ECON 110 – HOMEWORK QUESTIONS
AND CORRECT ANSWERS
the Marginal benefit from consuming another unit of a good ✔️✔️ correct answ-equals the increase
in total benefit from consuming the unit
Sunk costs ✔️✔️ correct answ-are irrelevant to economic decisions
Economic Reasoning would argue that there is an opportunity cost to: ✔️✔️ correct answ-all choices
when your wages rise, the: ✔️✔️ correct answ-opportunity cost of an hour of leisure increases
Applying the concept of opportunity cost to the pollution of a lake, an economist probably would
conclude that: ✔️✔️ correct answ-pollution should be eliminated as long as the benefit from a
cleanup exceeds the opportunity cost
Scarcity exists because economies cannot produce enough to meet the perceived desire of all
individuals ✔️✔️ correct answ-True
Social and political forces affect the way in which the invisible hand works ✔️✔️ correct answ-True
Deciding what the distribution of income should be is an example of normative economics ✔️✔️
correct answ-True
Which of the following is NOT one of the three central coordination problems of the economy given
in the book? ✔️✔️ correct answ-Whether
an economic force given relatively free rein by society to work through the market is: ✔️✔️ correct
answ-a market force
the price mechanism is: ✔️✔️ correct answ-affected by both political and social forces
, many drugs are illegal in the US. Despite this law, illegal drugs are usually available at a price may
times higher than they would be if the drugs weren't illegal. the high price of illegal drugs is an
example of: ✔️✔️ correct answ-political forces affecting the market
an economic model: ✔️✔️ correct answ-applies economic theory to understand real-world events
an economic principle: ✔️✔️ correct answ-can be combined with knowledge of economic institutions
to make policy proposals
economics primarily ✔️✔️ correct answ-an observational science
a theorem is ✔️✔️ correct answ-a proposition that is logically true based on the assumptions of a
model
a policy rule that concludes that a particular course of action is preferable is known as a(n): ✔️✔️
correct answ-precept
which statement BEST summarizes the invisible hand theorem? ✔️✔️ correct answ-markets direct
people's selfish desires (tempered by political and social force) to the common good
macroeconomics is: ✔️✔️ correct answ-the study of aggregate economic relationships
Production possibility curves are upward-sloping because increased production of one good implies
reduced production of other goods ✔️✔️ correct answ-true
if the principle of increasing marginal opportunity cost holds, the opportunity cost of producing each
additional unit of a good should fall as production of that good rises ✔️✔️ correct answ-true
if a country has a comparative advantage in the production of a good, its resources are better suited
to the production of that good than are the resources of other countries ✔️✔️ correct answ-true
which of the following cannot be determined by using a production possibility table? ✔️✔️ correct
answ-what combination of outputs is best
AND CORRECT ANSWERS
the Marginal benefit from consuming another unit of a good ✔️✔️ correct answ-equals the increase
in total benefit from consuming the unit
Sunk costs ✔️✔️ correct answ-are irrelevant to economic decisions
Economic Reasoning would argue that there is an opportunity cost to: ✔️✔️ correct answ-all choices
when your wages rise, the: ✔️✔️ correct answ-opportunity cost of an hour of leisure increases
Applying the concept of opportunity cost to the pollution of a lake, an economist probably would
conclude that: ✔️✔️ correct answ-pollution should be eliminated as long as the benefit from a
cleanup exceeds the opportunity cost
Scarcity exists because economies cannot produce enough to meet the perceived desire of all
individuals ✔️✔️ correct answ-True
Social and political forces affect the way in which the invisible hand works ✔️✔️ correct answ-True
Deciding what the distribution of income should be is an example of normative economics ✔️✔️
correct answ-True
Which of the following is NOT one of the three central coordination problems of the economy given
in the book? ✔️✔️ correct answ-Whether
an economic force given relatively free rein by society to work through the market is: ✔️✔️ correct
answ-a market force
the price mechanism is: ✔️✔️ correct answ-affected by both political and social forces
, many drugs are illegal in the US. Despite this law, illegal drugs are usually available at a price may
times higher than they would be if the drugs weren't illegal. the high price of illegal drugs is an
example of: ✔️✔️ correct answ-political forces affecting the market
an economic model: ✔️✔️ correct answ-applies economic theory to understand real-world events
an economic principle: ✔️✔️ correct answ-can be combined with knowledge of economic institutions
to make policy proposals
economics primarily ✔️✔️ correct answ-an observational science
a theorem is ✔️✔️ correct answ-a proposition that is logically true based on the assumptions of a
model
a policy rule that concludes that a particular course of action is preferable is known as a(n): ✔️✔️
correct answ-precept
which statement BEST summarizes the invisible hand theorem? ✔️✔️ correct answ-markets direct
people's selfish desires (tempered by political and social force) to the common good
macroeconomics is: ✔️✔️ correct answ-the study of aggregate economic relationships
Production possibility curves are upward-sloping because increased production of one good implies
reduced production of other goods ✔️✔️ correct answ-true
if the principle of increasing marginal opportunity cost holds, the opportunity cost of producing each
additional unit of a good should fall as production of that good rises ✔️✔️ correct answ-true
if a country has a comparative advantage in the production of a good, its resources are better suited
to the production of that good than are the resources of other countries ✔️✔️ correct answ-true
which of the following cannot be determined by using a production possibility table? ✔️✔️ correct
answ-what combination of outputs is best
