Test Bank for Principles of Economics 10e by N. Gregory Mankiw – 300+ Exam Questions & Answers

Test Bank for Principles of Economics
10e by N. Gregory Mankiw – 300+ Exam
Questions & Answers




1. The English word that comes from the Greek word for "one
who manages a household" is...
 a. market.

, b. consumer.
 c. producer.
 d. economy.
 ANSWER: d
 DIFFICULTY: Easy
 TOPICS: Economic thinking




2. The word "economy" comes from the Greek word oikonomos,
which means...
 a. "environment."
 b. "production."
 c. "one who manages a household."
 d. "one who makes decisions."
 ANSWER: c
 DIFFICULTY: Easy
 TOPICS: Economic thinking




3. Resources are...
 a. scarce for households but plentiful for economies.
 b. plentiful for households but scarce for economies.
 c. scarce for households and scarce for economies.
 d. plentiful for households and plentiful for economies.
 ANSWER: c
 DIFFICULTY: Easy
 TOPICS: Scarcity




4. Economics is the study of how society manages its...
 a. unlimited resources.
 b. scarce resources.
 c. financial assets.
 d. government sectors.
 ANSWER: b
 DIFFICULTY: Easy

, TOPICS: Economic thinking




5. The adage "there is no such thing as a free lunch" means
that...
 a. even bartered items have a financial value.
 b. people face trade-offs when making choices.
 c. true charity does not exist in a modern economy.
 d. products are always priced higher than their production cost.
 ANSWER: b
 DIFFICULTY: Easy
 TOPICS: Trade-offs




6. When society gets the maximum benefits from its scarce
resources, it is achieving...
 a. equality.
 b. efficiency.
 c. productivity.
 d. equity.
 ANSWER: b
 DIFFICULTY: Easy
 TOPICS: Efficiency vs. Equality




7. An allocation that distributes economic prosperity uniformly
among society's members is achieving...
 a. efficiency.
 b. equilibrium.
 c. equality.
 d. trade-offs.
 ANSWER: c
 DIFFICULTY: Easy
 TOPICS: Efficiency vs. Equality

, 8. What you must give up to obtain an item is called its...
 a. direct cost.
 b. opportunity cost.
 c. explicit cost.
 d. sunk cost.
 ANSWER: b
 DIFFICULTY: Easy
 TOPICS: Opportunity Cost




9. Rational people make decisions at the margin by comparing...
 a. total costs and total benefits.
 b. average costs and average benefits.
 c. marginal benefits and marginal costs.
 d. financial costs and non-financial benefits.
 ANSWER: c
 DIFFICULTY: Medium
 TOPICS: Marginal Thinking




10. A small incremental adjustment to an existing plan of action
is a...
 a. marginal change.
 b. trade-off.
 c. market failure.
 d. incentive.
 ANSWER: a
 DIFFICULTY: Easy
 TOPICS: Marginal Thinking




11. Something that induces a person to act, such as the prospect
of a punishment or a reward, is a(n)...