ECON 2110 Exam 1 Clemson exam
with Verified Correct Solutions.
1. If a buyer values a product at $19 and a seller' opportunity cost of selling the
product is $14, the gains from trade
a. can't be determined without knowledge of the price.
b. are $19.
c. are $14.
d. are $5.
e. are $33. - ANSWER are $5
2. Which of the following is the most important advantage to a society of using
money rather than relying exclusively on barter?
a. The use of money encourages people to diversify and learn to do more
things for themselves.
b. The use of money encourages people who want to exchange to
become more closely acquainted.
c. The use of money lowers the cost of exchanging goods.
d. The use of money reduces opportunities for fraud and theft.
e. The use of money reduces selfishness because money in itself has no
value. - ANSWER The use of money lowers the cost of exchanging goods.
3. Based on the concept of opportunity cost, where would you expect to have
the least trouble finding someone to clean your house?
a. In a high-income area with low unemployment.
b. In a low-income area with high unemployment.
c. In a middle class area with medium unemployment.
d. In any area, because there's always someone willing to clean house. -
ANSWER In a low-income area with high unemployment
,4. The real cost of any action
a. depends upon the number of suppliers
b. is the cost to the consumer plus the cost to the producer
c. is greater when demand shifts
d. is the value of the alternative sacrificed
e. all of the above - ANSWER is the value of the alternative sacrificed
5. Movie-goers who are willing to put up with long lines at a cinema to get a
lower price are
a. not rational
b. haven't evaluated the marginal cost of the time they give up
c. would give up any amount of time to save a little money
d. all of the above.
e. none of the above. - ANSWER none of the above
6. Which of the following explain my decision to go to the weight room rather
than to a movie?
a. I value exercising more than movie watching
b. I feel better if I work out
c. The marginal benefits of working out rather than going to a movie
exceed the marginal costs
d. I like to exercise more than I like to watch films
e. all of the above - ANSWER The marginal benefits of working out
rather than going to a movie exceed the marginal costs
7. How can I raise the cost of coming to class?
a. charge an admission fee
b. schedule class at inconvenient times
c. give extra homework to anyone who shows up
d. all of the above
e. none of the above - ANSWER all of the above
,8. The idea that human behavior is "self-interested" assumes that people want
a. more of everything
b. material goods but not spiritual goods
c. money
d. to advance projects in which they are interested
e. all of the above - ANSWER to advance projects in which they are
interested
9. An article in the newspaper suggests that an Indian tribe should use coal
rather than gas power because the tribe owns 114 billion tons of coal
reserves. This statement
a. is true because if they own the coal, they don't have to pay for it
b. is false because coal is more polluting
c. is false because it ignores opportunity costs
d. none of the above - ANSWER is false because it ignores opportunity
costs
10.The cost to a ski instructor of taking a day off
a. is higher on the weekend when more people ski.
b. falls when it snows.
c. rises when it rains.
d. rises when there are a lot of other instructors around, so competition is
intense. - ANSWER is higher on the weekend when more people ski
11.You see this deal at the supermarket: one frozen pizza for $3.00, two for
$5.00.
Your marginal cost for the second pizza is
a. $5.00
b. $3.00
c. $2.50
d. $2.00
e. zero. - ANSWER $2.00
, 12.If you've bought an $80 sticker to park on campus, and you plan to park on
campus eighty times before the semester ends, the marginal cost to you each
time you park is
a. $0
b. $1
c. $8
d. $80
e. Negative - ANSWER $0
13. If you paid $25,000 for your car just a short while ago, but the best offer
you can get for it now is $12,000. You should only sell the car
a. if its worth to you is less than $12,000.
b. if its worth to you is less than $25,000.
c. if you can get something close to what you paid for it.
d. if you value it more than $12,000. - ANSWER if its worth to you is less than
$12,000
14. The form of rationing we see most often in our society is
a. queuing (waiting in line).
b. lotteries.
c. allocating goods through the political process.
d. allocating goods according to need.
e. price. - ANSWER price
15. Sunk costs are irrelevant to economic decisions because
a. they don't involve monetary expenditures, merely opportunity costs.
b. opportunity costs rise with the quantity supplied.
c. they don't affect a firm's profit.
with Verified Correct Solutions.
1. If a buyer values a product at $19 and a seller' opportunity cost of selling the
product is $14, the gains from trade
a. can't be determined without knowledge of the price.
b. are $19.
c. are $14.
d. are $5.
e. are $33. - ANSWER are $5
2. Which of the following is the most important advantage to a society of using
money rather than relying exclusively on barter?
a. The use of money encourages people to diversify and learn to do more
things for themselves.
b. The use of money encourages people who want to exchange to
become more closely acquainted.
c. The use of money lowers the cost of exchanging goods.
d. The use of money reduces opportunities for fraud and theft.
e. The use of money reduces selfishness because money in itself has no
value. - ANSWER The use of money lowers the cost of exchanging goods.
3. Based on the concept of opportunity cost, where would you expect to have
the least trouble finding someone to clean your house?
a. In a high-income area with low unemployment.
b. In a low-income area with high unemployment.
c. In a middle class area with medium unemployment.
d. In any area, because there's always someone willing to clean house. -
ANSWER In a low-income area with high unemployment
,4. The real cost of any action
a. depends upon the number of suppliers
b. is the cost to the consumer plus the cost to the producer
c. is greater when demand shifts
d. is the value of the alternative sacrificed
e. all of the above - ANSWER is the value of the alternative sacrificed
5. Movie-goers who are willing to put up with long lines at a cinema to get a
lower price are
a. not rational
b. haven't evaluated the marginal cost of the time they give up
c. would give up any amount of time to save a little money
d. all of the above.
e. none of the above. - ANSWER none of the above
6. Which of the following explain my decision to go to the weight room rather
than to a movie?
a. I value exercising more than movie watching
b. I feel better if I work out
c. The marginal benefits of working out rather than going to a movie
exceed the marginal costs
d. I like to exercise more than I like to watch films
e. all of the above - ANSWER The marginal benefits of working out
rather than going to a movie exceed the marginal costs
7. How can I raise the cost of coming to class?
a. charge an admission fee
b. schedule class at inconvenient times
c. give extra homework to anyone who shows up
d. all of the above
e. none of the above - ANSWER all of the above
,8. The idea that human behavior is "self-interested" assumes that people want
a. more of everything
b. material goods but not spiritual goods
c. money
d. to advance projects in which they are interested
e. all of the above - ANSWER to advance projects in which they are
interested
9. An article in the newspaper suggests that an Indian tribe should use coal
rather than gas power because the tribe owns 114 billion tons of coal
reserves. This statement
a. is true because if they own the coal, they don't have to pay for it
b. is false because coal is more polluting
c. is false because it ignores opportunity costs
d. none of the above - ANSWER is false because it ignores opportunity
costs
10.The cost to a ski instructor of taking a day off
a. is higher on the weekend when more people ski.
b. falls when it snows.
c. rises when it rains.
d. rises when there are a lot of other instructors around, so competition is
intense. - ANSWER is higher on the weekend when more people ski
11.You see this deal at the supermarket: one frozen pizza for $3.00, two for
$5.00.
Your marginal cost for the second pizza is
a. $5.00
b. $3.00
c. $2.50
d. $2.00
e. zero. - ANSWER $2.00
, 12.If you've bought an $80 sticker to park on campus, and you plan to park on
campus eighty times before the semester ends, the marginal cost to you each
time you park is
a. $0
b. $1
c. $8
d. $80
e. Negative - ANSWER $0
13. If you paid $25,000 for your car just a short while ago, but the best offer
you can get for it now is $12,000. You should only sell the car
a. if its worth to you is less than $12,000.
b. if its worth to you is less than $25,000.
c. if you can get something close to what you paid for it.
d. if you value it more than $12,000. - ANSWER if its worth to you is less than
$12,000
14. The form of rationing we see most often in our society is
a. queuing (waiting in line).
b. lotteries.
c. allocating goods through the political process.
d. allocating goods according to need.
e. price. - ANSWER price
15. Sunk costs are irrelevant to economic decisions because
a. they don't involve monetary expenditures, merely opportunity costs.
b. opportunity costs rise with the quantity supplied.
c. they don't affect a firm's profit.
