Exam 1: The Principles and Practice of Economics

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.What is the total cost involved if Maria chooses to travel by train?

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

The following table shows the various combinations of rugs and chairs that the consumer can buy with $100: -Suppose workers decide to work more and consume less leisure when their hourly wage rate increases.What could explain this behavior?

Why do trade-offs occur? How are budget constraints related to trade-offs?

Which of the following is true of equilibrium?

Which of the following statements is true?

What is cost-benefit analysis? What are the steps involved in using cost-benefit analysis to make the optimal choice?

How does microeconomics differ from macroeconomics?

Which of the following is NOT a scarce resource?

Which of the following statements is true?

Why an economy contracts during slowdowns and the analysis of appropriate policies is studied under ________.

An individual has 8 hours to spare.She has to divide her time between two activities: reading and writing.Which of the following allocations will completely exhaust the individual's budget?

If a particular choice that an individual faces gives him a benefit of $20 but costs $30,the net benefit from making this choice equals ________.

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 Maria's opportunity cost of time increases to $80 per hour,the cost of driving to destination A is ________.

________ is the study of how individuals,households,governments,and firms make choices and how those choices affect prices,the allocation of resources,and the well-being of other agents.

Which of the following statements is true of optimization?

A consumer has $20 that he wants to spend on two goods: pens priced at $2 each and pencils priced at $1 each.Which of the following correctly represents his budget constraint?

Differentiate between positive and normative economics using examples.

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

What are scarce resources? Why are economic agents concerned with the allocation of these resources?