Question

9.

Gains from trade arise because of:

	marginal analysis.
	specialization in consumption.
	specialization in production.
	individual choice.

10.

If equilibrium exists:

	there will be no remaining opportunities for individuals to make themselves better off.
	the price in that market will not fluctuate by more than 5%.
	the number of buyers will equal the number of sellers.
	all individuals must have an equal amount of income.

11.

Economists believe that resources should be used as efficiently as possible to:

	achieve society's goals.
	eliminate scarcity.
	maximize profits.
	reduce inequity.

12.

In most cases, economic efficiency is achieved through:

	maximizing equity.
	reducing regulation.
	incentives built into a market economy.
	individuals seeking out opportunities that involve no risk.

13.

Which principle underlies the interaction of individual choices?

	People usually respond to incentives, exploiting opportunities to make themselves better off.
	Choices are necessary because resources are scarce.
	“How Much” is a decision at the margin.
	There are gains from trade.

14.

When a factory closes, why is it bad news for the local restaurants?

	Unemployed factory workers are eligible for government unemployment benefits.
	Sales taxes are likely to increase.
	Unemployed factory workers have lower incomes and are less likely to dine out.
	The opportunity cost of dining out has fallen.

15.

Which statement demonstrates one of the three principles of economy-wide interactions?

	A student chooses to rent a movie with friends, rather than study for an economics quiz.
	Your roommate offers to pay for the movie tickets if you drive to the theater.
	A city builds a new public park on the grounds of an abandoned warehouse.
	In 2008, fearing a recession, Congress approved a White House proposal to rebate some taxes for 2007.

16.

I know when I shop at the local grocery store, I am helping my community. Which economic principle does this statement BEST represent?

	There are gains from trade.
	One person's spending is another person's income.
	Overall spending sometimes gets out of line with the economy's productive capacity.
	People usually respond to incentives, exploiting opportunities to make themselves better off.

17.

Using marginal analysis to decide whether to consume an additional slice of pizza requires making a comparison of the benefits and costs associated with the consumption of an additional slice of pizza.

	True
	False

18.

Trade theoretically allows people to get more of what they want.

	True
	False

19.

Handicapped-designated parking spaces are an example of the market economy achieving efficiency.

	True
	False

Answer 1