ECN 101
Class Activity
Chapter 1
Prof. Ali
Answer the following questions.
Chapter 1: Introduction
1. Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of
napping is
a. the value of the knowledge she would have received had she attended class.
b. the $24 she could have earned if she had worked at her job for those two hours.
c. the value of her nap minus the value of attending class.
d. nothing, since she valued sleep more than attendance at class.
2. The property of society getting the most it can from its scarce resources is called
a. externality.
b. efficiency
c. equality.
d. productivity.
3. The phrase “no such thing as a free lunch” means
a. rational people think at the margin.
b. people respond to incentives.
c. people must face tradeoffs.
d. trade can make everyone better off.
4. A rational decisionmaker takes an action if and only if
a. the marginal benefit of the action exceeds the marginal cost of the action.
b. the marginal cost of the action exceeds the marginal benefit of the action.
c. the marginal cost of the action is zero.
d. the opportunity cost of the action is zero.
5. Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in
Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best
illustrate?
a. Markets are usually a good way to organize economic activity.
b. Rational people think at the margin.
c. Trade can make everyone better off.
d. People respond to incentives.
Class Activity
Chapter 1
Prof. Ali
Answer the following questions.
Chapter 1: Introduction
1. Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of
napping is
a. the value of the knowledge she would have received had she attended class.
b. the $24 she could have earned if she had worked at her job for those two hours.
c. the value of her nap minus the value of attending class.
d. nothing, since she valued sleep more than attendance at class.
2. The property of society getting the most it can from its scarce resources is called
a. externality.
b. efficiency
c. equality.
d. productivity.
3. The phrase “no such thing as a free lunch” means
a. rational people think at the margin.
b. people respond to incentives.
c. people must face tradeoffs.
d. trade can make everyone better off.
4. A rational decisionmaker takes an action if and only if
a. the marginal benefit of the action exceeds the marginal cost of the action.
b. the marginal cost of the action exceeds the marginal benefit of the action.
c. the marginal cost of the action is zero.
d. the opportunity cost of the action is zero.
5. Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in
Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best
illustrate?
a. Markets are usually a good way to organize economic activity.
b. Rational people think at the margin.
c. Trade can make everyone better off.
d. People respond to incentives.
