Test 1

Question 1

The Principle that says that our choices demonstrate our values is

Answer 1

Revealed Preference

Question 2

Wyn is considering driving to a fast food place for an order of jalapino poppers. Which is true?

Answer 2

The cost of the first order of jalapino poppers must be greater than the cost of a second order.

Question 3

Simone buys Kat’s lunch. This is?

Answer 3

None of the Above.

Question 4

Gregor says that an all you can eat pizza place, he stops eating when he feels that eating any more would embarrass him. This means that Gregor

Answer 4

Faces costs that are not monetary in nature.

Question 5

One reason the supply curve slopes upward is?

Answer 5

The law of Diminishing Returns

Question 6

If the government pays some of producers’ costs, leading them to produce more than they would in the market, then….?

Answer 6

The value of some units produced is less than the cost.

Question 7

If a person breaks her own window and pays to get it replaced..?

Answer 7

Her wealth decreases.

Question 8

Efficient study dictates that?

Answer 8

The marginal value of studying is equal to the marginal cost.

Question 9

People’s implicit statistical value of their own lives is measured by?

Answer 9

Their willingness to accept higher pay to do more dangerous jobs.

Question 10

The consumer’s gain from purchasing a good plus the producer’s gain from producing a good is equal to?

Answer 10

(The Total Value {minus} the Total Cost of the good)

Question 11

Which is not a function of market price?

Answer 11

Distribute products evenly between consumers.

Question 12

If the state wants to manage the Economy as well as individuals do, through markets, it must posses at least as much knowledge as every individual in the Economy. This is known as?

Answer 12

The Calculation Problem.

Question 13

The direct costs of Regulation include?

Answer 13

(A&B) - a) Business employees and programs for reporting, planning and administration of complying with the regulations.
b) Government Employees to monitor and enforce the Law.

Question 14

Without CAFE standards, cars?

Answer 14

• would be less safe
• would be more expensive
• would provide less value to consumers
• all of the above
• None of the Above

Question 15

A job will be (destroyed) by the free market only if?

Answer 15

The cost of the resources used to produce the good in question is greater than the value of the good.

Question 16

Regulatory capture occurs when?

Answer 16

Regulators work on the side of the firm, instead of monitoring and enforcing the law.

Question 17

In 2009, expensive testing for the metal, lead, in toys?

Answer 17

Was welcomed by large toy manufacturers.

Question 18

Which is an example of Status Quo minus fallacy?

Answer 18

Since the state provides housing for 1.2 million people, if there were no government housing, there would 1.2 million more homeless people.

Question 19

When we say that people are “Rationally Ignorant” regarding voting we mean?

Answer 19

Since 1 vote will not likely change the elections results, the value of voting does not justify expending effort to intelligently vote.

Question 20

The fact that the government passed laws requiring ethanol to be put in gasoline is evidence that putting ethanol in gasoline…?

Answer 20

Decreases Social Gain

Question 21

Which is not a resource?

Answer 21

Money

Question 22

According to Bastiat, in the manufacture of a coat…?

Answer 22

Everyone in the production process is a middleman.

Question 23

Bastiat says:

Answer 23

We know that the best method for transporting grain involves hiring others to do so, since this is the method people usually choose when they are free.

Question 24

Milton Friedman was once told that workers in an undeveloped country used shovels, instead of bulldozers in order to create more jobs. He recommended that they…?

Answer 24

Use spoons instead.

Question 25

The production possibilities frontier model does (NOT) assume…?

Answer 25

People can only consume a certain amount of goods.

Question 26

The Law Of Increasing Opportunity Costs comes from..?

Answer 26

(C&D): c) The Principle Of Optimal Arrangement & d) The fact that Resources are not identical.

Question 27

The best point to Consume on the Production Possibilities Frontier is…?

Answer 27

• on the horizontal axis
• on the vertical axis
• half way down the PPF
• (None of the Above)

Question 28

It is possible…?

Answer 28

For an economy to have too much Health care.

Question 29

Human Capital is…?

Answer 29

Training and Education

Question 30

If a completed trade was based on tastes…?

Answer 30

(Value) was created.

Question 31

The cost of the 4th fish is…?

Answer 31

7 coconuts.

Question 32

Which pair can not find any good trades?

Answer 32

Donna & Hugh

Question 33

If workers in the US and Canada have the productivities listed above, then to be as well off as possible…?

Answer 33

Canada should specialize in lumber and the US should specialize in oil.

Question 34

Transactions Costs are…?

Answer 34

Resources used to find and complete exchanges.

Question 35

Bastiat buys wine in Bordeaux for $50,000, ships it to Liverpool and sells for $70,000. Then he uses the $70,000 to purchase coal in Liverpool and sells it in Bordeaux for $90,000. Which is true?

Answer 35

Bastiat says France’s gain is $40,000

Question 36

If people want more US goods, we expect the dollar to…?

Answer 36

Appreciate and exporting to become harder

Question 37

Central banks sometimes try to boost…?

Answer 37

Exports by raising the supply of dollars.

Question 38

To counter Mr. Protectionists argument, Bastiat says…?

Answer 38

Money spent on foreign iron returns to the home country and money saved on foreign iron is spent in the home country.

Question 39

When we restrict imports with a quota, the group who loses the most are…?

Answer 39

Consumers

Question 40

The point of Petition of the Candlemakers is…?

Answer 40

To turn our back on trade is to turn our back on the enlightenment of reason.