ECO 201 Final Exam Questions and Answers Solved Correctly Rated 100%
Paolo is training for a triathlon, a timed race that combines swimming, biking, and running. Each hour he
spends swimming is an hour that he can't spend biking or running.
Which basic principle of individual choice does this sentence best illustrate? - Answers all choices have
opportunity costs
Suppose that in the hypothetical country of Vanadia, picture frames are distributed on a first-come,
first-served basis.
This distribution rule gives the residents of Vanadia an incentive to spend time - Answers maintaining
their place in line
Simone has opened a new startup company in web design. Within the first month of business, the
startup agrees to maintain an accounting firm's website in exchange for someone doing their tax
returns.
Which of the following principles of economic interaction best describes this scenario? - Answers trade
can make everyone better off
Economics is best defined as the study of - Answers how society manages its scarce resources.
Your opportunity cost of going to a movie is - Answers the total cash expenditure needed to go to the
movie plus the value of your time.
A marginal change is one that - Answers incrementally alters an existing plan.
Adam Smith's phrase "invisible hand" refers to - Answers the ability of free markets to reach desirable
outcomes, despite the self-interest of market participants.
Governments may intervene in a market economy in order to - Answers protect property rights.
correct a market failure due to externalities.
achieve a more equal distribution of income
The Social Security system provides income for people over age 65. If a recipient of Social Security
decides to work and earn some income, the amount he receives in Social Security benefits is typically
reduced.
The provision of Social Security gives people the incentive to save____________while working.
Moreover, the reduction in benefits associated with higher earnings gives people the incentive
to__________. - Answers less
not work past 65
, A 1996 bill reforming the federal government's antipoverty programs limited many welfare recipients to
only two years of benefits.
This change gives people the incentive to find a job __________ quickly than if welfare benefits lasted
forever.
The loss of benefits after two years will result in the distribution of income becoming ____________
equal.
In addition, the economy will be _____________ efficient because of the change in working incentives. -
Answers more
less
more
the study of how prices and quantities are determined through interactions between buyers and sellers
(individuals and firms) in individual markets - Answers microeconomics
the study of factors that affect the entire economy - Answers macroeconomics
Rosa: Most people recognize that the budget deficit has been rising considerably over the last century.
We need to find the best course of action to remedy this situation.
Nick: I believe that a cut in income tax rates would boost economic growth and raise tax revenue
enough to reduce budget deficits.
Rosa: I actually feel that raising the top income tax rate would reduce the budget deficit more
effectively.
The disagreement between these economists is most likely due to - Answers differences in scientific
judgements
Two economists chosen at random are most likely to agree that - Answers tariffs and import quotas
generally reduce economic welfare
An economic model is - Answers a simplified representation of some aspect of the economy.
The circular-flow diagram illustrates that, in markets for the factors of production, - Answers households
are sellers, and firms are buyers.
A point inside the production possibilities frontier is - Answers feasible, but not efficient.
An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot
dogs were to change consumers' preferences, it would - Answers move the economy along the
production possibilities frontier.
Paolo is training for a triathlon, a timed race that combines swimming, biking, and running. Each hour he
spends swimming is an hour that he can't spend biking or running.
Which basic principle of individual choice does this sentence best illustrate? - Answers all choices have
opportunity costs
Suppose that in the hypothetical country of Vanadia, picture frames are distributed on a first-come,
first-served basis.
This distribution rule gives the residents of Vanadia an incentive to spend time - Answers maintaining
their place in line
Simone has opened a new startup company in web design. Within the first month of business, the
startup agrees to maintain an accounting firm's website in exchange for someone doing their tax
returns.
Which of the following principles of economic interaction best describes this scenario? - Answers trade
can make everyone better off
Economics is best defined as the study of - Answers how society manages its scarce resources.
Your opportunity cost of going to a movie is - Answers the total cash expenditure needed to go to the
movie plus the value of your time.
A marginal change is one that - Answers incrementally alters an existing plan.
Adam Smith's phrase "invisible hand" refers to - Answers the ability of free markets to reach desirable
outcomes, despite the self-interest of market participants.
Governments may intervene in a market economy in order to - Answers protect property rights.
correct a market failure due to externalities.
achieve a more equal distribution of income
The Social Security system provides income for people over age 65. If a recipient of Social Security
decides to work and earn some income, the amount he receives in Social Security benefits is typically
reduced.
The provision of Social Security gives people the incentive to save____________while working.
Moreover, the reduction in benefits associated with higher earnings gives people the incentive
to__________. - Answers less
not work past 65
, A 1996 bill reforming the federal government's antipoverty programs limited many welfare recipients to
only two years of benefits.
This change gives people the incentive to find a job __________ quickly than if welfare benefits lasted
forever.
The loss of benefits after two years will result in the distribution of income becoming ____________
equal.
In addition, the economy will be _____________ efficient because of the change in working incentives. -
Answers more
less
more
the study of how prices and quantities are determined through interactions between buyers and sellers
(individuals and firms) in individual markets - Answers microeconomics
the study of factors that affect the entire economy - Answers macroeconomics
Rosa: Most people recognize that the budget deficit has been rising considerably over the last century.
We need to find the best course of action to remedy this situation.
Nick: I believe that a cut in income tax rates would boost economic growth and raise tax revenue
enough to reduce budget deficits.
Rosa: I actually feel that raising the top income tax rate would reduce the budget deficit more
effectively.
The disagreement between these economists is most likely due to - Answers differences in scientific
judgements
Two economists chosen at random are most likely to agree that - Answers tariffs and import quotas
generally reduce economic welfare
An economic model is - Answers a simplified representation of some aspect of the economy.
The circular-flow diagram illustrates that, in markets for the factors of production, - Answers households
are sellers, and firms are buyers.
A point inside the production possibilities frontier is - Answers feasible, but not efficient.
An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot
dogs were to change consumers' preferences, it would - Answers move the economy along the
production possibilities frontier.
