Question 1

In general,to make optimal decisions,one needs information on the

Accepted Answer

A)  average benefits and marginal costs. 
B)  marginal benefits and marginal costs. 
C)  marginal benefits and average costs. 
D)  average benefits and average costs. 
E)  benefits and costs,which can be either average or marginal. 
A)  average benefits and marginal costs. 
B)  marginal benefits and marginal costs. 
C)  marginal benefits and average costs. 
D)  average benefits and average costs. 
E)  benefits and costs,which can be either average or marginal.

Question 2

The economist often considered the "father of macroeconomics" is ___________.

Accepted Answer

A)  Adam Smith. 
B)  Alfred Marshall. 
C)  David Hume 
D)  John Maynard Keynes. 
E)  John Stuart Mill. 
A)  Adam Smith. 
B)  Alfred Marshall. 
C)  David Hume 
D)  John Maynard Keynes. 
E)  John Stuart Mill.

Question 3

Sonja owns a business that pays her a salary of $50,000 plus the potential for future profits.She is considering an offer for a top management position with another firm at a salary of $75,000 per year.

Accepted Answer

A)  She should accept the management position because she would earn more income with the other firm. 
B)  She should refuse the management position because,despite the higher salary,the future profits from her current business will be greater. 
C)  A cost-benefit analysis of her decision should include an opportunity cost of $75,000. 
D)  A cost-benefit analysis of her decision should not include an opportunity cost of $75,000 because her current salary plus future profits could be greater than the salary offered by the other firm. 
E)  A cost-benefit analysis of her decision should include an average cost of $75,000. 
A)  She should accept the management position because she would earn more income with the other firm. 
B)  She should refuse the management position because,despite the higher salary,the future profits from her current business will be greater. 
C)  A cost-benefit analysis of her decision should include an opportunity cost of $75,000. 
D)  A cost-benefit analysis of her decision should not include an opportunity cost of $75,000 because her current salary plus future profits could be greater than the salary offered by the other firm. 
E)  A cost-benefit analysis of her decision should include an average cost of $75,000.

Question 4

If all the world's resources were to magically increase 100-fold,then

Accepted Answer

A)  the scarcity problem would still govern behaviour. 
B)  economics would no longer be relevant. 
C)  the scarcity problem would disappear. 
D)  everyone would be satisfied. 
E)  trade-offs would become unnecessary. 
A)  the scarcity problem would still govern behaviour. 
B)  economics would no longer be relevant. 
C)  the scarcity problem would disappear. 
D)  everyone would be satisfied. 
E)  trade-offs would become unnecessary.

Question 5

The principle of scarcity applies to

Accepted Answer

A)  the poor exclusively. 
B)  nations exclusively. 
C)  all consumers. 
D)  all firms. 
E)  everyone;consumers,firms,governments,and nations. 
A)  the poor exclusively. 
B)  nations exclusively. 
C)  all consumers. 
D)  all firms. 
E)  everyone;consumers,firms,governments,and nations.

Question 6

While eating dinner one evening,you receive a phone call from a telemarketing firm.The firm's representative informs you that your name is one of only five names drawn in a recent lottery.Each of the five people will receive a prize.In order to claim your prize,however,you must visit Summer Resorts,Inc.the following Friday (with no commitment to purchase anything),take a 90 minute tour of their facilities,and,at that time,your prize will be awarded.In order to visit Summer Resorts,Inc.the next Friday,you would have to miss 8 hours of work ($15 per hour),pay for the gas to drive there and back home ($20),and buy lunch ($10).Because you won't go to work that day you won't have to pay the $3 for gas to drive to and from work,nor pay to park,for which you have a monthly pass that costs $50.Using cost-benefit analysis,you determine that it is rational for you to visit Summer Resorts,Inc.if the prize has a minimum value to you of

Accepted Answer

A)  $177. 
B)  $180. 
C)  $183. 
D)  $147. 
E)  $98. 
A)  $177. 
B)  $180. 
C)  $183. 
D)  $147. 
E)  $98.

Question 7

If Brenda works for 10 hours she can sell 15 insurance contracts,and if she works for 11 hours she can sell 18 insurance contracts.The marginal benefit of the 11th hour of Brenda's work equals

Accepted Answer

A)  18 insurance contracts. 
B)  15 insurance contracts. 
C)  33 insurance contracts. 
D)  1 insurance contract. 
E)  3 insurance contracts. 
A)  18 insurance contracts. 
B)  15 insurance contracts. 
C)  33 insurance contracts. 
D)  1 insurance contract. 
E)  3 insurance contracts.

Question 8

-The "net benefit" (total donations minus total labour costs)from hiring fundraisers is largest when __________ employees are hired.

Accepted Answer

A)  5 
B)  4 
C)  3 
D)  2 
E)  1 
A)  5 
B)  4 
C)  3 
D)  2 
E)  1

Question 9

The following table provides the costs (Cost A and Cost B)and the benenfits associated with each unit of activity
-Which of the following statements is correct?

Accepted Answer

A)  The total benefit exceeds the total cost for all units of activity. 
B)  Each of the five units of activity yields the same total benefit. 
C)  Each of the five units of activity yields the same average benefit. 
D)  Each additional unit of activity yields the same marginal benefit. 
E)  Each additional unit of activity yields more and more additional benefit. 
A)  The total benefit exceeds the total cost for all units of activity. 
B)  Each of the five units of activity yields the same total benefit. 
C)  Each of the five units of activity yields the same average benefit. 
D)  Each additional unit of activity yields the same marginal benefit. 
E)  Each additional unit of activity yields more and more additional benefit.

Question 10

The scarcity problem applies to

Accepted Answer

A)  all decisions. 
B)  only market decisions,e.g. ,buying a car. 
C)  only non-market decisions,e.g. ,watching a sunset. 
D)  only the poor. 
E)  only the wealthy. 
A)  all decisions. 
B)  only market decisions,e.g. ,buying a car. 
C)  only non-market decisions,e.g. ,watching a sunset. 
D)  only the poor. 
E)  only the wealthy.

Question 11

-Total donations raised by three employees are

Accepted Answer

A)  $43,899. 
B)  $45,000. 
C)  $48,911. 
D)  $51,963. 
E)  $57,721. 
A)  $43,899. 
B)  $45,000. 
C)  $48,911. 
D)  $51,963. 
E)  $57,721.

Question 12

If there were no scarcity,it implies that

Accepted Answer

A)  benefits must be greater than costs. 
B)  all human desires would be irrelevant. 
C)  costs would be irrelevant. 
D)  market prices must be low. 
E)  everyone probably has lots of money. 
A)  benefits must be greater than costs. 
B)  all human desires would be irrelevant. 
C)  costs would be irrelevant. 
D)  market prices must be low. 
E)  everyone probably has lots of money.

Question 13

Which of the following statements is an example of positive economics?

Accepted Answer

A)  The minimum wage should be increased to allow minimum-wage workers to earn decent incomes. 
B)  In a free market environment,wages should be set by the market. 
C)  A higher minimum wage will reduce the number of workers hired. 
D)  A higher minimum wage will be fairer to skilled workers. 
E)  A higher minimum wage is good for the economy. 
A)  The minimum wage should be increased to allow minimum-wage workers to earn decent incomes. 
B)  In a free market environment,wages should be set by the market. 
C)  A higher minimum wage will reduce the number of workers hired. 
D)  A higher minimum wage will be fairer to skilled workers. 
E)  A higher minimum wage is good for the economy.

Question 14

To avoid the mistake of ignoring opportunity costs,questions can be framed in the form of

Accepted Answer

A)  "should I do A?" 
B)  "should I do B?" 
C)  "why should I do A?" 
D)  "should I do A or B?" 
E)  "should I do A or B or C or¼ Z?" 
A)  "should I do A?" 
B)  "should I do B?" 
C)  "why should I do A?" 
D)  "should I do A or B?" 
E)  "should I do A or B or C or¼ Z?"

Question 15

David finds he has one hour of time in the evening to allocate on the first day of the new semester.He can do one of two things.He can watch TV for one hour or he can open his economics textbook and read for an hour.The benefit of watching TV is 30;the benefit of reading about economics is 20.
-If David applies the cost-benefit principle accurately,he will

Accepted Answer

A)  read about economics. 
B)  watch TV. 
C)  watch TV but fret that he should be reading economics. 
D)  read about economics but resent missing TV. 
E)  flip a coin,because the economic surplus is the same either way. 
A)  read about economics. 
B)  watch TV. 
C)  watch TV but fret that he should be reading economics. 
D)  read about economics but resent missing TV. 
E)  flip a coin,because the economic surplus is the same either way.

Question 16

Refer to the graph below.Rodney has taken two trips to New York City at an average cost of $400 per trip.Which of the following is true?

Accepted Answer

A)  Rodney is rational. 
B)  Rodney took too many trips 
C)  We cannot determine whether Rodney is rational given the available information. 
D)  Rodney took too few trips. 
E)  Rodney took the optimal number of trips. 
A)  Rodney is rational. 
B)  Rodney took too many trips 
C)  We cannot determine whether Rodney is rational given the available information. 
D)  Rodney took too few trips. 
E)  Rodney took the optimal number of trips.

Question 17

Chuck offers $122,000 for a house.The seller turns down the offer but says she will sell the house for $129,000.However,Chuck refuses to pay the higher price.If both Chuck and the seller are rational,then marginal analysis implies that the marginal benefit to the house to

Accepted Answer

A)  Chuck must be less than $129,000. 
B)  Chuck must be greater than $129,000. 
C)  Chuck must be greater than $122,000. 
D)  the seller must be less than $129,000. 
E)  the seller must be less than $122,000. 
A)  Chuck must be less than $129,000. 
B)  Chuck must be greater than $129,000. 
C)  Chuck must be greater than $122,000. 
D)  the seller must be less than $129,000. 
E)  the seller must be less than $122,000.

Question 18

If the marginal costs of 1,2,and 3 hours of talking on the phone are $50,$75,and $105,then the total costs are

Accepted Answer

A)  $50,$150,and $315. 
B)  $50,$41.67,and $115. 
C)  $50,125,and $230. 
D)  $50,$175,and $405. 
E)  impossible to calculate with information given. 
A)  $50,$150,and $315. 
B)  $50,$41.67,and $115. 
C)  $50,125,and $230. 
D)  $50,$175,and $405. 
E)  impossible to calculate with information given.

Question 19

The following table shows the relationship between the speed of a computer's CPU and the benefits and costs.Assume that all other features of the computer are the same,i.e. ,CPU speed is the only source of variation.
  
-The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is

Accepted Answer

A)  $600. 
B)  $500. 
C)  $400. 
D)  $200. 
E)  $100. 
A)  $600. 
B)  $500. 
C)  $400. 
D)  $200. 
E)  $100.

Question 20

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home.
  
-What is the marginal benefit of painting the fourth room?

Accepted Answer

A)  $0. 
B)  $200. 
C)  $300. 
D)  $400. 
E)  $500. 
A)  $0. 
B)  $200. 
C)  $300. 
D)  $400. 
E)  $500.

In general,to make optimal decisions,one needs information on the

The economist often considered the "father of macroeconomics" is ___________.

Sonja owns a business that pays her a salary of $50,000 plus the potential for future profits.She is considering an offer for a top management position with another firm at a salary of $75,000 per year.

If all the world's resources were to magically increase 100-fold,then

The principle of scarcity applies to

If Brenda works for 10 hours she can sell 15 insurance contracts,and if she works for 11 hours she can sell 18 insurance contracts.The marginal benefit of the 11^th hour of Brenda's work equals

-The "net benefit" (total donations minus total labour costs)from hiring fundraisers is largest when __________ employees are hired.

The following table provides the costs (Cost A and Cost B)and the benenfits associated with each unit of activity -Which of the following statements is correct?

The scarcity problem applies to

-Total donations raised by three employees are

If there were no scarcity,it implies that

Which of the following statements is an example of positive economics?

To avoid the mistake of ignoring opportunity costs,questions can be framed in the form of

Refer to the graph below.Rodney has taken two trips to New York City at an average cost of $400 per trip.Which of the following is true?

Chuck offers $122,000 for a house.The seller turns down the offer but says she will sell the house for $129,000.However,Chuck refuses to pay the higher price.If both Chuck and the seller are rational,then marginal analysis implies that the marginal benefit to the house to

If the marginal costs of 1,2,and 3 hours of talking on the phone are $50,$75,and $105,then the total costs are

The following table shows the relationship between the speed of a computer's CPU and the benefits and costs.Assume that all other features of the computer are the same,i.e. ,CPU speed is the only source of variation. -The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home. -What is the marginal benefit of painting the fourth room?

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Exam 1: Measuring Macroeconomic Performance: Output and Prices

In general,to make optimal decisions,one needs information on the

The economist often considered the "father of macroeconomics" is ___________.

Sonja owns a business that pays her a salary of $50,000 plus the potential for future profits.She is considering an offer for a top management position with another firm at a salary of $75,000 per year.

If all the world's resources were to magically increase 100-fold,then

The principle of scarcity applies to

If Brenda works for 10 hours she can sell 15 insurance contracts,and if she works for 11 hours she can sell 18 insurance contracts.The marginal benefit of the 11th hour of Brenda's work equals

-The "net benefit" (total donations minus total labour costs)from hiring fundraisers is largest when __________ employees are hired.

The following table provides the costs (Cost A and Cost B)and the benenfits associated with each unit of activity -Which of the following statements is correct?

The scarcity problem applies to

-Total donations raised by three employees are

If there were no scarcity,it implies that

Which of the following statements is an example of positive economics?

To avoid the mistake of ignoring opportunity costs,questions can be framed in the form of

Refer to the graph below.Rodney has taken two trips to New York City at an average cost of $400 per trip.Which of the following is true?

Chuck offers $122,000 for a house.The seller turns down the offer but says she will sell the house for $129,000.However,Chuck refuses to pay the higher price.If both Chuck and the seller are rational,then marginal analysis implies that the marginal benefit to the house to

If the marginal costs of 1,2,and 3 hours of talking on the phone are $50,$75,and $105,then the total costs are

The following table shows the relationship between the speed of a computer's CPU and the benefits and costs.Assume that all other features of the computer are the same,i.e. ,CPU speed is the only source of variation. -The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home. -What is the marginal benefit of painting the fourth room?

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

If Brenda works for 10 hours she can sell 15 insurance contracts,and if she works for 11 hours she can sell 18 insurance contracts.The marginal benefit of the 11^th hour of Brenda's work equals