Exam 1: The Principles and Practice of Economics

Which of the following statements is true?

The following table shows the various combinations of rugs and chairs that the consumer can buy with $100: -Sam pays $600 for 30 days of guitar classes.He attends an hour-long class every day.If,instead of attending class,he works at a part-time job,he would be paid $5 an hour.Alternatively,he could work at a fast-food outlet and earn $9 per hour.Once he has already paid a nonrefundable fee of $600 to enroll in the class,what is his opportunity cost of attending each hour of class?

Which of the following statements is true of equilibrium?

Which of the following statements is true?

Assume that a house is rented by four students.When it comes to keeping the house clean,each of the four roommates has an incentive to leave the cleaning to the others.As a result,the house is never clean.Which of the following is the best solution to this problem of free riding?

Which of the following statements correctly highlights the difference between microeconomics and macroeconomics?

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. -Refer to the scenario above.If the opportunity cost of time increases to $80 per hour,which of the following statements is true?

Define the three key principles of economics.

Which of the following is an example of a positive economic statement?

The best alternative use of a resource is referred to as its ________.

Robert and Janet are discussing the unemployment and inflation in their country.Robert,on the basis of a recent newspaper report,claims that a 5 percent reduction in unemployment will lead to a 2 percent rise in inflation.In contrast,Janet insists that inflation is a far bigger problem than unemployment and should be considered as of prime importance.Classify Robert's and Janet's statements as descriptive or advisory.Explain your answer.

Which of the following statements is true?

John has to choose between two jobs: one that offers him $50 per hour and one that offers him $35 per hour.The opportunity cost of choosing the job that offers him $50 per hour is ________.

Which of the following best describes scarce resources?

A budget constraint represents the ________.

Kevin has a lot of free time,and he decides to pick up a new hobby.He has two options-he can take art classes or sign up for cooking classes.He estimates that the art classes would cost him $70 and would provide him with a benefit of $100.In contrast,the cooking classes would cost him $120 but provide him benefits worth $160.Use cost-benefit analysis to arrive at the optimum choice for Kevin.

Which of the following is a topic studied by macroeconomists?

Which of the following statements is true of free riding?

The relationship between a firm's advertising expenditure and its profit is studied under ________.

Which of the following correctly identifies the trade-off that a budget constraint represents?