ECON 2110 Final Exam Review Questions And Answers

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ECON 2110 Final Exam Review Questions And
Answers
1. c. the value of that plateful to you is greater than zero.: If you've purchased an
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all you can eat ticket to a clam roast for $25, good economic thinking would tell you to
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take one last plateful if
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a. the value of that plateful to you is greater than $25
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b. the value of that plateful to you is greater than or equal to $1 and you've already tak
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en 24 platefuls that you value at $1 each.
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c. the value of that plateful to you is greater than zero.
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d. none of the above q q q


2. d. at the margin, you value two hours of movie watching more than two hours of
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studying economics: If you decide to go to a movie this evening rather than study e
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conomics, you thereby demonstrate that q q q q




a. you don't care about getting good grades
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b. you hate economics
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c. you would rather have fun than fulfill your responsibilities
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d. at the margin, you value two hours of movie watching more than two hours of stu
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dying economics
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e. none of the above. q q q


3. b. marginal costs: The costs that influence decisions are always
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a. average costs. q


b. marginal costs q


c. sunk costs. q


d. total costs. q


4. e. zero: If you pay $400 for a season pool pass at a private club, the marginal cost to y
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ou of swimming on any given weekday will be
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a. $400.
b. $10 if you swim 40 times.
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c. $20 if the swim season lasts twenty weeks.
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d. $3 if the swim season lasts twenty-one weeks and there are seven days in a week
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e. zero
5. d. $5.: You want to purchase two pizzas. The price is $8 per pizza, 2 for $15, 3 for
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$20. What will be the marginal cost to you of buying a third pizza?
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a. $20.
b. $12.
c. $7.




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d. $5.
e. zero, if you don't plan to eat the third pizza (it becomes a sunk cost
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6. c. only join if I expect to get at least $100 worth of discounts: I am considering joi
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ning a "shopper's club", where I pay $100 membership fee and then get a twenty-
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five percent discount on all my purchases. In making my decision, I should
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a. only join if I plan to make at least $100 of purchases
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b. ignore the membership fee since it is a sunk cost
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c. only join if I expect to get at least $100 worth of discounts
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d. only join if they promise to refund my membership fee if I'm not satisfied
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7. c. an increase in the demand for off-
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campus parking: If Clemson raises the price of on-
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campus parking, you would expect to see q q q q q q




a. a decrease in the demand for on-campus parking
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b. an decrease in the supply of on-campus parking
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c. an increase in the demand for off-campus parking
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d. all of the above
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8. d. all of the above: Which of the following is true of the statement "All pollution mu
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st be stopped"?
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a. It ignores the importance of comparing marginal benefits and marginal costs
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b. It does not consider that we may have too much pollution control
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c. It ignores the fact that to get more of anything, we must give up something else
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d. all of the above
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9. c. sell the motorcycle for the best offer you can get: If you buy a motorcycle for
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$1000 and then discover that you hate riding it and will never ride it again, the best th
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ing to do is
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a. keep the motorcycle because you've paid so much for it
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b. keep the motorcycle unless you can find someone who will pay you at least $1000 for
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it
c. sell the motorcycle for the best offer you can get
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d. sell the motorcycle for the best offer you can get, as long as it covers most of what you
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qpaid for it q q


10. e. All are assumptions of the economic model.: Which of the following is not an
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qassumption of the economic model? q q q q




a. People respond to incentives. q q q


b. Goods are scarce. q q

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c. People make decisions by comparing marginal benefits and marginal costs.
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d. The only costs that matter are opportunity costs.
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e. All are assumptions of the economic model.
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11. b. the shopping time matters less to you than the lower price you expect to
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get.: If you are searching for a new pair of skis, it makes sense to keep looking as lon
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a. you haven't found the lowest price available.
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b. the shopping time matters less to you than the lower price you expect to get.
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c. there are stores left that you haven't checked.
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d. you face no opportunity costs at all.
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e. All of the above.
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12. e. None of the above.: If Switzerland can make 35 pounds of chocolate or 5 wa
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tches while Albania can make 6 pounds of chocolate or 1 watch
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a. no trade will be profitable for Switzerland.
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b. no trade will be profitable for Albania.
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c. Albania has higher opportunity costs than Switzerland.
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d. Switzerland has higher opportunity costs than Albania. q q q q q q


e. None of the above. q q q


13. c. Switzerland has the comparative advantage in chocolate; Albania in
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watches.: If Switzerland can make 35 pounds of chocolate or 5 watches while Al
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bania can make 6 pounds of chocolate or 1 watch, who has the comparative adva
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ntage?

a. Switzerland has the comparative advantage in both chocolate and watches. q q q q q q q q q


b. Albania has the comparative advantage in both chocolate and watches.
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c. Switzerland has the comparative advantage in chocolate; Albania in watches.
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d. Albania has the comparative advantage in chocolate; Switzerland in watches.
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e. There is not enough information to say.
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14. b. one watch for 6.5 pounds of chocolate.: A trade that can make both co
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untries better off would beq q q q




a. one watch for 7 pounds of chocolate.
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b. one watch for 6.5 pounds of chocolate.
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c. one watch for 6 pounds of chocolate.
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d. one watch for 7.5 pounds of chocolate.
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e. No such trade exists.
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