ECON EXAM 1QUESTIONSAND ANSWERS
Economics is best defined as the study of: - Answers - how people make choices in
the face of scarcity and the implications of those choices for society as a whole.
Economists recognize that because people have limited resources: - Answers - they
have to make trade-offs.
If all the world's resources were to magically increase one hundredfold, then: - Answers
- people would still have to make trade-offs.
Chris has a one-hour break between classes every Wednesday. Chris can either stay at
the library and study or go to the gym and work out. The decision Chris must make is: -
Answers - an economic problem because Chris has only one hour, and engaging in
one activity means giving up the other.
The Cost-Benefit Principle indicates that an action should be taken if, and only if: -
Answers - its benefits exceed its costs.
According to the Cost-Benefit Principle, you should spend an additional hour studying
for an exam if, and only if,: - Answers - the benefits of studying for an additional hour
exceed the costs of studying for an additional hour.
A rational person is someone: - Answers - with well-defined goals who tries to fulfill
those goals as best as he or she can.
Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant
that gives free refills. According to the Cost-Benefit Principle Tim should: - Answers -
drink a third glass of soda if the benefit of doing so is positive.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for
food and drinks rather than spending an equal amount of money to go to a movie. Her
opportunity cost of going to the beach is: - Answers - the value she places on seeing
the movie.
All else equal, relative to a person who earns minimum wage, a person who earns $30
per hour has: - Answers - a higher opportunity cost of taking the day off work.
The opportunity cost of an activity includes the value of: - Answers - the next-best
alternative that must be foregone.
Alex received a four-year scholarship to State U. that covered tuition and fees, room
and board, and books and supplies. If Alex becomes a full-time student, then: -
Answers - the opportunity cost of attending State U. includes the money Alex could
have earned working for four years.
, Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys
one for $12,000, her ______ would be ______. - Answers - economic surplus; $3,000
If one fails to account for implicit costs in decision making, then applying the cost-benefit
rule will be flawed because: - Answers - the costs will be understated.
The marginal benefit of an activity is the: - Answers - extra benefit associated with an
extra unit of the activity.
Suppose the total benefit of watching 1 baseball game is 100, the total benefit of
watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case,
the marginal benefit of watching the 3rd game is: - Answers - 5
The extra cost that results from carrying out one additional unit of an activity is the
_____ of the activity. - Answers - marginal cost
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan,
which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th
meal is: - Answers - $0.
Refer to the table below. The marginal cost of the 3rd unit of this activity is:
Units of
Activity
Total
Cost Total
Benefit
0 $0 $0
1 $30 $100
2 $40 $160
3 $60 $190
4 $100 $210
5 $150 $220
6 $210 $225 - Answers - $20
Refer to the table below. The marginal benefit of the 5th unit of activity is:
Units of
Activity
Total
Cost Total
Benefit
0 $0 $0
1 $30 $100
Economics is best defined as the study of: - Answers - how people make choices in
the face of scarcity and the implications of those choices for society as a whole.
Economists recognize that because people have limited resources: - Answers - they
have to make trade-offs.
If all the world's resources were to magically increase one hundredfold, then: - Answers
- people would still have to make trade-offs.
Chris has a one-hour break between classes every Wednesday. Chris can either stay at
the library and study or go to the gym and work out. The decision Chris must make is: -
Answers - an economic problem because Chris has only one hour, and engaging in
one activity means giving up the other.
The Cost-Benefit Principle indicates that an action should be taken if, and only if: -
Answers - its benefits exceed its costs.
According to the Cost-Benefit Principle, you should spend an additional hour studying
for an exam if, and only if,: - Answers - the benefits of studying for an additional hour
exceed the costs of studying for an additional hour.
A rational person is someone: - Answers - with well-defined goals who tries to fulfill
those goals as best as he or she can.
Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant
that gives free refills. According to the Cost-Benefit Principle Tim should: - Answers -
drink a third glass of soda if the benefit of doing so is positive.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for
food and drinks rather than spending an equal amount of money to go to a movie. Her
opportunity cost of going to the beach is: - Answers - the value she places on seeing
the movie.
All else equal, relative to a person who earns minimum wage, a person who earns $30
per hour has: - Answers - a higher opportunity cost of taking the day off work.
The opportunity cost of an activity includes the value of: - Answers - the next-best
alternative that must be foregone.
Alex received a four-year scholarship to State U. that covered tuition and fees, room
and board, and books and supplies. If Alex becomes a full-time student, then: -
Answers - the opportunity cost of attending State U. includes the money Alex could
have earned working for four years.
, Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys
one for $12,000, her ______ would be ______. - Answers - economic surplus; $3,000
If one fails to account for implicit costs in decision making, then applying the cost-benefit
rule will be flawed because: - Answers - the costs will be understated.
The marginal benefit of an activity is the: - Answers - extra benefit associated with an
extra unit of the activity.
Suppose the total benefit of watching 1 baseball game is 100, the total benefit of
watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case,
the marginal benefit of watching the 3rd game is: - Answers - 5
The extra cost that results from carrying out one additional unit of an activity is the
_____ of the activity. - Answers - marginal cost
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan,
which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th
meal is: - Answers - $0.
Refer to the table below. The marginal cost of the 3rd unit of this activity is:
Units of
Activity
Total
Cost Total
Benefit
0 $0 $0
1 $30 $100
2 $40 $160
3 $60 $190
4 $100 $210
5 $150 $220
6 $210 $225 - Answers - $20
Refer to the table below. The marginal benefit of the 5th unit of activity is:
Units of
Activity
Total
Cost Total
Benefit
0 $0 $0
1 $30 $100
