Question 1

The opportunity cost of something refers to the price you pay to get it.

Accepted Answer

A) True 
 B)False

Question 2

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations.Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy.Explain.

Accepted Answer

Because households and firms look at pri...

Question 3

The word 'economy' comes from the Greek word for 'one who manages the government'.

Accepted Answer

A) True 
 B)False

Question 4

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The government is considering investing in two policies aimed at increasing the productivity of the healthcare system.The first policy reduces the cost of doing a medical degree.The second invests in a new IT system for managing patient records.What is the government trying to achieve with each policy? What incentives is it creating?

Accepted Answer

The first policy is aimed at increasing ...

Question 7

Australian government policies announcing when changes to child benefits would occur had no effect on the decision around timing of some Australian families to have babies.

Accepted Answer

A) True 
 B)False

Question 8

While the 'invisible hand' cannot guarantee efficiency, it is better at guaranteeing equity.

Accepted Answer

A) True 
 B)False

Question 9

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 10

An electronics store usually sells televisions for $1000 but business has been slow and it needs to sell them before the new model comes out.The shop buys the televisions in bulk for $550 each.The manager estimates they can only sell the old televisions for $375 each.What should the store do?

Accepted Answer

A)  Never sell anything for less than they paid for it
B)  Cut their losses and sell them for $375
C)  Sell the televisions back to the bulk seller
D)  Give the televisions to their employees as a bonusE) B) and D)
F) B) and C)

Question 11

To increase living standards, the most appropriate public policy measure is to:

Accepted Answer

A)  accelerate the conversion of natural forests to farmland
B)  make unemployment benefits more generous
C)  encourage workers to become more educated and have the necessary tools and technology
D)  require all workers to belong to unions and set high minimum wagesE) A) and B)
F) A) and D)

Question 12

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

Accepted Answer

When the money supply is reduced, lower ...

Question 13

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) None of the above
F) All of the above

Question 14

Coordination of economic activity in a market economy is achieved by:

Accepted Answer

A)  government regulations
B)  banks and other financial intermediaries
C)  planning agencies within government
D)  pricesE) B) and C)
F) A) and D)

Question 15

Inflation in an economy is primarily caused by profiteering by greedy firms.

Accepted Answer

A) True 
 B)False

Question 16

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) A) and B)
F) B) and D)

Question 17

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 are fortunate enough 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, since a university education will allow a student to earn a higher income after graduationE) A) and C)
F) A) and B)

Question 18

When the government prevents prices from adjusting naturally to supply and demand:

Accepted Answer

A)  it stabilises the economy
B)  it adversely affects the allocation of resources
C)  the improvement in equity justifies the reduction in efficiency
D)  the reduced uncertainty associated with fixed prices is worth more than the cost in lower efficiencyE) A) and D)
F) B) and D)

Question 19

When government policies are being designed:

Accepted Answer

A)  equity and efficiency goals are usually independent of each other
B)  there is usually a trade-off between equity and efficiency
C)  equity can usually be achieved without an efficiency loss
D)  increasing efficiency usually results in more equityE) C) and D)
F) B) and C)

Question 20

Equity means that everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Lessons From Economics

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct Answer
verified

An electronics store usually sells televisions for $1000 but business has been slow and it needs to sell them before the new model comes out.The shop buys the televisions in bulk for $550 each.The manager estimates they can only sell the old televisions for $375 each.What should the store do?

Correct Answer
verified

Equity means that everyone in the economy should receive an equal share of the goods and services produced.

Correct Answer
verified

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:

Correct Answer
verified

The word 'economy' comes from the Greek word for 'one who manages the government'.

Correct Answer
verified

When government policies are being designed:

Correct Answer
verified

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

Correct Answer
verified
When the money supply is reduced, lower ...
View Answer

Inflation in an economy is primarily caused by profiteering by greedy firms.

Correct Answer
verified

For society, a good is not scarce if:

Correct Answer
verified

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations.Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy.Explain.

Correct Answer
verified
Because households and firms look at pri...
View Answer

When the government prevents prices from adjusting naturally to supply and demand:

Correct Answer
verified

The opportunity cost of something refers to the price you pay to get it.

Correct Answer
verified

Correct Answer
verified
The first policy is aimed at increasing ...
View Answer

To increase living standards, the most appropriate public policy measure is to:

Correct Answer
verified

Australian government policies announcing when changes to child benefits would occur had no effect on the decision around timing of some Australian families to have babies.

Correct Answer
verified

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

Correct Answer
verified

Coordination of economic activity in a market economy is achieved by:

Correct Answer
verified

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

Correct Answer
verified

The opportunity cost of going to university is:

Correct Answer
verified

While the 'invisible hand' cannot guarantee efficiency, it is better at guaranteeing equity.

Correct Answer
verified

Exam 1: Ten Lessons From Economics

With careful planning, we can usually get something that we like without having to give up something else that we like.

Correct AnswerverifiedShow Answer

An electronics store usually sells televisions for $1000 but business has been slow and it needs to sell them before the new model comes out.The shop buys the televisions in bulk for $550 each.The manager estimates they can only sell the old televisions for $375 each.What should the store do?

Correct AnswerverifiedShow Answer

Equity means that everyone in the economy should receive an equal share of the goods and services produced.

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

The word 'economy' comes from the Greek word for 'one who manages the government'.

Correct AnswerverifiedShow Answer

When government policies are being designed:

Correct AnswerverifiedShow Answer

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

Correct AnswerverifiedWhen the money supply is reduced, lower ...View AnswerShow Answer

Inflation in an economy is primarily caused by profiteering by greedy firms.

Correct AnswerverifiedShow Answer

For society, a good is not scarce if:

Correct AnswerverifiedShow Answer

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations.Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy.Explain.

Correct AnswerverifiedBecause households and firms look at pri...View AnswerShow Answer

When the government prevents prices from adjusting naturally to supply and demand:

Correct AnswerverifiedShow Answer

The opportunity cost of something refers to the price you pay to get it.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe first policy is aimed at increasing ...View AnswerShow Answer

To increase living standards, the most appropriate public policy measure is to:

Correct AnswerverifiedShow Answer

Australian government policies announcing when changes to child benefits would occur had no effect on the decision around timing of some Australian families to have babies.

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

Coordination of economic activity in a market economy is achieved by:

Correct AnswerverifiedShow Answer

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

Correct AnswerverifiedShow Answer

The opportunity cost of going to university is:

Correct AnswerverifiedShow Answer

While the 'invisible hand' cannot guarantee efficiency, it is better at guaranteeing equity.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When the money supply is reduced, lower ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Because households and firms look at pri...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The first policy is aimed at increasing ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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