Quiz 1
Question 1
2 / 2 pts
An example of a direct positive incentive is:
a prison sentence for committing a crime.
unemployment insurance for those who are laid off.
providing a workplace safety program.
providing a commission for sales.
threatening to fire those who do not perform well.
Question 2
2 / 2 pts
Indirect incentives create:
positive consequences.
negative consequences.
indirect consequences.
direct consequences.
unintended consequences.
Question 3
2 / 2 pts
I asked my neighbor to rake the leaves on his lawn because they are blowing into my yard. He
responded that it wouldn’t be rational for him to do so. Why would this be the case?
My neighbor lacks the equipment to rake leaves and thinks it would take too long to do the job.
My neighbor is a busy person and doesn’t have time to rake leaves.
My neighbor is getting revenge on me because I didn’t rake the leaves on my lawn last year.
My neighbor is a lawyer who values his time at $200 an hour and knows that he can hire a high school
kid to rake leaves for $20 an hour.
My neighbor is a high school teacher and values his time at $15 an hour, and he knows that he can
hire one of his students to rake leaves for $20 an hour.
Question 4
2 / 2 pts
Which of the following statements best represents the fact that I cannot put in extra hours of work
because of scarcity?
I don’t have enough time for additional work because I need to spend time with my family and there
are only so many hours in the day.
I don’t like going to work, so why would I work more than I have to?
I don’t think that overtime pay is high enough.
I am worried that if I work extra hours, I will get bored with my job.
I don’t want my coworkers to feel pressure to work more because I am working additional hours.
Question 5
2 / 2 pts
Economists believe that individuals compare the benefits and costs of various options when making
a decision and in so doing act ________.
fairly
selfishly
collectively
unpredictably
rationally
Question 6
2 / 2 pts
The need to study economics would cease to exist if:
the government stopped controlling people’s actions.
people were free to make decisions on their own.
people put forth the effort required to attain the goods and services they wanted.
people earned more than they spent.
there were enough resources to produce all the goods and services people would like to obtain.
Question 7
2 / 2 pts
Microeconomics is the branch of economics that focuses on the:
entire economy.
production side of the economy.
consumption side of the economy.
involvement of the government in the entire economy.
choices and decision-making of individuals and firms.
Question 8
2 / 2 pts
Why would economists find it surprising if the CEO of a large company does his or her own
housework?
The opportunity cost of CEO’s time is quite high because they have an abundance of time to spend on
housework.
The opportunity cost of CEO’s time is quite low because they have a scarcity of time to spend on
housework.
The opportunity cost of CEO’s time is quite low because they have an abundance of time to spend on
housework.
The opportunity cost of CEO’s time is quite high because they have a scarcity of time to spend on
housework.
The opportunity cost of a CEO’s time is equal to that of everyone else that works at the same
company.
Question 9
2 / 2 pts
Economics is the study of:
how to make money.
how to allocate resources to satisfy wants and needs.
capitalism.
how to make workers more productive and firms more profitable.
markets.
Question 10
2 / 2 pts
When a parent tells you not to study economics because it is a pointless discipline, why is he or she
incorrect?
The government continues to play a role in our daily lives.
People have the freedom to do whatever they want, and economists have nothing to add to their
decision-making process.
There are not enough resources to produce all the goods and services that are wanted and needed.
Economics has nothing to offer in terms of understanding the stock market.
Economics has nothing to offer in terms of understanding government programs like Social Security.
Question 11
2 / 2 pts
An example of a direct negative incentive is:
providing a commission for sales.
awarding a promotion for hard work.
threatening to fire those who do not perform well.
providing an orientation for new employees.
providing generous benefits and pay for employees.
Question 12
2 / 2 pts
Actions and activities are discouraged with which type of incentive?
positive
negative
neutral
complementary
unintended
Question 13
2 / 2 pts
One way to promote a new business is to offer free items. If you were to open a new restaurant and
offer free food, you likely would have a line out the door. How would an economist understand the
behavior of those standing in line?
Those waiting in line place a high value on the use of their time.
Those waiting in line believe that the marginal cost of waiting in line exceeds the marginal benefit of
waiting in line.
Those waiting in line place a low value on the use of their time.
Those waiting in line believe that the marginal cost of waiting in line is zero.
Those waiting in line believe that the marginal benefit of waiting in line is zero.
Question 14
2 / 2 pts
The patent system:
acts as a direct positive incentive.
acts as a direct negative incentive.
acts as an indirect positive incentive.
acts as an indirect negative incentive.
does not provide an incentive.
Question 15
2 / 2 pts
In a growing number of cities, stores are required either not to make available plastic or paper bags or
to do so only for an additional fee. If this fee can be refunded when you recycle the bag, the refund
acts as a(n):
direct incentive.
indirect incentive.
neutral incentive.
complementary incentive.
unintended incentive.
Quiz Score: 30 out of 30
