A grocery store is running a \"buy-one-get-another-at-one-half-off\" promotion o

Question

A grocery store is running a "buy-one-get-another-at-one-half-off" promotion on a dozen doughnuts. So the first dozen is $6 and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is: Select one:

a. greater than $3

b. greater than $6

c. greater than $9

d. less than $3

Adam Smith sought to explain the concept of aligning self-interest with the promotion of society's overall interest by: Select one:

a. using an analysis of wealth as productivity.

b. suggesting markets are led by an invisible hand.

c. arguing that markets were ineffective institutions.

d. suggesting that government increase regulations.

If North Korea and South Korea were both equally poor in 1950, why has South Korea developed so much faster since then? Select one:

a. The two countries have different language, cultural, and historical backgrounds.

b. North Korea has an economic system that develops incentives.

c. South Korea has maintained a more market-based economic system.

d. South Korea began with a higher per capita GDP.

The real power of trade lies in people's ability to: Select one:

a. get things they can't produce.

b. get the lowest price possible.

c. increase their consumption.

d. specialize and increase production.

The idea that markets work efficiently: Select one:

a. refers to the fact that self-interest can be aligned with social interest.

b. means that trade-offs can be reduced by channeling greed toward good ends.

c. suggests that there is never any need for government regulation, taxes, or subsidies.

d. has been known for many centuries.

Inflation can be defined as: Select one:

a. the general rise in the level of output in an economy.

b. the boom and bust cycles of an economy.

c. the rise and fall of the general level of prices in an economy.

d. the increase in the general level of prices in an economy.

When markets don't align self-interest with social interest: Select one:

a. markets will still manage to reach an efficient outcome.

b. governments may improve the situation by changing incentives.

c. societal costs will always exceed individual benefits.

d. individual benefits will exceed societal benefits

The ______ has the power to regulate the money supply in the United States. Select one:

a. Federal Reserve

b. President

c. Senate

d. House of Representatives

You are given a ticket to a Bob Dylan concert with a face value of $50. You only value the ticket at $40, sell it to a friend for $40, and attend a U2 concert priced at $60. The opportunity cost of attending the U2 concert is: Select one:

a. $20 worth of alternative goods and services.

b. $40 worth of alternative goods and services.

c. $50 worth of alternative goods and services.

d. $60 worth of alternative goods and services.

What causes countries to become wealthier over time? Select one:

a. government central planning

b. economic growth

c. price controls on key natural resources

d. restrictions on imported goods

During the Great Depression, the United States unemployment rate exceeded ______ percent. Select one:

a. 35

b. 30

c. 25

d. 20

South Korea became much richer than North Korea as a result of: Select one:

a. foreign aid from the United States.

b. a different cultural background.

c. a different language.

d. its economic systems and incentives.

The decisions made by the Federal Reserve Bank sometimes result in negative effects on the economy because: Select one:

a. the economy is weakened when the Fed uses monetary policy.

b. the government uses money inefficiently when it comes to fiscal policy.

c. the Fed finds that forecasting economic conditions is easy but controlling the money supply is difficult.

d. too much money or too little money might induce inflation or unemployment due to bad timing of decisions.

The Great Depression was: Select one:

a. a natural manifestation of competitive markets.

b. cut short because of well-thought-out monetary policy.

c. to date, the worst economic period in United States economic history.

d. about as severe as the 2008–2009 recession.

The opportunity cost of a choice is: Select one:

a. the opportunity of using the money to buy something else cheaper.

b. the money cost that a person does not have to pay when doing something.

c. the money that a buyer has to pay for an item.

d. the value of the next best opportunity foregone.

In several cities around the country, schools are paying cash awards to students who do well on English and Math tests. This practice highlights the idea of: Select one:

a. pedagogical economics—the continuous assessment of student performance in an effort to maximize student efficiency.

b. hidden costs—the costs borne by taxpayers in the form of wasteful school spending.

c. incentives—the rewards and penalties that motivate behavior.

d. screening theory—the identification of individuals or groups based on various performance measures.

What are the institutions that help foster the appropriate incentives for economic growth? Select one:

a. regulated labor and credit markets; and unions

b. communal property rights and absence of a profit-loss system

c. a dependable legal system, property rights, and competitive and open markets

d. production and export quotas; and supply and demand

The Zimbabwean government printed money as fast as it could for years. As a result: Select one:

a. prices fell rapidly in Zimbabwe.

b. the Zimbabwean economy grew rapidly.

c. Zimbabwe experienced mild inflation.

d. Zimbabwe experienced inflation at a rate of billions of percent per month. Check

Explanation / Answer

Answers

c. Greater than $9: Total cost is $9. Therefore two dozens will bought only if total satisfaction is greater than $9.

b. suggesting markets are led by an invisible hand: Smith believed that if everyone acted in his own self-interest, society maximizes total benefit, because of the operation of the price mechanism( supply and demand) which he called “invisible hand”

c. South Korea has maintained a more market-based economic system. It has been historically shown that market based systems are more efficient in allocation of resources than centralized planning and control of the economy. Though both systems have drawbacks, the former has proved more efficient to generate wealth faster.

a. get things they can't produce: people produce to satisfy wants. If they cannot produce, they barter or trade between each other.

a. refers to the fact that self-interest can be aligned with social interest: This is the basis of capitalist philosophy and democratic system of politics

Inflation can be defined as:

d. the increase in the general level of prices in an economy:

When markets don't align self-interest with social interest:

c. societal costs will always exceed individual benefits. These costs are called externalities. For example pollution is a cost when everyone tries to own personal means of transportation

a. Federal Reserve

a. $20 worth of alternative goods and services: You forgo $60, out of which you got $40 for free. The net amount is the $value of other goods/service you could have had.

b. economic growth: is the increase of GDP over time, which is addition to wealth of individuals.

During the Great Depression, the United States unemployment rate exceeded ______ percent.

c. 25% during most of 1930’s . Recovery began only in 1933, when unemployment rate fell to 15%

South Korea became much richer than North Korea as a result of:

d. its economic systems and incentives. It is true that USA pumped aid to south korea after the war. But a system of market economy based on incentives is what spurred economic growth in S. korea.

d. too much money or too little money might induce inflation or unemployment due to bad timing of decisions: one of the greatest drawbacks of the monetary policy measures is the time-lag for effectiveness.

The Great Depression was:

a. a natural manifestation of competitive markets: capitalist markets are prone to cyclical instability.

The opportunity cost of a choice is:

d. the value of the next best opportunity foregone.

c. incentives—the rewards and penalties that motivate behavior.

What are the institutions that help foster the appropriate incentives for economic growth?

c. a dependable legal system, property rights, and competitive and open markets

The Zimbabwean government printed money as fast as it could for years. As a result:

d. Zimbabwe experienced inflation at a rate of billions of percent per month.

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