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HW for Chapter 1: Twelve Principles of Economics

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Vy Nguyen (username: w1410207) To Submissions

Attempt 2
Written: Jan 29, 2013 10:56 PM - Jan 29, 2013 11:01 PM

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Your quiz has been submitted successfully. Question 1 Economics is the study of how to be economic in our living. how society manages its unlimited resources. how society manages its scarce resources. how to make money in the stock market. how to increase our abundant resources. View Feedback Question 2 The adage, "There is no free lunch," means: 1 / 1 point 1 / 1 point

To get something, we usually have to give up another thing. Lunch is always costly. The cost of living is always increasing. All costs are measured in dollars. View Feedback Question 3 1 / 1 point

When society requires firms to reduce pollution, There is no tradeoff, since everyone benefits from reduced pollution. There is no tradeoff, since the firms pass the cost of reducing pollution to consumers. There is a tradeoff only if some firms are forced to close. There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers. View Feedback 1 / 1 point Question 4 In economics, the true cost of something is its sale price. what you give up to get it (opportunity cost). its monetary value to you. its sentimental value to you. View Feedback 1 / 1 point Question 5 The opportunity cost of going to college is equal to: cost of tuition, books, transportation, food, room and board, and related costs. zero for students who have all their college expenses paid by someone else. zero since a college education will allow a student to earn a higher income after graduation. the value of the best opportunity a student must give up in order to attend college. View Feedback Question 6 People make decisions at the margin by: following tradition. comparing marginal costs and marginal benefits (utility). experience. following parental advices. View Feedback Question 7 Trades between the U.S. and Mexico: 1 / 1 point 1 / 1 point

hurts Mexico because U.S. workers are more productive.

hurts the U.S. because Mexico has cheaper labor. hurts both countries in the long run. benefits both countries in the long run. View Feedback 1 / 1 point Question 8 In a market economy, economic activities are guided by: the government. price signals. central planners. corporations. View Feedback 1 / 1 point Question 9 Which of the following statements is true about a market economy? The Council of Economic Advisers regulates and controls all economic activities. The market economy makes sure that all market participants receive equal shares. The market economy makes sure that all citizens are well fed and happy. Market participants act as if guided by an 'invisible hand' to produce outcomes that maximize social welfare. View Feedback 1 / 1 point Question 10 Governments can sometimes improve market outcomes because The market economy can never allocate resources efficiently. A governmental central economic planning agency can always manage scarce resources better than the market. Politicians are better qualified to manage the economy. There are situations in which the market by itself, fails to allocate resources efficiently. This situation is often referred to as market failure. View Feedback 1 / 1 point Question 11 Which of the following factors are possible causes of market failure? There exists an externality such as pollution or education. A single person holds large market power.

In addition to efficiency, the society is trying to meet other goals such as fairness, equity, national security, etc. All of the above. View Feedback 1 / 1 point Question 12 The rising living standards in the U.S. in the last 100 years can be best attributed to: the influence of labor unions. the protection of domestic industry against foreign competition. minimum-wage laws. the rise in labor productivity. View Feedback Question 13 To increase living standards, public policy should: 1 / 1 point

encourage all high school graduates to go to work right away. raise unemployment benefits. ensure that workers are well educated and have the necessary tools and technology. protect domestic industry against foreign competition. View Feedback Question 14 Inflation causes: the value of money to fall. the value of money to rise. productivity to increase. the government to lower taxes. View Feedback 1 / 1 point Question 15 During the 1929-33 depression, the U.S. economy went from full employment to 25% unemployment. What do you assume happened to prices? Prices were unaffected. Prices fell and the economy experienced deflation. Prices rose and the economy experienced inflation. Inflation also rose to 25%. 1 / 1 point

View Feedback 1 / 1 point Question 16 In the old days, corporations often released toxic chemicals into the environment, causing serious pollution problems. This is an example of: good or positive externality. bad or negative externality. the appeal of the free market system. the appeal of the central planning system. View Feedback 1 / 1 point Question 17 The city decides to turn the empty lot near your house into a quiet and beautiful park. As a result, you are likely to get: good or positive externality. bad or negative externality. lower standard of living. lower marginal cost of living. View Feedback 1 / 1 point Question 18 The two best reasons for a government to intervene in the market are to raise revenue and to promote stability. to protect capitalists and to protect the ruling class. government officials are capable and fair to promote efficiency and to promote equity. View Feedback 1 / 1 point Question 19 If education produces external benefits for society, the government should subsidize public education. provide free basic education to all citizens. provide tax incentives for education. all of the above. View Feedback 1 / 1 point Question 20 In the book The Wealth of Nations, Adam Smith made the following famous observation

there is no free lunch. demand increases as price decreases. demand increases as income increases. Households and firms interacting in the markets are guided by an "invisible hand" that lead them to desirable market outcomes. View Feedback 1 / 1 point Question 21 Many policymakers thought that competition and profit incentive would make private contractors cheaper and more efficient in performing certain war's functions. In the requiredreading article, "Outsourcing the Fight", P. W. Singer wrote that the use of private contractors in the current Iraq war shows that: private contractors have been clearly cheaper than the military. private contractors have been clearly more efficient than the military. private contractors have been generally as cheap and efficient as the military. private contractors may not be cheaper than the military. Private contractors may bill the military for bogus services. For example, "the Defense Contract Audit Agency has identified more than $10 billion in unsupported or questionable costs from battlefield contractors." View Feedback 1 / 1 point Question 22 Mr. Singer also wrote that: contract costs tend to be low due to intense competition from private contractors. many contracts cost the military nothing. Most private contractors are patriotic. They are willing to provide their services to the military for free. contract costs tend to be high due to lack of true competition from a few private contractors. most private contractors are unwilling to provide services in war zones, regardless of offered price. View Feedback 1 / 1 point Question 23 Mr. Singer thought that the use of private contractors in the current Iraq war: was a great success. was a total catastrophic failure. "the military (with a push from Congress) needs to reevaluate what is appropriate to outsource and what is not."

made no difference to the impact of the Iraq war. View Feedback Question 24 1 / 1 point

A student faces the choice of either working full time for a salary of $30,000/year, or goes to college full time with cost of tuition, books, and miscellaneous college expenses of $20,000/year. If he goes to college, his accounting (out-of-pocket cost) plus opportunity cost would be: The cost of tuition, books, and miscellaneous expenses of $20,000/year. $30,000/year due to missed opportunity to work. . 4. $30,000 - $20,000 = $10,000. $50,000/year ($30,000/year due to missed opportunity to work plus cost of tuition, books, and miscellaneous college expenses of $20,000/year.) View Feedback 1 / 1 point Question 25 Productivity is defined as the amount of goods and services that a nation produces in a year. the amount of goods and services that a machine can produce in a year. the amount of goods and services that a worker produces in an hour. the wage that a worker makes in an hour. View Feedback 1 / 1 point Question 26 When the government borrows to finance its budget deficit, investment in both physical capital (factory and structures) and human capital (education) are reduced, and future productivity growth is also reduced. investment in both physical capital (factory and structures) and human capital (education) are not affected. investment in both physical capital (factory and structures) and human capital (education) are increased, and future productivity growth is also increased. investment in both physical capital (factory and structures) and human capital (education) are decreased, but future productivity growth is increased. View Feedback 1 / 1 point Question 27 A friend asks you to go to a movie this weekend. Going to the movie costs you $15 ($8 for ticket, $3 for popcorn, and $4 for gas). Instead of going to the movie, you can either (1) wash your friend's car for $5, or (2) mow your friend's lawn for $40. The opportunity cost of going to the movie is

$15. $5. $40. $15 + $5 + $40 = $60. View Feedback 1 / 1 point Question 28 You sell hamburgers to help your school. The total cost (including permit and supplies) of selling the first hamburger is $26; the second, $28; the third, $29. What is the marginal cost (the increase in total cost) of the third hamburger? $26. $28. $29. $1. View Feedback 1 / 1 point Question 29 Because of the short-run tradeoff between inflation and unemployment, monetary and fiscal policies aimed at reducing unemployment tend to: reduce inflation. have no impact on inflation. increase inflation. have no impact on unemployment. View Feedback 1 / 1 point Question 30 If the out-of-pocket cost (accounting cost) of attending college is $20,000/year, the true economic cost (opportunity cost) of attending college is less than $20,000/year, opportunity cost is always less than accounting cost. equal $20,000/year, opportunity cost is always equal to accounting cost. equal or more than $20,000/year, opportunity cost is always equal or more than accounting cost. unknown. Opportunity cost can be more or less than accounting cost. View Feedback 1 / 1 point Question 31 Society often faces trade-offs between efficiency and equity. Efficiency here refers to

the property of society producing good and services from its scarce resources. the property of society distributing good and services among its members. the property of society educating its members. the property of society electing public officials. View Feedback Question 32 Equity refers to: 1 / 1 point

the property of society producing good and services from its scarce resources. the property of society distributing good and services among its members. the property of society producing energy. the property of society electing its public officials. View Feedback 1 / 1 point Question 33 One important role of the government in a market economy is to enforce property right. to tell firms how much to produce. to tell firms how much to charge for their products. to provide income to consumers so that they can purchase goods and services. View Feedback 33 (100.00 / %) 33 33 (100.00 / %) 33

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