Quiz #1 - Full [Only 10 questions per variant]

Question 1

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Accepted Answer

false

Answer

true

Question 2

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Accepted Answer

true

Question 3

Adam Smith's “invisible hand” concept describes how corporate business reaches into the pockets of consumers like an “invisible hand.”

Accepted Answer

false

Answer

true

Question 4

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Accepted Answer

true

Question 5

The European Union will benefit economically if we eliminate trade with Asian countries because its citizens will be forced to produce more of their own cars and clothes.

Accepted Answer

false

Answer

true

Question 6

When a jet flies overhead, the noise it generates is an externality.

Accepted Answer

true

Question 7

A tax on alcoholic drinks raises the price of alcoholic drinks and provides an incentive for consumers to drink more.

Accepted Answer

false

Answer

true

Question 8

An unintended consequence of public support for higher education is that low tuition provides an incentive for many people to attend state universities even if they have no desire to learn anything.

Accepted Answer

true

Question 9

Sue is better at cleaning and Bob is better at cooking. It will take fewer hours to eat and clean if Bob specializes in cooking and Sue specializes in cleaning than if they share the household duties evenly.

Accepted Answer

true

Question 10

High and persistent inflation is caused by excessive growth in the quantity of money in the economy.

Accepted Answer

true

Question 11

Economic models must mirror reality or they are of no value.

Accepted Answer

false

Answer

true

Question 12

Assumptions make the world easier to understand because they simplify reality and focus our attention.

Accepted Answer

true

Question 13

It is reasonable to assume that the world is composed of only one person when modelling international trade.

Accepted Answer

false

Answer

true

Question 14

When people act as scientists, they must try to be objective.

Accepted Answer

true

Question 15

If an economy is operating on its production possibilities frontier, it must be using its resources efficiently.

Accepted Answer

true

Question 16

If an economy is operating on its production possibilities frontier, it must produce less of one good if it produces more of another.

Accepted Answer

true

Question 17

Points outside the production possibilities frontier are attainable but inefficient.

Accepted Answer

false

Answer

true

Question 18

If an economy were experiencing substantial unemployment, the economy is producing inside the production possibilities frontier.

Accepted Answer

true

Question 19

The production possibilities frontier is bowed outward because the trade-offs between the production of any two goods are constant.

Accepted Answer

false

Answer

true

Question 20

An advance in production technology would cause the production possibilities curve to shift outward.

Accepted Answer

true

Question 21

If Japan has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Accepted Answer

false

Answer

true

Question 22

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Accepted Answer

true

Question 23

Absolute advantage is a comparison based on productivity.

Accepted Answer

true

Question 24

Self-sufficiency is the best way to increase one's material welfare.

Accepted Answer

false

Answer

true

Question 25

Comparative advantage is a comparison based on opportunity cost.

Accepted Answer

true

Question 26

If a producer is self-sufficient, the production possibilities frontier is also the consumption possibilities frontier.

Accepted Answer

true

Question 27

If a country's workers can produce 5 hamburgers per hour or 10 bags of French fries per hour, absent trade, the price of 1 bag of fries is 2 hamburgers.

Accepted Answer

false

Answer

true

Question 28

If producers have different opportunity costs of production, trade will allow them to consume outside their production possibilities frontiers.

Accepted Answer

true

Question 29

If trade benefits one country, its trading partner must be worse off due to trade.

Accepted Answer

false

Answer

true

Question 30

Talented people that are the best at everything have a comparative advantage in the production of everything.

Accepted Answer

false

Answer

true

Question 31

A perfectly competitive market consists of products that are all slightly different from one another.

Accepted Answer

false

Answer

true

Question 32

An oligopolistic market has only a few sellers.

Accepted Answer

true

Question 33

The law of demand states that an increase in the price of a good decreases the demand for that good.

Accepted Answer

false

Answer

true

Question 34

If apples and oranges are substitutes, an increase in the price of apples will decrease the demand for oranges.

Accepted Answer

false

Answer

true

Question 35

If golf clubs and golf balls are complements, an increase in the price of golf clubs will decrease the demand for golf balls.

Accepted Answer

true

Question 36

If consumers expect the price of shoes to rise, there will be an increase in the demand for shoes today.

Accepted Answer

true

Question 37

The law of supply states that an increase in the price of a good increases the quantity supplied of that good.

Accepted Answer

true

Question 38

An increase in the price of steel will shift the supply of cars to the right.

Accepted Answer

false

Answer

true

Question 39

When the price of a good is below the equilibrium price, it causes a surplus.

Accepted Answer

false

Answer

true

Question 40

The market supply curve is the horizontal summation of the individual supply curves.

Accepted Answer

true

Question 41

If the quantity demanded of a good is sensitive to a change in the price of that 
good, demand is said to be price inelastic.

Accepted Answer

false

Answer

true

Question 42

Using the midpoint method to calculate elasticity, if an increase in the price of pencils from €0.10 to €0.20 reduces the quantity demanded from 1000 pencils to 500 pencils, then the demand for pencils is unit price elastic.

Accepted Answer

true

Question 43

The demand for tyres should be more inelastic than the demand for Michelin brand tyres.

Accepted Answer

true

Question 44

The demand for aspirin over one month should be more elastic than the demand for aspirin over one year.

Accepted Answer

false

Answer

true

Question 45

The price elasticity of demand is defined as the percentage change in the price of that good divided by the percentage change in quantity demanded of that good.

Accepted Answer

false

Answer

true

Question 46

If the cross-price elasticity of demand between two goods is positive, the goods are likely to be complements.

Accepted Answer

false

Answer

true

Question 47

If the demand for a good is price inelastic, an increase in its price will increase total revenue in that market.

Accepted Answer

true

Question 48

The demand for a necessity such as petrol tends to be elastic.

Accepted Answer

false

Answer

true

Question 49

If a demand curve is linear, the price elasticity of demand is constant along it.

Accepted Answer

false

Answer

true

Question 50

If the income elasticity of demand for a bus ride is negative, then a bus ride is an inferior good.

Accepted Answer

true

Question 51

If the equilibrium price of petrol is €1.00 per litre and the government places a price ceiling on petrol of €1.50 per litre, the result will be a shortage of petrol.

Accepted Answer

false

Answer

true

Question 52

A price ceiling set below the equilibrium price causes a surplus.

Accepted Answer

false

Answer

true

Question 53

A price floor set above the equilibrium price is a binding constraint.

Accepted Answer

true

Question 54

The shortage of housing caused by a binding rent control is likely to be more severe in the long run when compared to the short run.

Accepted Answer

true

Question 55

The minimum wage helps all teenagers because they receive higher wages than they would otherwise.

Accepted Answer

false

Answer

true

Question 56

A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers

Accepted Answer

true

Question 57

A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

Accepted Answer

true

Question 58

A price floor in a market always creates a surplus in that market.

Accepted Answer

false

Answer

true

Question 59

A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.

Accepted Answer

false

Answer

true

Question 60

The ultimate burden of a tax falls most heavily on the side of the market that is less elastic.

Accepted Answer

true

Question 61

Total revenue equals the quantity of output the firm produces times the price at which it sells its output.

Accepted Answer

true

Question 62

Wages and salaries paid to workers are an example of implicit costs of production.

Accepted Answer

false

Answer

true

Question 63

If total revenue is €100, explicit costs are €50, and implicit costs are €30, then accounting profit equals €50.

Accepted Answer

true

Question 64

If there are implicit costs of production, accounting profits will exceed economic profits.

Accepted Answer

true

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Quiz #1 - Full [Only 10 questions per variant]

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