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1. Young people who want to earn moderate-to-high incomes should

   	a.	seek employment at an early age with a non-profit organization.
   	b.	join a labor union in order to make sure they are treated fairly by employers
   	c.	borrow all of the funds necessary to attend an elite college or university so they will know lots of people who will provide them with favors in the future.
   	d.	acquire skills and invest in education that will increase their ability to provide valuable goods and services to others.

2.5 points

Question 12

1. Are jobs the key to economic progress and the achievement of high income levels?

   	a.	Yes, as long as people are working, income levels will be high.
   	b.	Yes, when full employment is present, the income levels of the residents will be at their maximum.
   	c.	No, employment will not lead to higher incomes if it does not involve production of goods and services that people value.
   	d.	Uncertain, when an economy is at full employment production of goods and services people value is important, but when unemployment is present, jobs are the key to prosperity.

2.5 points

Question 13

1. Which of the following is correct?

   	a.	As long as resources are scarce, output and income cannot be increased.
   	b.	The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less.
   	c.	Projects that increase employment will increase output and income only if they increase the value of the resources.
   	d.	If a project creates jobs, it will expand output and increase income.

2.5 points

Question 14

1. How does the invisible hand principle explain why self-interested individuals will generally pursue activities that benefit others?

   	a.	The pursuit of profit and income gives individuals a strong incentive to provide goods and services that are highly valued by others.
   	b.	Social Good will result from products or services made available to others, even if sellers reduce their output so they will be able to charge excessively high prices.
   	c.	The invisible hand will cause a certain percentage of individuals to put aside their own self-interest and pursue activities that benefit others.
   	d.	Social pressure from fellow citizens will cause most individuals to pursue activities that benefit others rather than earning profit and income.

2.5 points

Question 15

1. When rent control pushes the price of apartments below the market equilibrium, then

   	a.	everyone who would like a rent-controlled apartment will be able to find one.
   	b.	the scarcity of apartments will be eliminated.
   	c.	a surplus of apartments will emerge.
   	d.	a shortage of the apartments will develop.

2.5 points

Question 16

1. Innovation and technological advancements are most likely to occur

   	a.	through central planning.
   	b.	when firms are subsidized by the government.
   	c.	when entry barriers are high and competitive pressures largely absent.
   	d.	in a competitive market economy.

2.5 points

Question 17

1. Competition is vitally important in a market economy because

   	a.	it directs resources toward firms producing low quality goods.
   	b.	it makes it possible for inefficient producers to earn profits if they supply only high quality goods.
   	c.	it weeds out high-cost producers and directs production toward firms providing quality goods at economical prices.
   	d.	it makes it possible for even inefficient producers to earn high profits.

2.5 points

Question 18

1. When property is owned in common, i.e. not owned by anyone, then

   	a.	there will be a strong incentive to use the property in a manner that will benefit the general public.
   	b.	the incentives to conserve resources are improved.
   	c.	the property will be used less productively.
   	d.	people will take better care of the property.

2.5 points

Question 19

1. Which of the following proposals would be most likely to increase economic growth in developing countries?

   	a.	increasing minimum wages in developing countries
   	b.	increasing foreign aid to developing countries
   	c.	improving central planning by writing more detailed plans
   	d.	providing property deeds and laws that protect property rights

2.5 points

Question 20

1. Which of the following is the best way to assure that property is well kept and managed wisely?

   	a.	government ownership, because government can objectively determine the best use for property
   	b.	cooperatives, because of the input and resources of many people
   	c.	elected officials, who can direct the use of property for the public good
   	d.	private ownership, because the failure to maintain property will directly result in a decline in the property's value