Question 1

The opportunity cost of an action is equal to:

Accepted Answer

A) the monetary expense incurred as a result of the action. 
B) the value of any alternative use of the time expended on the action. 
C) the highest valued alternative sacrificed as a result of the action. 
D) the sum of the benefits received as a result of the action. 
E) the time value of money. 
A) the monetary expense incurred as a result of the action. 
B) the value of any alternative use of the time expended on the action. 
C) the highest valued alternative sacrificed as a result of the action. 
D) the sum of the benefits received as a result of the action. 
E) the time value of money.

Question 2

Explain why each of the following is considered an economic issue:
a.whether to spend Saturday afternoon at a football game
b.obtaining tickets to a U2 concert
c.your university considers your application for one of 25 available scholarships

Accepted Answer

Each of the following are economic issue

Question 3

Which of the following explains why people tend to dedicate their resources to one primary activity?

Accepted Answer

A) Opportunity costs 
B) Negative incentives 
C) Positive thinking 
D) Fallacy of composition 
A) Opportunity costs 
B) Negative incentives 
C) Positive thinking 
D) Fallacy of composition

Question 4

Tractors, shovels, copy machines, and computer programming expertise are all examples of scarce resources.

Accepted Answer

A) True 
 B)False

Question 5

Why are graphs such an important tool in economics?

Accepted Answer

Graphs allow us to express a s

Question 6

A student has a chance to see Green Day in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

Accepted Answer

A) she may receive a lower grade on the economics exam. 
B) the opportunity cost of the concert is the value of the time spent studying. 
C) the decision involves a trade-off. 
D) all of the above are correct. 
A) she may receive a lower grade on the economics exam. 
B) the opportunity cost of the concert is the value of the time spent studying. 
C) the decision involves a trade-off. 
D) all of the above are correct.

Question 7

Tom is a castaway who washes up on a remote island.He can kill eight birds per hour or catch ten fish per day.The natives on the island can kill ten birds per day or catch twenty fish per day.According to comparative advantage,

Accepted Answer

A) Tom should kill more birds and fish less, then trade birds for fish. 
B) Tom should kill fewer birds and fish more, then trade fish for birds. 
C) Both should kill more birds and fish less. 
D) Both should kill fewer birds and fish more. 
A) Tom should kill more birds and fish less, then trade birds for fish. 
B) Tom should kill fewer birds and fish more, then trade fish for birds. 
C) Both should kill more birds and fish less. 
D) Both should kill fewer birds and fish more.

Question 8

Maggie is a potter and she likes to dig her own clay for producing pots, cups and other ceramic items.She is aware of two places where she can obtain the right clay for her work.The first field is quite close, just at the edge of town.The second field is 15 miles away and (since there are no access roads) requires a half-day of travel just to get there.Compare the opportunity cost of producing pots using clay from each of these fields.

Accepted Answer

The opportunity cost of the clay necessa

Question 9

The opportunity cost of attending college is likely to include all except which of the following?

Accepted Answer

A) the cost of required textbooks 
B) tuition fees 
C) the income you forego in order to attend classes 
D) the cost of haircuts received during the school term 
E) the cost of paper and pencils needed to take notes 
A) the cost of required textbooks 
B) tuition fees 
C) the income you forego in order to attend classes 
D) the cost of haircuts received during the school term 
E) the cost of paper and pencils needed to take notes

Question 10

When a person possesses a comparative advantage in the production of one good or service, it:

Accepted Answer

A) means that the person's opportunity cost is higher than for that of other goods. 
B) discourages specialization. 
C) promotes greater self-sufficiency. 
D) permits gains from trade to be realized due to a more efficient use of resources. 
A) means that the person's opportunity cost is higher than for that of other goods. 
B) discourages specialization. 
C) promotes greater self-sufficiency. 
D) permits gains from trade to be realized due to a more efficient use of resources.

Question 11

When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

Accepted Answer

A) True 
 B)False

Question 12

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.The economic way of thinking indicates that legislation of this type would:

Accepted Answer

A) make it more expensive for parents to provide for their children. 
B) reduce the value of children to their parents and therefore lead to a reduction in the birth rate. 
C) reduce the after-tax cost of raising children and therefore increase the birth rate. 
D) exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity. 
A) make it more expensive for parents to provide for their children. 
B) reduce the value of children to their parents and therefore lead to a reduction in the birth rate. 
C) reduce the after-tax cost of raising children and therefore increase the birth rate. 
D) exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity.

Question 13

Advantages of specialization do not include:

Accepted Answer

A) reduced interdependence. 
B) the exploitation of comparative advantage. 
C) the ability to utilize more complex production processes. 
D) gains from learning by doing. 
E) All of the above are advantages of specialization. 
A) reduced interdependence. 
B) the exploitation of comparative advantage. 
C) the ability to utilize more complex production processes. 
D) gains from learning by doing. 
E) All of the above are advantages of specialization.

Question 14

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g., the imposition of a price control).

Accepted Answer

A) True 
 B)False

Question 15

Jamie and Danny both attend the same college and incur the same expenses for tuition, books, and school supplies.Jamie gave up a lucrative modeling job in Paris to attend school full-time and Danny gave up a part-time job as a sales clerk in a department store.It follows that:

Accepted Answer

A) the opportunity cost of attending college is the same for both since they are enrolled at the same academic institution. 
B) the opportunity cost of attending college is likely greater for Jamie than for Danny. 
C) the opportunity cost of attending college is likely greater for Danny than for Jamie. 
D) the opportunity cost is minimal for both since college graduates are paid much higher than high school graduates on average. 
A) the opportunity cost of attending college is the same for both since they are enrolled at the same academic institution. 
B) the opportunity cost of attending college is likely greater for Jamie than for Danny. 
C) the opportunity cost of attending college is likely greater for Danny than for Jamie. 
D) the opportunity cost is minimal for both since college graduates are paid much higher than high school graduates on average.

Question 16

Beers at the football stadium cost $4 each.Cynthia will stop drinking beer when:

Accepted Answer

A) the marginal benefit received from consuming peanuts with beer just equals $4. 
B) the marginal cost of an additional beer is less than $4. 
C) the marginal benefit of an additional beer equals zero. 
D) the marginal benefit of an additional beer falls below $4. 
A) the marginal benefit received from consuming peanuts with beer just equals $4. 
B) the marginal cost of an additional beer is less than $4. 
C) the marginal benefit of an additional beer equals zero. 
D) the marginal benefit of an additional beer falls below $4.

Question 17

The following table shows the marginal benefit to a consumer from viewing theatrical-release films each month. $$\begin{array} { c c } 
\text { Movie tickets per month } & \text { Marginal Benefit (in dollars) } \
1 & \$ 10.50 \
2 & \$ 9.50 \
3 & \$ 8.50 \
4 & \$ 7.50 \
5 & \$ 6.50 \
6 & \$ 5.50 \
7 & \$ 4.50 \
8 & \$ 3.50
\end{array}$$ If the price of a movie ticket is $8, a consumer following the rule of rational choice will purchase:

Accepted Answer

A) 2 movie tickets per month. 
B) 3 movie tickets per month. 
C) 4 movie tickets per month. 
D) 5 movie tickets per month. 
E) 6 movie tickets per month. 
A) 2 movie tickets per month. 
B) 3 movie tickets per month. 
C) 4 movie tickets per month. 
D) 5 movie tickets per month. 
E) 6 movie tickets per month.

Question 18

Which of the following best defines rational behavior?

Accepted Answer

A) analyzing the total costs of a decision 
B) analyzing the total benefits of a decision 
C) undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities 
D) undertaking activities whenever the marginal benefit exceeds the marginal cost 
E) undertaking activities as long as the marginal benefit exceeds zero 
A) analyzing the total costs of a decision 
B) analyzing the total benefits of a decision 
C) undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities 
D) undertaking activities whenever the marginal benefit exceeds the marginal cost 
E) undertaking activities as long as the marginal benefit exceeds zero

Question 19

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

Accepted Answer

A) True 
 B)False

Question 20

A good economic theory should capture as many details about real-world behavior as possible.

Accepted Answer

A) True 
 B)False

The opportunity cost of an action is equal to:

Explain why each of the following is considered an economic issue: a.whether to spend Saturday afternoon at a football game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

Which of the following explains why people tend to dedicate their resources to one primary activity?

Tractors, shovels, copy machines, and computer programming expertise are all examples of scarce resources.

Why are graphs such an important tool in economics?

A student has a chance to see Green Day in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

Tom is a castaway who washes up on a remote island.He can kill eight birds per hour or catch ten fish per day.The natives on the island can kill ten birds per day or catch twenty fish per day.According to comparative advantage,

The opportunity cost of attending college is likely to include all except which of the following?

When a person possesses a comparative advantage in the production of one good or service, it:

When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.The economic way of thinking indicates that legislation of this type would:

Advantages of specialization do not include:

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g., the imposition of a price control).

Jamie and Danny both attend the same college and incur the same expenses for tuition, books, and school supplies.Jamie gave up a lucrative modeling job in Paris to attend school full-time and Danny gave up a part-time job as a sales clerk in a department store.It follows that:

Beers at the football stadium cost $4 each.Cynthia will stop drinking beer when:

Which of the following best defines rational behavior?

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

A good economic theory should capture as many details about real-world behavior as possible.

The Role and Method of Economics

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 2: The Economic Way of Thinking

The opportunity cost of an action is equal to:

Explain why each of the following is considered an economic issue: a.whether to spend Saturday afternoon at a football game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

Which of the following explains why people tend to dedicate their resources to one primary activity?

Tractors, shovels, copy machines, and computer programming expertise are all examples of scarce resources.

Why are graphs such an important tool in economics?

A student has a chance to see Green Day in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

Tom is a castaway who washes up on a remote island.He can kill eight birds per hour or catch ten fish per day.The natives on the island can kill ten birds per day or catch twenty fish per day.According to comparative advantage,

The opportunity cost of attending college is likely to include all except which of the following?

When a person possesses a comparative advantage in the production of one good or service, it:

When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.The economic way of thinking indicates that legislation of this type would:

Advantages of specialization do not include:

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g., the imposition of a price control).

Jamie and Danny both attend the same college and incur the same expenses for tuition, books, and school supplies.Jamie gave up a lucrative modeling job in Paris to attend school full-time and Danny gave up a part-time job as a sales clerk in a department store.It follows that:

Beers at the football stadium cost $4 each.Cynthia will stop drinking beer when:

Which of the following best defines rational behavior?

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

A good economic theory should capture as many details about real-world behavior as possible.

The Role and Method of Economics

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters