TEST BANK
Principles of Economics, 3rd Edition
by Stevenson & Wolfers
AM
AZ
IN
G
TI
PS
All Chapters 1–35 Covered
,Table of Contents
Test Bank for Principles of Economics, 3rd Edition
Stevenson & Wolfers — Chapters 1–35
Part 1: Introduction to Economics
1. Chapter 1 — The Principles of Economics
AM
2. Chapter 2 — Economic Models and Trade
3. Chapter 3 — Supply and Demand
4. Chapter 4 — Markets and Government
AZ
Part 2: Microeconomics: Consumers and Firms
5. Chapter 5 — Elasticity
6. Chapter 6 — Consumer Choice
IN
7. Chapter 7 — Production and Costs
8. Chapter 8 — Perfect Competition
G
9. Chapter 9 — Monopoly
10. Chapter 10 — Price Discrimination
TI
11. Chapter 11 — Oligopoly
12. Chapter 12 — Game Theory
PS
13. Chapter 13 — Externalities
14. Chapter 14 — Public Goods and Common Resources
15. Chapter 15 — Asymmetric Information
Part 3: Markets for Labor and Capital
16. Chapter 16 — The Labor Market
17. Chapter 17 — Income Inequality and Poverty
18. Chapter 18 — Human Capital
, 19. Chapter 19 — Financial Markets
20. Chapter 20 — Saving and Investment
Part 4: Macroeconomic Foundations
21. Chapter 21 — Measuring the Economy
22. Chapter 22 — Unemployment
23. Chapter 23 — Inflation
AM
24. Chapter 24 — Economic Growth
25. Chapter 25 — The Financial System
Part 5: Macroeconomic Policy
AZ
26. Chapter 26 — Aggregate Demand
27. Chapter 27 — Fiscal Policy
28. Chapter 28 — Monetary Policy
IN
29. Chapter 29 — International Trade
30. Chapter 30 — Exchange Rates and Open-Economy Macroeconomics
G
Part 6: Advanced Applications and Economic Issues
TI
31. Chapter 31 — Business Cycles
32. Chapter 32 — Stabilization Policy
PS
33. Chapter 33 — Long-Run Economic Development
34. Chapter 34 — The Economics of Health and Education
35. Chapter 35 — Current Economic Challenges and Policy Issues
, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
AM
c. C.
d. D.
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
AZ
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
IN
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
G
c. C.
d. D.
TI
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
PS
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
Principles of Economics, 3rd Edition
by Stevenson & Wolfers
AM
AZ
IN
G
TI
PS
All Chapters 1–35 Covered
,Table of Contents
Test Bank for Principles of Economics, 3rd Edition
Stevenson & Wolfers — Chapters 1–35
Part 1: Introduction to Economics
1. Chapter 1 — The Principles of Economics
AM
2. Chapter 2 — Economic Models and Trade
3. Chapter 3 — Supply and Demand
4. Chapter 4 — Markets and Government
AZ
Part 2: Microeconomics: Consumers and Firms
5. Chapter 5 — Elasticity
6. Chapter 6 — Consumer Choice
IN
7. Chapter 7 — Production and Costs
8. Chapter 8 — Perfect Competition
G
9. Chapter 9 — Monopoly
10. Chapter 10 — Price Discrimination
TI
11. Chapter 11 — Oligopoly
12. Chapter 12 — Game Theory
PS
13. Chapter 13 — Externalities
14. Chapter 14 — Public Goods and Common Resources
15. Chapter 15 — Asymmetric Information
Part 3: Markets for Labor and Capital
16. Chapter 16 — The Labor Market
17. Chapter 17 — Income Inequality and Poverty
18. Chapter 18 — Human Capital
, 19. Chapter 19 — Financial Markets
20. Chapter 20 — Saving and Investment
Part 4: Macroeconomic Foundations
21. Chapter 21 — Measuring the Economy
22. Chapter 22 — Unemployment
23. Chapter 23 — Inflation
AM
24. Chapter 24 — Economic Growth
25. Chapter 25 — The Financial System
Part 5: Macroeconomic Policy
AZ
26. Chapter 26 — Aggregate Demand
27. Chapter 27 — Fiscal Policy
28. Chapter 28 — Monetary Policy
IN
29. Chapter 29 — International Trade
30. Chapter 30 — Exchange Rates and Open-Economy Macroeconomics
G
Part 6: Advanced Applications and Economic Issues
TI
31. Chapter 31 — Business Cycles
32. Chapter 32 — Stabilization Policy
PS
33. Chapter 33 — Long-Run Economic Development
34. Chapter 34 — The Economics of Health and Education
35. Chapter 35 — Current Economic Challenges and Policy Issues
, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
AM
c. C.
d. D.
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
AZ
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
IN
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
G
c. C.
d. D.
TI
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
PS
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
