelt law has been:

Correct AnswerverifiedShow Answer

Market power refers to the:

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Public policies to reduce emissions from cars do not affect the private costs and benefits of driving cars.

Correct AnswerverifiedShow Answer

A situation in which a market left on its own fails to allocate resources efficiently is known as:

Correct AnswerverifiedShow Answer

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

Correct AnswerverifiedShow Answer

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An action is taken o...
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Changes in the unemployment benefits sys...
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