Economics Exam

Economics is best defined as the study of - ANSWER-how society manages its scarce resources. Your opportunity cost of going to a movie is - ANSWER-the total cash expenditure needed to go to the movie plus the value of your time. A marginal change is one that - ANSWER-incrementally alters an existing plan. Adam Smith's phrase "invisible hand" refers to - ANSWER-the ability of free markets to reach desirable outcomes, despite the self-interest of market participants. Governments may intervene in a market economy in order to - ANSWER-All of the above. If a nation has high and persistent inflation, the most likely explanation is - ANSWER-the central bank creating excessive amounts of money. Which of the following describe some of the trade-offs faced by a family deciding whether to buy a new car? Check all that apply. - ANSWER--A larger vehicle means saving time by not having to make multiple trips somewhere, but a smaller vehicle is cheaper. -An increase in the family's car payment means the family will be unable to afford a vacation. -Fuel-efficient cars are more expensive, but regular cars require spending more on gas. Which of the following describe some of the trade-offs faced by a member of Congress deciding how much to spend on national parks? Check all that apply. - ANSWER--Congress can spend either a small amount on a lot of parks or a large amount on a single national park. -Money spent on national parks benefits park visitors, but alternatively the money could be spent on highways to benefit drivers. Which of the following describe some of the trade-offs faced by a company president deciding whether to open a new factory? Check all that apply. --The firm can either pay out more of its profit to shareholders or earn additional profit next year by increasing production. --The president has been with the company for 20 years. --The firm can either open a new factory or upgrade existing equipment. --The factory currently employs 100 workers. - ANSWER--The firm can either pay out more of its profit to shareholders or earn additional profit next year by increasing production.