Q: Which equation best represents productivity?

$$\text{Productivity} = \frac{\text{Output}}{\text{Labor Input}}$$

Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative that is forgone to obtain something.

Question 2

A government program that redistributes income from the wealthy to the poor is most likely to:

Accepted Answer

Increase equality but may reduce efficiency.

Question 3

Suppose you have already spent $$1000 repairing your car. The transmission fails and will cost 600 to $$fix. If the car is worth $$6500 with a working transmission and 5700 $$without, what should you do?

Accepted Answer

Repair the transmission because the $1000 already spent is a sunk cost.

Question 4

Which equation best represents productivity?

Accepted Answer

$$	ext{Productivity} = \frac{	ext{Output}}{	ext{Labor Input}}$$

Question 5

During a recession, college enrollment tends to increase. This is best explained by:

Accepted Answer

A decrease in the opportunity cost of attending college.

Question 6

Which of the following is an example of a positive incentive?

Accepted Answer

A bonus for employees who exceed sales targets.

Question 7

According to Adam Smith’s concept of the 'invisible hand,'

Accepted Answer

Self-interested actions of individuals can lead to positive outcomes for society.

Question 8

Which of the following is a likely cause of market failure?

Accepted Answer

Externalities such as pollution.

Question 9

If the government increases the money supply rapidly, what is the most likely long-term effect?

Accepted Answer

An increase in inflation.

Question 10

Which of the following best illustrates the concept of a tradeoff?

Accepted Answer

Choosing to spend more time studying means less time for leisure activities.

Question 11

A monopoly is an example of:

Accepted Answer

Market power leading to market failure.

Question 12

Which of the following is NOT a likely result of international trade?

Accepted Answer

All countries become self-sufficient.

Question 13

Which policy tool is used to moderate the business cycle?

Accepted Answer

Monetary and fiscal policy.

Question 14

If the marginal benefit of repairing a car transmission is $$800 and the marginal cost is 600$$, what should a rational person do?

Accepted Answer

Repair the transmission.

Question 15

Which of the following best explains why living standards vary greatly across countries?

Accepted Answer

Differences in productivity.

Question 16

Which of the following is an example of an unintended consequence of a policy?

Accepted Answer

A tax on plastic bags leads to increased use of paper bags, which also harm the environment.

Question 17

Which formula best represents the inflation rate if the price level increases from $$P_0 to$$ $$P_1$$ over one year?

Accepted Answer

$$	ext{Inflation Rate} = \frac{P_1$ - P_0$}{P_0$} 	imes 100\%$$

Question 18

Which of the following is NOT a reason why markets are usually a good way to organize economic activity?

Accepted Answer

Markets always ensure perfect equality.

Question 19

If a country experiences a boom followed by a bust, this is an example of:

Accepted Answer

The business cycle.

Question 20

Which of the following is an example of a marginal change?

Accepted Answer

Deciding to study one more hour for an exam.

Ten Big Ideas in Economics: Foundations and Principles

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