Question 1

The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?

Accepted Answer

Cows can be privately owned and bred for meat production, ensuring their population is maintained, while elephants are often protected and not privately owned, leading to less controlled breeding and conservation efforts.

Question 2

The student government associations at several universities have experimented with purchasing bicycles to leave around campus for everyone's use. Anyone who needs the bike can use it, and they are not allowed to lock the bike up or take it home, but rather must leave it on campus for someone else to use. Economic theory would predict that

Accepted Answer

Economic theory suggests that commonly owned resources, like these bicycles, are subject to the "tragedy of the commons," where individuals have little incentive to maintain or take care of them compared to privately owned property.

Question 3

Isabella decides to buy a dress that Olivia has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

Accepted Answer

Both parties expect to gain from the transaction because they voluntarily agreed to the exchange, indicating that each values what they are receiving more than what they are giving up.

Question 4

In an informed and voluntary exchange,

Accepted Answer

In an informed and voluntary exchange, both parties engage in the transaction because they each value what they are receiving more than what they are giving up, leading to mutual benefit.

Question 5

Which of the following about trade is true?

Accepted Answer

The value of a good is subjective and can vary depending on who is using it and the context in which it is used, such as time and location.

Question 6

When private ownership rights are well-defined and enforced, owners

Accepted Answer

When private ownership rights are well-defined and enforced, owners are held accountable for any damage their property causes to others, ensuring responsible use and management.

Question 7

In Zimbabwe and Botswana, elephants can be owned by local tribes and trade in ivory is legal, while in countries such as Kenya, it is illegal to trade in ivory and elephants cannot be privately owned but are protected by the government. Which of the following is true regarding the change in the elephant populations since 1979 in these countries?

Accepted Answer

In Zimbabwe and Botswana, community-based conservation efforts and regulated ivory trade have led to an increase in elephant populations, while in Kenya, strict protection measures have not been as effective, leading to a decline in elephant numbers.

Question 8

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Accepted Answer

Transaction costs refer to the expenses incurred during the process of buying or selling goods or services, which include the time, effort, and resources needed to search, negotiate, and complete an exchange.

Question 9

In economics, transaction costs refer to the

Accepted Answer

Transaction costs are the costs associated with the time, effort, and resources needed to search for, negotiate, and complete an exchange.

Question 10

In voluntary exchange, if the seller of a product gains,

Accepted Answer

In a voluntary exchange, both the buyer and the seller expect to gain from the transaction. The buyer values the product more than the money they pay, and the seller values the money more than the product they sell. This mutual benefit is the foundation of voluntary exchange.

Question 11

Which of the following statements about exchange is false?

Accepted Answer

Voluntary exchange is based on the principle that both parties expect to benefit from the trade, making it mutually beneficial rather than a zero-sum game where one gains and the other loses.

Question 12

Todd owns a truck that he values at $2,000. Susan, who does a lot of hauling, values the truck at $6,000. If these two are allowed to negotiate, which of the following will most likely occur?

Accepted Answer

Todd values the truck at $2,000 and Susan values it at $6,000. They will likely agree on a price between these values, benefiting both.

Question 13

If Sean sells Tom a tennis racket for $50, we would expect

Accepted Answer

In a voluntary transaction, both parties typically gain because Sean values the $50 more than the tennis racket, and Tom values the tennis racket more than the $50.

Question 14

Beginning in the early 1990s, private landowners in Zimbabwe have started fencing in large areas of land that contain black rhinos, which were on the verge of extinction. These private owners charge fees for a stay at the lodges on the property (eco-tourism) and also sell hunting safaris and photo safaris. As a result,

Accepted Answer

The conservation efforts by private landowners, including eco-tourism and safaris, have provided financial incentives to protect and increase the population of black rhinos.

Question 15

Mateo values his camper at $4,000, and Nicole values it at $9,000. If Nicole buys it from Mateo for $7,000, which of the following is true?

Accepted Answer

Mateo gains $3,000 because he values the camper at $4,000 and sells it for $7,000. Nicole gains $2,000 because she values the camper at $9,000 and buys it for $7,000.

Question 16

Given your knowledge of the incentives created by private ownership, which of the following would you expect to be false?

Accepted Answer

People are generally more likely to keep their own property clean and well-maintained compared to public spaces, as they have a personal stake in the condition and value of their own property.

Question 17

When private ownership of a resource is clearly defined and enforced, the private owner

Accepted Answer

Private ownership provides the owner with the incentive to maximize the value of the resource, which often involves using it wisely and sustainably to ensure long-term benefits.

Question 18

Which of the following most accurately states the economic significance of exchange?

Accepted Answer

Exchange creates value by reallocating resources to those who value them more, thus increasing overall utility and economic efficiency.

Question 19

Suppose that in Australia, the government allows private ownership of chickens but not of cows. If the people of Australia permanently increase their desire to purchase more chicken and beef, in the long run, we would expect

Accepted Answer

The increased demand for chicken will lead to a higher price for chicken, which will make it more profitable to raise chickens. This will lead to an increase in the population of chickens. The increased demand for beef will not have any effect on the population of cows, since the government does not allow private ownership of cows.

Question 20

Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true?

Accepted Answer

Noah gains $1,000 because he values the car at $10,000 and sells it for $11,000. Emily gains $3,000 because she values the car at $14,000 and buys it for $11,000.

Quiz 2: Some Tools of the Economist