Question 1

What is the most important factor that explains differences in living standards across countries?
A)the quantity of money
B)the level of unemployment
C)productivity
D)equality

Accepted Answer

Productivity is the most important factor that explains differences in living standards across countries. It determines how much output can be produced from a given amount of input and influences the level of wages, the availability of goods and services, and the overall standard of living in a country. Higher productivity leads to higher incomes and a higher standard of living.

Question 2

The amount of goods and services produced from each unit of labor input is called
A)opportunity cost.
B)productivity.
C)externality.
D)marginal benefit.

Accepted Answer

Productivity is the measure of how efficiently resources are used to produce goods and services. It is calculated by dividing the total output by the total labor input.

Question 3

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every
A)15 years.
B)25 years.
C)35 years.
D)45 years.

Accepted Answer

The answer of In the United States, incomes historically have...

Question 4

The balance between efficiency and equality is an illustration of
A)​scarcity.
B)​trade-offs.
C)​the forces of supply and demand.
D)​none of the above.

Accepted Answer

The balance between efficiency and equality is an example of trade-offs. There is a finite amount of resources available, and society must make choices between utilizing those resources efficiently or distributing them equally. The more resources allocated to equity, the less there are to promote efficiency, and vice versa. Thus, a trade-off must be made between the two goals.

Question 5

A direct or positive relationship exists between a country's
A)productivity and its standard of living.
B)amount of government spending and its productivity.
C)total population and its average citizen's income.
D)rate of population growth and the extent of its trade with other countries.

Accepted Answer

Productivity and standard of living have a direct relationship, as higher productivity leads to more economic output and resources, which in turn can lead to higher standards of living for a country's citizens.

Question 6

The term "productivity"
A)means the same thing as "efficiency."
B)is seldom used by economists, as its meaning is not precise.
C)refers to the quantity of goods and services produced from each unit of labor input.
D)refers to the variety of goods and services from which households can choose when they shop.

Accepted Answer

Productivity refers to the quantity of goods and services produced from each unit of labor input. It is a commonly used term by economists to measure economic efficiency. It is not synonymous with efficiency as efficiency can refer to the use of resources in general, while productivity specifically refers to output per unit of labor. Options A, B, and D are incorrect as they do not accurately define productivity as used in economics.

Question 7

Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is
A)the $50 she earns working.
B)the $50 minus the enjoyment she would have received from going to the family gathering.
C)the enjoyment she would have received had she gone to the family gathering
D)nothing, since she wanted to work more than she wanted to attend the family gathering

Accepted Answer

The answer of Jane decides to spend four hours working...

Question 8

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?
A)The average American purchases more televisions than the average Nigerian.
B)The average American has better nutrition and healthcare than the average Nigerian.
C)The average American has a longer life expectancy than the average Nigerian.
D)All of the above are correct.

Accepted Answer

The answer of In 2011, the average American earned about...

Question 9

Tim decides to spend four hours playing video games rather than attending his classes. His opportunity cost of playing games is
A)the value of the knowledge he would have received had he attended his classes.
B)the $50 he could have earned if he had worked at his job for those four hours.
C)the value of his time playing video games minus the value of attending classes.
D)nothing, since he valued playing video games more than attending classes.

Accepted Answer

Opportunity cost is the value of the best alternative forgone. In this case, the best alternative forgone is attending classes, and the value of attending classes is the knowledge that Tim would have received. Therefore, the opportunity cost of playing video games is the value of the knowledge he would have received had he attended his classes.

Question 10

​Which of the following industries has a marginal cost that is close to zero?
A)​automobile
B)​aircraft
C)​software
D)​furniture

Accepted Answer

The software industry has a marginal cost close to zero because the cost of producing one additional unit of software is minimal once the initial development has been done. The cost of duplication and distribution is low, and there are no scarce resources needed to produce additional copies.

Question 11

Consider Larry's decision to go to college. If he goes to college, he will spend a total of $120,000 on tuition, $30,000 on room and board, and $3,500 on books over four years. If he does not go to college, he will earn $30,000 annually working in a store and spend $7,000 on room and board each year. Larry's cost of going to college is
A)$123,500.
B)$153,500.
C)$190,500
D)$245,500

Accepted Answer

The answer of Consider Larry's decision to go to college....

Question 12

The balance between maximizing a society's income and an equal distribution of that income is an illustration of
A)​scarcity.
B)​trade-offs.
C)​the forces of supply and demand.
D)​none of the above.

Accepted Answer

The concept of balancing maximizing a society's income and an equal distribution of that income involves making trade-offs between the two goals. There is a limited amount of resources available, so a society must make choices about how to allocate those resources to achieve its goals. This is an example of the trade-offs that are an inherent part of economics.

Question 13

If Jane attends graduate school, it will take her two years, during which time she will earn no income. She will pay a total of $100,000 for tuition, $20,000 for room and board, and $2,000 for books. If she spends the two years working rather than attending college, she will pay a total of $18,000 for room and board, pay no intuition, and buy no books. Based on this information, Jane's economic cost of attending graduate school would be $175,000 if, over the two years, she could earn a total of
A)$53,000 instead of attending graduate school.
B)$55,000 instead of attending graduate school.
C)$71,000 instead of attending graduate school.
D)$73,000 instead of attending graduate school.

Accepted Answer

The answer of If Jane attends graduate school, it will...

Question 14

In the United States, incomes have historically grown
A)about 0.5 percent per year.
B)about 2 percent per year.
C)about 4 percent per year.
D)about 6 percent per year.

Accepted Answer

According to historical data from the Federal Reserve Bank of St. Louis, incomes in the United States have grown at an average annual rate of around 2 percent over the past several decades.

Question 15

Over the past century, the average income in the United States has risen about
A)twofold.
B)fivefold.
C)eightfold.
D)tenfold.

Accepted Answer

According to historical data from the U.S. Census Bureau, the average income in the United States has risen about 8 times (or eightfold) since the early 20th century, adjusting for inflation.

Question 16

Michael is a college student. He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer. This illustrates the principle that
A)trade can make everyone better off.
B)people face trade-offs.
C)rational people think at the margin.
D)people respond to incentives.

Accepted Answer

Michael has to choose between buying the textbook or saving for a road trip, which represents a trade-off. He cannot have both because he has limited resources. Therefore, he is facing a trade-off.

Question 17

Which of the following is not an example of a group responding to an incentive?
A)Students attend class because of an attendance policy that reduces their grade for absences.
B)Consumers buy more of a product when it is on sale at a reduced price.
C)Universities offer fewer online classes when they generate more revenue than traditional classes.
D)Employees work harder to earn higher commissions.

Accepted Answer

This statement is describing a decision made by a single entity (the university) rather than a group responding to an incentive. The other options all involve individuals or groups changing their behavior based on a perceived benefit.

Question 18

Productivity is defined as the
A)amount of goods and services produced from each unit of labor input.
B)number of workers required to produce a given amount of goods and services.
C)amount of labor that can be saved by replacing workers with machines.
D)actual amount of effort workers put into an hour of working time.

Accepted Answer

Productivity is measured as the amount of goods and services produced from each unit of labor input, such as per hour or per worker. It is not measured by the number of workers or the amount of effort put in, and while machines can improve productivity, they do not directly measure it.

Question 19

Almost all variation in living standards is attributable to differences in countries'
A)population growth rates.
B)productivity.
C)systems of public education.
D)taxes.

Accepted Answer

Productivity, or the amount of output produced per unit of input, is the main driver of differences in living standards between countries. Countries with higher productivity can produce more goods and services per person, leading to higher incomes and standards of living. Population growth rates, systems of public education, and taxes can all contribute to a country's productivity, but they are not the sole determinants.

Question 20

The income of a typical worker in a country is most closely linked to which of the following?
A)population
B)productivity
C)market power
D)government policies

Accepted Answer

The income of a typical worker in a country is most closely linked to productivity. When workers produce more goods or services in a given amount of time, it increases the supply of those goods and services, which can lead to higher wages due to market competition for those workers. Productivity is influenced by factors such as investment in technology, education, and training, which are important drivers of long-term economic growth. Population, market power, and government policies can also affect income, but they are not as closely linked as productivity.

Quiz 1: Ten Principles of Economics

What is the most important factor that explains differences in living standards across countries?

The amount of goods and services produced from each unit of labor input is called

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

The balance between efficiency and equality is an illustration of

A direct or positive relationship exists between a country's

The term "productivity"

Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is

In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely?

Tim decides to spend four hours playing video games rather than attending his classes. His opportunity cost of playing games is

​Which of the following industries has a marginal cost that is close to zero?

The balance between maximizing a society's income and an equal distribution of that income is an illustration of

In the United States, incomes have historically grown

Over the past century, the average income in the United States has risen about

Michael is a college student. He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer. This illustrates the principle that

Which of the following is not an example of a group responding to an incentive?

Productivity is defined as the

Almost all variation in living standards is attributable to differences in countries'

The income of a typical worker in a country is most closely linked to which of the following?

Which of the following industries has a marginal cost that is close to zero?