ECN Test 1

Our economic model would lead us to predict that if monetary aid per child given to single parents increases substantially (holding everything else the same),

single people will be more likely to have children at the margin

the greatest benefit of trade comes from allowing people to

specialize and thereby increase production and consumption

If you are searching for an expensive new suit, it makes sense to keep looking as long as

the shopping time matters less to you than the lower price you expect to get

when airlines increase the number of safety inspections of their engines,

there is a cost bc firms and consumers must give up something in return

scarcity is a situation in which

we are unable to satisfy all our wants

The idea that "people respond to incentives" would lead us to conclude that the murder rate

would fall if tougher penalties are enacted

You say that expanding the food stamp program is the right thing to do, and I reply that expanding the program will lead to less spent in other areas, we are unlikely to have a meeting of minds because

you are making a normative argument and I am making a positive argument

If you stop studying biology and spend an hour studying economics instead, we can conclude that

you value one additional hour of studying economics more than one additional hour of studying biology

If you decide to go to a movie this evening rather than study economics, you thereby demonstrate that

at the margin, you value an evening of movie watching more than an evening of economics

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

$0

Suppose you go to an amusement park, and rather than paying $1.50 per ride, you pay $20 for a card that gives twenty rides. You are about to take your tenth ride. The marginal cost of that tenth ride is

$0

What is the cost of going home after only ten rides when the card would allow you twenty rides?

$0

If a buyer values a product at $28 and a seller's opportunity cost of providing the product is $12, the gains from trade

$16

the form of rationing we see most often in our society is

price

"Senior citizens deserve an income that will allow them to live in comfort for their remaining years." This is an example of

a normative statement

best illustrates the concept of comparative advantage

a world-renowned chef hires someone to cook meals for his family

a person has a comparative advantage in any activity whenever she

can perform the activity at a lower opp cost than other people

You miss the last train home on New Year's Eve. After walking for an hour, you spot a taxi. Its driver wants to charge $150 to take you home, though the ride usually costs $30. You are furious, but feel you have no other option and accept the deal. Finding the taxi

has made both you and the driver better off

The idea that "people respond to incentives" would lead us to conclude that class attendance would rise

if attendance is for a grade, if there are lost of pop quizzes, if students get paid for attending class

The professional basketball players' union negotiates a contract that dramatically increases all players' salaries. How would this influence the cost to a player of quitting basketball to pursue a career in broadcasting?

increase the cost

your comparative advantage as a house painter (as opposed to a student)

increases during the summer vacation

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

is false because it ignores opportunity costs

the real cost of any action

is the value of the alternative sacrificed

A friend of yours invests his lifesavings in a yacht even though he has never sailed, can't swim, and hates being out on the water. You try to talk him out of it, but he won't listen. His purchase of the yacht

makes him better off

the difference between a marginal cost and an opportunity cost is

nothing

I am considering joining a "shopper's club", where I pay $100 membership fee and then get a twenty-five percent discount on all my purchases. In making my decision, I should

only join if I expect to get at least $100 worth of discounts

you observe that a hot dog vendor lowers his prices in the late afternoon. which is a plausible economic rationale?

opportunity cost of hot dogs has fallen, people are less likely to buy them in the late afternoon rather than earlier, marginal benefits of other activities rises in the afternoon

for which is there a market

orange juice, pedigree dogs, hiking in national forest

After graduating from high school, Steve had three choices, listed in order of preference: (1) matriculate at Clemson, (2) work in a printed circuit board factory, or (3) attend a rival college. His opportunity cost of going to Clemson includes

the income he could have earned at the factory and the direct cost of attending Clemson

a rational decision maker takes action only if

the marginal benefit is greater than the marginal cost