Question 1

Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?

Accepted Answer

In general it would not make s

Question 2

Pollution damages the environment we live in.An economist would advise that we reduce air pollution:

Accepted Answer

A) as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction. 
B) until the total benefit from air pollution reduction just equals the total cost of pollution reduction. 
C) until air pollution levels reach near-zero levels. 
D) to the levels experienced in the 1950s when air was much cleaner near big cities. 
A) as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction. 
B) until the total benefit from air pollution reduction just equals the total cost of pollution reduction. 
C) until air pollution levels reach near-zero levels. 
D) to the levels experienced in the 1950s when air was much cleaner near big cities.

Question 3

The circular flow model indicates that income flows from households to firms through product markets and back from firms to households through factor markets.Is the total amount spent by all households equal to the total income that flows back to all households? Why or why not? Is the amount spent by each individual household equal to the amount that flows back to that specific household? Why or why not?

Accepted Answer

In our circular flow model, the total am

Question 4

Assume that Columbia can produce 1,000 pounds of coffee in one day or produce 200 pounds of bananas in one day.In addition, assume that Ecuador can produce 300 pounds of coffee in one day or produce 100 pounds of bananas in one day.Which country has the comparative advantage in coffee and which has the comparative advantage in bananas? Determine a pattern of trade regarding these countries and these goods that would benefit both countries.

Accepted Answer

Columbia has the comparative advantage i

Question 5

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Accepted Answer

A) True 
 B)False

Question 6

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00.The marginal cost of buying a second gallon of milk:

Accepted Answer

A) equals $6.00. 
B) equals $4.00. 
C) equals $3.00. 
D) equals $2.00. 
E) equals zero dollars. 
A) equals $6.00. 
B) equals $4.00. 
C) equals $3.00. 
D) equals $2.00. 
E) equals zero dollars.

Question 7

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).This illustrates the concept of:

Accepted Answer

A) exchange. 
B) ceteris paribus. 
C) opportunity cost. 
D) specialization. 
E) the division of labor. 
A) exchange. 
B) ceteris paribus. 
C) opportunity cost. 
D) specialization. 
E) the division of labor.

Question 8

To be a positive economic statement, an assertion must be factual.

Accepted Answer

A) True 
 B)False

Question 9

If airfares to Europe were to increase, an economist would predict that:

Accepted Answer

A) most people will not change their travel and vacation plans. 
B) more individuals will choose to fly to Europe because now it is a more valuable experience. 
C) many individuals will substitute toward other travel destinations. 
D) airlines will make significantly greater profits. 
A) most people will not change their travel and vacation plans. 
B) more individuals will choose to fly to Europe because now it is a more valuable experience. 
C) many individuals will substitute toward other travel destinations. 
D) airlines will make significantly greater profits.

Question 10

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Accepted Answer

These activities would be considered rat

Question 11

Which of the following is true?

Accepted Answer

A) People specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. 
B) The primary reason people pursue their comparative advantage is their self-interest. 
C) One advantage of specialization is that workers acquire greater skill from repetition. 
D) If a person, a region, or a country can produce a good or service at a lower opportunity cost than others, we say that they have a comparative advantage in the production of that good or service. 
E) All of the above are true. 
A) People specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. 
B) The primary reason people pursue their comparative advantage is their self-interest. 
C) One advantage of specialization is that workers acquire greater skill from repetition. 
D) If a person, a region, or a country can produce a good or service at a lower opportunity cost than others, we say that they have a comparative advantage in the production of that good or service. 
E) All of the above are true.

Question 12

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000.The price of the new sport utility vehicle is $22,000.

Accepted Answer

A) If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. 
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C) If you do not purchase the new sport utility vehicle, your net loss will be $2,000. 
D) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000. 
A) If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. 
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C) If you do not purchase the new sport utility vehicle, your net loss will be $2,000. 
D) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000.

Question 13

To obtain the greatest gains from trade, a country should specialize in and ____ those goods for which it has a comparative advantage and ____ those goods for which other countries have a comparative advantage.

Accepted Answer

A) export; export 
B) import; import 
C) export; import 
D) import; export 
A) export; export 
B) import; import 
C) export; import 
D) import; export

Question 14

When economists disagree, it is often over what type of issues?

Accepted Answer

Economists generally disagree

Question 15

Scarcity applies to our needs but does not apply to our wants.

Accepted Answer

A) True 
 B)False

Question 16

The opportunity cost of an airplane flight:

Accepted Answer

A) differs across passengers only to the extent that each traveler pays a different airfare. 
B) is identical for all passengers and equal to the number of hours a particular flight takes. 
C) differs across passengers to the extent that both the airfare paid and the highest valued use of travel time vary. 
D) is equal to the cost of a bus ticket, the next best form of alternative transportation to flying. 
A) differs across passengers only to the extent that each traveler pays a different airfare. 
B) is identical for all passengers and equal to the number of hours a particular flight takes. 
C) differs across passengers to the extent that both the airfare paid and the highest valued use of travel time vary. 
D) is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.

Question 17

The main concern of economics is to study how well the stock markets are performing.

Accepted Answer

A) True 
 B)False

Question 18

A university offers a free shuttle service around campus.The opportunity cost of the shuttle service is equal to:

Accepted Answer

A) zero, since it is free to students who want to ride. 
B) the wages paid to the shuttle drivers. 
C) the wages paid to the shuttle drivers, plus the gasoline expenses. 
D) the highest valued alternative use of the resources devoted to the shuttle program. 
A) zero, since it is free to students who want to ride. 
B) the wages paid to the shuttle drivers. 
C) the wages paid to the shuttle drivers, plus the gasoline expenses. 
D) the highest valued alternative use of the resources devoted to the shuttle program.

Question 19

Why do people generally switch channels when a movie's final credits are being displayed?

Accepted Answer

Individuals will only pursue an activity

Question 20

Identify the error in judgment in each of the following statements:
 "If you leave a concert durng the encore, you wril avaid traffic and get home more rapidy, therefore everyone should leave during the encore."
II. "Whenever I wear my lucky baseball cap to an exam, I receive an "A." My baseball cap Must induce the teacher to give me goud grades."

Accepted Answer

Statement I is an example of t

Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?

Pollution damages the environment we live in.An economist would advise that we reduce air pollution:

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00.The marginal cost of buying a second gallon of milk:

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).This illustrates the concept of:

To be a positive economic statement, an assertion must be factual.

If airfares to Europe were to increase, an economist would predict that:

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Which of the following is true?

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000.The price of the new sport utility vehicle is $22,000.

To obtain the greatest gains from trade, a country should specialize in and those goods for which it has a comparative advantage and those goods for which other countries have a comparative advantage.

When economists disagree, it is often over what type of issues?

Scarcity applies to our needs but does not apply to our wants.

The opportunity cost of an airplane flight:

The main concern of economics is to study how well the stock markets are performing.

A university offers a free shuttle service around campus.The opportunity cost of the shuttle service is equal to:

Why do people generally switch channels when a movie's final credits are being displayed?

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

Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?

Pollution damages the environment we live in.An economist would advise that we reduce air pollution:

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00.The marginal cost of buying a second gallon of milk:

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).This illustrates the concept of:

To be a positive economic statement, an assertion must be factual.

If airfares to Europe were to increase, an economist would predict that:

Can activities like driving faster than the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Which of the following is true?

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000.The price of the new sport utility vehicle is $22,000.

To obtain the greatest gains from trade, a country should specialize in and ____ those goods for which it has a comparative advantage and ____ those goods for which other countries have a comparative advantage.

When economists disagree, it is often over what type of issues?

Scarcity applies to our needs but does not apply to our wants.

The opportunity cost of an airplane flight:

The main concern of economics is to study how well the stock markets are performing.

A university offers a free shuttle service around campus.The opportunity cost of the shuttle service is equal to:

Why do people generally switch channels when a movie's final credits are being displayed?

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

To obtain the greatest gains from trade, a country should specialize in and those goods for which it has a comparative advantage and those goods for which other countries have a comparative advantage.