Question 1

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

The answer of Explain how an attempt by the government...

Question 2

The adage, "There ain't no such thing as a free lunch," means

Accepted Answer

This adage implies that everything has a cost, even if it's not immediately apparent. It suggests that in any situation where something is offered for free, there is always a trade-off or cost involved elsewhere, reflecting the economic principle that people face trade-offs.

Question 3

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The answer of With the understanding that people respond to...

Question 4

The overriding reason why households and societies face many decisions is that

Accepted Answer

Resources are scarce, which means that there are limited resources available to satisfy the unlimited wants and needs of households and societies. This scarcity requires making choices about how to allocate resources effectively.

Question 5

Economics is the study of how society manages its

Accepted Answer

Economics is concerned with how society allocates its scarce resources to satisfy unlimited wants, highlighting the fundamental problem of scarcity.

Question 6

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

The answer of One tradeoff society faces is between efficiency...

Question 7

Fundamentally, economics deals with

Accepted Answer

Economics fundamentally deals with the concept of scarcity, which is the basic economic problem that arises because people have unlimited wants but resources are limited. This scarcity requires the allocation of limited resources among competing uses.

Question 8

Under what conditions might government intervention in a market economy improve the economy's performance?

Accepted Answer

The answer of Under what conditions might government intervention in...

Question 9

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

Scarcity refers to the basic economic problem that arises because people have unlimited wants but resources are limited. This means not all goods and services can be produced, leading to the need for choices to be made about how to allocate resources effectively.

Question 10

The phenomenon of scarcity stems from the fact that

Accepted Answer

Scarcity arises because resources (such as time, money, and raw materials) are limited, but the demand for goods and services is virtually unlimited. This fundamental economic problem affects all societies and economies, regardless of their wealth or production methods.

Question 11

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Accepted Answer

The answer of Define opportunity cost. What is the opportunity...

Question 12

What are the two short-run effects of increasing the quantity of nation's money?

Accepted Answer

The answer of What are the two short-run effects of...

Question 13

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

Accepted Answer

Candice's situation illustrates the principle that people face tradeoffs, as she must choose between two desirable activities that cannot be done at the same time.

Question 14

When society requires that firms reduce pollution, there is

Accepted Answer

There is a tradeoff because implementing measures to reduce pollution often involves costs for firms, which can lead to reduced profits for owners and potentially lower wages or job losses for workers. This reflects the economic principle that resources used for one purpose (e.g., pollution control) are not available for another (e.g., income generation).

Question 15

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

The answer of How does the study of economics depend...

Question 16

Which of the following statements best represents the principle represented by the adage, "There ain't no such thing as a free lunch"?

Accepted Answer

The answer of Which of the following statements best represents...

Question 17

Fossil fuels are considered to be nonrenewable energy sources. Which of the following statements is correct?

Accepted Answer

Fossil fuels are considered scarce resources because they exist in finite amounts and are being depleted faster than natural processes can replenish them.

Question 18

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

Accepted Answer

This statement illustrates the principle that people face tradeoffs, as it highlights the tradeoff between a cleaner environment and the economic costs to firms and individuals.

Question 19

In most societies, resources are allocated by

Accepted Answer

In most societies, resources are allocated through the market mechanism, where the combined actions of millions of households and firms determine how resources are distributed. This decentralized approach contrasts with central planning, where decisions are made by a single entity or a small group.

Question 20

Resources are

Accepted Answer

Resources are limited both for individual households and for economies as a whole, which necessitates choices about how to allocate them efficiently.

Quiz 1: Ten Principles of Economics