第一章
1. Beth’s friends want to take her to a movie or a play for her birthday. Beth chooses to attend the play. We know that:
a. Beth has made an irrational decision.
b. not seeing the movie is Beth’s opportunity cost of attending the play.
c. Beth did not make a decision at the margin.
d. seeing the play did not cost Beth anything since she did not have to pay for the ticket.
2. A market economy relies on
a. decentralized choices coordinated by Adam Smith’s “invisible hand.”
b. centralized choices coordin ated by Adam Smith’s “invisible hand.”
c. decentralized choices coordinated by the “visible hand” of authority.
d. centralized choices coordinated by the “visible hand” of authority.
3. Which of the following is an example of market power?
a. Elaine engages in less research than she would if the government were to subsidize her research activities.
b. Mark’s company charges a higher price for its product because government regulations force the company to clean-up its emissions into a local waterway.
c. Because of the high cost of gasoline, Jennifer buys a smaller, more fuel-efficient car.
d. The town’s only cable company charges a higher price than it would if it faced competition from other firms.
4. Government regulation of the economy may be beneficial if:
a. externalities exist.
b. there is too much competition.
c. there is no market power.
d. special interest groups act to influence government policy.
5. Which of the following variables is the key ingredient in improving the standard of living of the average citizen?
a. low inflation
b. low unemployment rates
c. productivity increases
d. population growth
6. Externalities occur when
a. one person’s actions affect the well-being of a bystander.
b. the government imposes taxes.
c. increases in the price of oil cause gasoline prices to rise.
d. higher wages result in increased spending.
7. Which of the following are NOT examples of market failure?
a. There is only one firm that employs all the workers of Smalltown.
b. BUU is the sole provider of long-distance for the United States.
c. As a result of its production processes, REA Corporation emits two tons of air pollutants daily.
d. None of the abov
e.
8. Government intervention in the marketplace
a. always benefits society.
b. always harms society.
c. may either benefit or harm society depending on the type and extent of government intervention.
d. is rarely influenced by political considerations.
9. Trade between two countries
a. makes both countries better off.
b. can benefit one country but not both.
c. causes one country to gain and the other country to lose.
d. is a zero-sum gam
e.
10. Inflation refers to
a. a continuing decrease in the overall level of prices in the economy.
b. an increase in the overall level of prices in the economy.
c. a persistent increase in the amount of goods which can be purchased with a given amount of money.
d. an increase in some individual prices in the economy.
11. In most cases, high or persistent inflation is caused by:
a. too rapid growth in the quantity of money.
b. a reduction in the quantity of money.
c. an increase in unemployment.
d. an increase in productivity.
12. To say that people make decisions at the margin means that they
a. wait until the last minute before making a decision.
b. weigh the additional costs and additional benefits of small changes.
c. make decisions that determine whether or not they will live their lives on the edge of subsistence.
d. make decisions on issues that are relatively unimportant for their economic well-being.
13. According to the Phillips curve,
a. there is no tradeoff between inflation and unemployment.
b. if inflation increases, so does unemployment.
c. increases in unemployment are associated with a rise in prices.
d. there is a short-run tradeoff between inflation and unemployment.
