exam-1-studyguide.pdf

Name: ________________________ Class: ___________________ Date: __________ ID: A1Exam 1 Study GuideMultiple Choice Identify the choice that best completes the statement or answers the question.____ 1. Which of the following questions is not answered by the decisions that every society must make? a.What determines consumer preferences? b.What goods will be produced? c.Who will produce the goods? d.Who will consume the goods? ____ 2. Economics is the study of a.how society manages its scarce resources. b.the government's role in society. c.how a market system functions. d.how to increase production. ____ 3. When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included? a.Your full room-and-board expenses should always be included. b.None of your room-and-board expenses should ever be included. c.You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. d.You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. ____ 4. The opportunity cost of an item is a.the number of hours needed to earn money to buy the item. b.what you give up to get that item. c.usually less than the dollar value of the item. d.the dollar value of the item. ____ 5. A donut shop sells fresh baked donuts from 5 a.m. until 3 p.m. every day. The shop does not sell day-old donuts, so all unsold donuts are thrown away at 3 p.m. each day. The cost of making and selling a dozen donuts is $1.50; there are no costs associated with throwing donuts away. If the manager has 10 dozen donuts left at 2:30 p.m. on a particular day, which of the following alternatives is most attractive? a.Lower the price of the remaining donuts, even if the price falls below $1.50 per dozen. b.Lower the price of the remaining donuts, but under no circumstances should the price fall below $1.50 per dozen. c.Throw the donuts away and produce 10 fewer dozen donuts tomorrow. d.Starting tomorrow, lower the price on all donuts so they will all be sold earlier in the day. ____ 6. Evidence indicates that seat belt laws have led to a.fewer pedestrian deaths. b.fewer automobile accidents. c.fewer deaths per automobile accident. d.All of the above are correct.Name: ________________________ ID: A2____ 7. Which of the following statements about trade is false? a.Trade increases competition. b.With trade, one country wins and one country loses. c.Bulgaria can benefit, potentially, from trade with any other country. d.Trade allows people to buy a greater variety of goods and services at lower cost. ____ 8. Senator Smart, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Smart should argue that trade can be beneficial a.only if it allows us to obtain things that we couldn't make for ourselves. b.because it allows specialization, which increases total output. c.to us if we can gain and the others involved in the trade lose. d.in only a limited number of circumstances because others are typically self-interested. ____ 9. The decisions of firms and households are guided by prices and self-interest in a mand economy. b.centrally-planned economy. c.market economy. d.All of the above are correct. ____ 10. The term “invisible hand“ was coined by a.Adam Smith. b.David Ricardo. c.Karl Marx. d.Benjamin Franklin. ____ 11. The “invisible hand“ directs economic activity through a.advertising. b.prices. c.central planning. d.government regulations. ____ 12. Market economies are distinguished from other types of economies largely on the basis of a.the political affiliations of government officials. b.the process by which government officials are elected or appointed. c.the ways in which scarce resources are allocated. d.the number of retail outlets available to consumers. ____ 13. Which of these activities will most likely result in an external benefit? a.A college student buys a deck of cards to play solitaire in her dorm room. b.An elderly woman plants a flower garden on the vacant lot next to her house. c.An executive purchases a book to read on a business trip. d.A ten-year-old uses his allowance to buy new Nike shoes. ____ 14. The fact that different countries experience different standards of living is largely explained by differences in those countries' a.populations. b.productivity levels. c.locations. d.none of the above; economists are puzzled by differences in standards of living around the world.Name: ________________________ ID: A3____ 15. Inflation is defined as a.a period of rising productivity in the economy. b.a period of rising income in the economy. c.an increase in the overall level of output in the economy. d.an increase in the overall level of prices in the economy. ____ 16. Low rates of inflation are generally associated with a.low rates of government spending. b.small o。