ECON 2110 Test #1 Final Exam Review

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

a. $0

Channing and Bevin are starting a house painting service. It takes Channing 10 minutes to scrape a standard sized wall and 20 minutes to paint the wall. It takes Bevin 20 minutes to scrape a standard wall and 30 minutes to paint the wall. Their paint service will be most productive if a. Channing focuses on the scraping while Bevin focuses on the painting b. Bevin focuses on the scraping while Channing focuses on the painting c. Channing handles both the painting and the scraping d. Channing and Bevin each scrape and paint their own wall e. There is not enough information to say which option would be most productive

a. Channing focuses on the scraping while Bevin focuses on the painting

Which of the following is a positive, rather than normative, statement? a. Fewer houses will be put up for rent if laws keep rents low b. Rents for long term tenants should not be allowed to rise merely because an area becomes fashionable. c. The amount of affordable housing currently available is too low. d. You are terrific! e. All of the above.

a. Fewer houses will be put up for rent if laws keep rents low

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? a. It would increase the cost b. It would decrease the cost, because the player could make more money in the meantime. c. It would not affect the cost, but it would affect the benefits. d. It would affect neither the benefits nor costs of becoming a broadcaster e. There is not enough information to determine

a. It would increase the cost

"Senior citizens deserve an income that will allow them to live in comfort for their remaining years." This is an example of a. a normative statement. b. a positive statement. c. neither a positive and normative statement. d. a statement reflecting the concept of scarcity. e. a recognition of opportunity costs.

a. a normative statement.

Douglas entered the Air Force's Officer Candidate School (AFOCS) after graduating from Clemson. Had he not entered the AFOCS, Douglas would have attended business school (he was accepted by Duke). Had he not been accepted by either the Air Force or Duke, he would have gone to work for his father. The opportunity cost of his going to AFOCS was a. attending Duke Business School. b. working for his father. c. either attending Duke Business School and working for his father. d. both attending Duke Business School and working for his father. e. It is impossible to know without more information.

a. attending Duke Business School.

Economists use the term "opportunity cost" to highlight the fact that a. costs are really opportunities given up. b. most costs involve the opportunity to get something in return. c. every opportunity also has its cost. d. there are always opportunities to lower the cost.

a. costs are really opportunities given up.

The fact that more pedestrians were killed after laws made cars safer demonstrates that a. people respond to incentives. b. laws usually have a bad effect. c. people will always drive badly. d. cars need to be made even safer.

a. people respond to incentives.

According to MBN, when U.S. jobs are "protected" through the use of trade barriers, a. the costs to consumers exceeds the benefits to protected workers b. the benefits to protected workers exceeds the costs to consumers c. the costs to consumers equals the benefits to protected workers d. it is difficult to tell whether the benefits to protected workers or the costs consumers is higher e. other countries may then attempt to "dump" goods within U.S. borders

a. the costs to consumers exceeds the benefits to protected workers

When economists refer to tradeoffs, they are highlighting a. the existence of scarcity b. the fact that trade makes us better off c. the importance of gains from trade d. the importance of ensuring that gains from trade are distributed equitably e. All of the above

a. the existence of scarcity

You and your friend decide to live in the wild for a year. Your friend has a small comparative advantage at hunting and you have a small comparative advantage at fishing. Therefore, a. the two of you will eat better if your friend does all the hunting and you do all the fishing. b. the two of you will eat better if the one who can catch the most fish per hour does the fishing, and the one who can shoot the most deer per hour does the hunting. c. you and your friend have the same opportunity costs. d. All of the above e. None of the above.

a. the two of you will eat better if your friend does all the hunting and you do all the fishing.

If we as a country decide to dedicate more resources to making meat safe a. there will be fewer resources left over to do other desirable things. b. we will have too much safety. c. we are not thinking at the margin. d. we will never face another case of e-coli poisoning

a. there will be fewer resources left over to do other desirable things.

If we as a country decide to dedicate more resources to making meat safe a. there will be less left over to do other desirable things. b. we will have too much safety. c. we are not thinking at the margin. d. we will never face another case of e-coli poisoning.

a. there will be less left over to do other desirable things.

The idea that "people respond to incentives" would lead us to conclude that single parent births a. will increase if public child support increases. b. should never happen. c. result from complicated social conditions and are thus unaffected by public assistance. d. depend only on the public assistance offered.

a. will increase if public child support increases.

If you value a good at $25 and you buy it from Ed, who values it at $4, for a price of $10, you have created total gains from trade of a. $15. b. $21. c. $6. d. $25.

b. $21

Which of the following best illustrates the concept of comparative advantage? a. Your lawyer processes his own legal briefs in order to get them done quickly. b. A world-renowned chef hires someone to cook meals for his family. c. A firm builds a second factory after demand for its product increases. d. A doctor takes accounting courses to help her manage the business end of her practice. e. All of the above.

b. A world-renowned chef hires someone to cook meals for his family.

I head out to the forest for a few hours of wild berry picking. I pick blueberries and blackberries. Blackberries are harder to pick, because they have thorns. In a minute, I can pick a cup of blueberries or half a cup of blackberries. I spend ten minutes picking blackberries. What did those blackberries cost? a. Exactly ten cups of blueberries. b. At least ten cups of blueberries. c. Less than ten cups of blueberries. d. Either more, less, or exactly ten cups of blueberries e. It is impossible to say

b. At least ten cups of blueberries.

As a result of a lucrative new TV contract, NFL player salaries rise dramatically. A veteran player, concerned about the risk of injury, had been considering retirement. Will the new contract affect the player's decision? a. Because it does not change the risk of injury, the new contract will not affect the player's decision. b. Because it raises the cost of retiring, the new contract makes it less likely the player will retire. c. Because the player will not be paid once he retires, the new contract has no effect at the margin. d. The player may be more or less likely to retire after learning about the new contract, depending upon the marginal benefits and marginal costs.

b. Because it raises the cost of retiring, the new contract makes it less likely the player will retire.

MBN describe the "Big Mac index" as a simple way to take into account a. differences in opportunity costs between consumers b. differences in purchasing power between countries c. differences in benefits from fast food received by consumers d. differences in locations of fast food restaurants within countries

b. differences in purchasing power between countries

"Microeconomics" focuses principally on a. choosing the proper goods for society to produce. b. how individuals choose among scarce goods. c. why some goods are scarce while others are not scarce. d. the unlimited nature of wants and resources. e. All of the above

b. how individuals choose among scarce goods.

Jerome manages the local Nifty-wear rug cleaning service, which cleans rugs and carpets. He is employing marginal analysis when he compares a. the total revenue from cleaning Persian carpets to the total cost. b. the extra revenue from cleaning a few more Persian carpets to the extra cost. c. the average cost of cleaning carpets to the average cost of cleaning rugs, in order to specialize more efficiently. d. how much his cleaning service costs relative to that of his nearest competitor. e. All of the above.

b. the extra revenue from cleaning a few more Persian carpets to the extra cost.

Laura is a manager for HP, and must decide whether to produce a few additional printers. She is choosing at the margin when she compares a. the total revenue from sales of printers to the total cost of producing printers. b. the extra revenue from selling a few additional printers to the extra costs of producing the additional printers. c. HP's printer sales to sales of competing printers. d. the extra revenue from selling a few additional printers to the average cost of producing the additional printers. e. All of the above

b. the extra revenue from selling a few additional printers to the extra costs of producing the additional printers.

According to Miller, Benjamin and North, the primary economic rationale for road tolls is a. to raise revenue b. to reduce congestion c. to reduce speeding d. to improve infrastructure

b. to reduce congestion

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

c. The marginal benefits of working out rather than going to a movie exceed the marginal costs

Some welfare programs offer assistance to families only if there is no father present in the home. What effect would you expect such programs to have on the number of two-parent, low-income families? a. No effect, since family decisions are based primarily on factors much more important than welfare eligibility. b. The number of two-parent, low-income families is likely to rise. c. The number of two-parent, low-income families is likely to fall. d. It is impossible to form any expectation about this situation.

c. The number of two-parent, low-income families is likely to fall

Tom is twice as good as Tim at producing widgets and three times as good as producing gadgets. Therefore, a. Tom and Tim would not benefit from trade b. Tim's cost of producing widgets is higher than his cost of producing gadgets c. Tom's cost of producing widgets is higher than Tim's cost of producing widgets d. Tim has higher opportunity costs than Tom e. There is not enough information to determine who has higher costs or if trade would be mutually beneficial.

c. Tom's cost of producing widgets is higher than Tim's cost of producing widgets

Which of the following is not a positive statement? a. If you leave that cookie on the table, the dog will eat it. b. If the dog eats the cookie, she will throw up on the rug. c. You should learn to take better care of your cookies. d. All of the above are positive statements e. None of the above are positive statements

c. You should learn to take better care of your cookies.

If Clemson raises the price of on-campus parking, you would expect to see a. a decrease in the demand for on-campus parking b. an decrease in the supply of on-campus parking c. an increase in the demand for off-campus parking d. all of the above

c. an increase in the demand for off-campus parking

Most economists believe that the assumption of rationality a. is how humans behave in all circumstances. b. is the best argument for the economic model. c. is not always a realistic assumption, but allows useful predictions to be made nonetheless. d. should be supported by teaching people how to act rationally.

c. is not always a realistic assumption, but allows useful predictions to be made nonetheless.

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 a. is inexplicable b. makes him worse off c. makes him better off d. makes him better off only if he uses the yacht. e. makes him neither better nor worse off, because he probably won't use the yacht.

c. makes him better off

Given that toxic waste can be a risk to health, the benefits of reducing toxic waste at the margin a. must exceed the costs b. must be less than the costs c. may be greater or less than the costs d. necessarily exceed the opportunity cost e. None of the above

c. may be greater or less than the costs

Given there is a finite amount of water, the benefits of conserving water at the margin a. must exceed the costs b. must be less than the costs c. may be greater or less than the costs d. necessarily exceed the opportunity cost

c. may be greater or less than the costs

MBN argue that the reason there is so much more natural gas produced from shale formations by fracking in the U.S. than in Europe is a. there are fewer shale formations in Europe b. European labor costs are higher c. mineral rights are owned by European governments, rather than by private landowners, as in the U.S. d. European governments care more about global warming than does the U.S. government

c. mineral rights are owned by European governments, rather than by private landowners, as in the U.S.

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 a. only join if I plan to make at least $100 of purchases b. ignore the membership fee since it is a sunk cost c. only join if I expect to get at least $100 worth of discounts d. only join if they promise to refund my membership fee if I'm not satisfied

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

Marginal benefits are the benefits a. that your activity provides to society b. that exceed the marginal costs c. that arise from a small increase in the activity d. that are always equal to the price you must pay to engage in the activity

c. that arise from a small increase in the activity

University enrollment tends to increase during recessions. Think like an economist: A plausible explanation is that a. the benefits of an education fall when unemployment rises. b. many people enjoy going to university whether times are good or bad. c. the opportunity cost of being a student falls when unemployment rises. d. a college degree can get one a better job. e. All of the above.

c. the opportunity cost of being a student falls when unemployment rises.

If you've purchased an all you can eat ticket to a clam roast for $25, good economic thinking would tell you to take one last plateful if a. the value of that plateful to you is greater than $25 b. the value of that plateful to you is greater than or equal to $1 and you've already taken 24 platefuls that you value at $1 each. c. the value of that plateful to you is greater than zero. d. none of the above

c. the value of that plateful to you is greater than zero.

According to the theory of comparative advantage, a country will export a good only if a. it can produce the good using less labor than other countries b. its producers pay low wages c. what it gives up to produce the good is less than what importers give up. d. its labor force is more productive than those of importing countries e. All of the above

c. what it gives up to produce the good is less than what importers give up.

If you stop studying biology and spend an hour studying economics instead, we can conclude that a. you like studying economics better than studying biology. b. you'd rather spend whatever time you have studying economics than studying biology c. you value one additional hour of studying economics more than one additional hour of studying biology. d. you value studying economics more than studying biology. e. All of the above.

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

You want to purchase some pizza. The price is $8 for one pizza, $15 for two pizzas, and $20 for three pizzas. What is the marginal cost to you of getting a third pizza? a. $20. b. $12. c. $7. d. $5. e. zero, if you don't plan to eat the third pizza (it becomes a sunk cost)

d. $5.

Which of the following is consistent with the marginal principle a. Saxon spends an hour studying, even though he can barely keep his eyes open b. Miley spends an hour studying, even though she has a tennis match early tomorrow c. Bob spends an hour studying, because he enjoys studying more than anything else d. All of the above are consistent with the marginal principle e. None of the above is consistent with the marginal principle

d. All of the above are consistent with the marginal principle

I traded my old ten speed bike for a vintage skateboard. As a result of the deal, a. gains from trade were created. b. I was made better off. c. my ten speed bike increased in value. d. All of the above. e. Just a and b.

d. All of the above.

Which of the following is a resource allocation question? a. Should the government allow mining or grazing on a parcel of public land? b. Should new houses be built in San Diego or in Las Vegas or both, and how many? c. Should my spouse and I have another child? d. All of the above. e. All except c.

d. All of the above.

Suppose Coney Island changes its pricing and offers instead a single $30 daily ticket, for which one can ride the Cyclone as many times as one likes. Using the economic model, we can predict that following the pricing change, a. Charlize will take more rides than under the $5 per ride scheme b. Charlize will take fewer rides than under the $5 per ride scheme c. Charlize will take the same number of rides as under the $5 per ride scheme d. Charlize may take, more, fewer, or the same number of rides as under the $5 per ride scheme

d. Charlize may take, more, fewer, or the same number of rides as under the $5 per ride scheme

From an economic perspective, the difference between price and cost is a. prices are more likely to involve money than costs b. costs are more likely to involve money than prices c. costs are opportunities sacrificed, while prices are amounts paid d. There is no difference

d. There is no difference

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

d. all of the above

Which of the following is true of the statement "All pollution must be stopped"? a. It ignores the importance of comparing marginal benefits and marginal costs b. It does not consider that we may have too much pollution control c. It ignores the fact that to get more of anything, we must give up something else d. all of the above

d. all of the above

Steve is walking along 5th Avenue passing by a penny, a nickel, a dime, and a quarter along the way. He only bothers to bend down to pick up the quarter. We can infer that the opportunity cost to Steve of picking up a coin measured in monetary units is a. one cent b. five cents c. ten cents d. greater than ten cents but less than 25 cents e. at least 25 cents

d. greater than ten cents but less than 25 cents

Steve is walking along 5th Avenue passing by a penny, a nickel, a dime, and a quarter along the way. He only bothers to bend down to pick up the quarter. We can infer that the opportunity cost to Steve of picking up a coin measured in monetary units is a. one cent b. five cents c. ten cents d. greater than ten cents but less than 25 cents e. at least 25 cents

d. greater than ten cents but less than 25 cents e. at least 25 cents

Making cars safer could result in more accidents a. under no possible circumstances. b. only if people are irrational. c. only if designers are mistaken about how safe a car really is. d. if people respond to incentives.

d. if people respond to incentives.

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), a. children will become less scarce b. single people will have many more children. c. single people will have fewer children at the margin. d. single people will be more likely to have children at the margin. e. the number of children is unlikely to change, because the decision to have children is based on opportunity cost, not just aid.

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

A good is "scarce", as economists use the term, only when a. there is less than an infinite amount of it available. b. there is less of the good available than there was in the past. c. a shortage exists. d. something has to be given up to get more of it.

d. something has to be given up to get more of it.

Marginal benefit is the benefit a. that your activity provides to someone else. b. of an activity that exceeds its cost. c. that arises from the opportunity cost of an activity. d. that arises from a small increase in an activity

d. that arises from a small increase in an activity

According to MBN, the single factor that best explains differences in per capita wealth across nations is a. different resource endowments. b. failure to take advantage of trade agreements. c. globalization. d. the quality of political and legal institutions. e. failure to think at the margin.

d. the quality of political and legal institutions.

When airlines increase the number of safety inspections of their engines, a. there is no cost, since more safety benefits everybody. b. there is no cost for society as a whole, since only a few firms are affected. c. there is a cost only if firms are forced to cancel flights. d. there is a cost because firms and consumers must give up something in return.

d. there is a cost because firms and consumers must give up something in return.

When society requires that firms reduce pollution a. there is no tradeoff, since lower pollution benefits everybody. b. there is no tradeoff for society as a whole, since only a few firms are affected. c. there is a tradeoff only if firms are forced to close down. d. there is a tradeoff because firms and consumers will be left with less money.

d. there is a tradeoff because firms and consumers will be left with less money.

Scarcity is a situation in which a. something is being wasted. b. something is on the verge of running out. c. some people are poor and others are rich. d. we are unable to satisfy all our wants. e. All of the above.

d. we are unable to satisfy all our wants.

If 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 a. you are emphasizing marginal benefits and I am emphasizing marginal costs b. much of the food stamp program is already a sunk cost c. the benefits and costs of food stamps are likely to be difficult to calculate d. you are making a normative argument and I am making a positive argument e. you are being reasonable and I am being aggravating

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

Think like an economist: If Bob chooses to go to a movie nearby rather than travelling into the city to attend a play, we can conclude that a. Bob's cost of attending the play is very high. b. Bob's benefits from attending the play are not very high. c. at the margin, Bob gets more benefits from going to the movie than from attending the play d. All of the above e. None of the above.

e. . None of the above.

Which of the following is not an assumption of the economic model? a. People respond to incentives. b. Goods are scarce. c. People make decisions by comparing marginal benefits and marginal costs. d. The only costs that matter are opportunity costs. e. All are assumptions of the economic model.

e. All are assumptions of the economic model.

Which of the following is not an assumption of the economic model? a. People respond to incentives. b. Goods are scarce. c. People make decisions by comparing marginal benefits and marginal costs. d. The only costs that matter are opportunity costs. e. All are assumptions of the economic model.

e. All are assumptions of the economic model.

Some parents changed their plans and skipped Parent's Weekend because of the looming hurricane. Thinking like economists, we can conclude that a. given the hurricane, the benefits of attending were less than the costs. b. the hurricane either raised the costs or lowered the benefits of attending. c. the hurricane made driving to Clemson too costly. d. All of the above. e. Just a and b.

e. Just a and b.

Suppose a law requires employers to provide health insurance coverage for "contract employees" (i.e., workers on short-term contracts), "because contract employees deserve health insurance too!" What would our economic model lead us to predict? a. Firms would use fewer contract employees b. Firms would reduce the amount they pay contract employees c. Most current contract employees would be made better off d. All of the above e. Just a and b.

e. Just a and b.

The marginal costs of your European vacation include a. your passport application fee if you wouldn't have gotten a passport otherwise b. your plane ticket to Europe. c. all the food you consume while in Europe. d. All of the above e. Just a and b.

e. Just a and b.

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 a. the income he could have earned at the printed circuit board factory b. the direct cost of attending Clemson (tuition, textbooks, etc.) c. the benefits he could have received from attending the rival college d. All of the above e. Just a. and b.

e. Just a. and b.

By law, you may donate your kidney to whomever you choose, but you are not allowed to sell your kidney. Assume people are rational and think like an economist: The reason is that a.monetary sales of body parts would make both buyers and sellers worse off b. people would sell kidneys for money even if it risks their health c. people would be forced to give up their kidneys in order to pay for things they need d. All of the above e. None of the above

e. None of the above

People who buy items without first shopping around for a lower price a. do not pay sufficient attention to their costs. b. are focused only on opportunity costs, not monetary costs. c. are paying more attention to their benefits than to their costs. d. All of the above e. None of the above

e. None of the above

The difference between a price and an opportunity cost is that a. a price does not represent an opportunity sacrificed. b. a price is expressed in dollar terms while an opportunity cost is an alternative foregone. c. an opportunity cost represents only part of a price paid. d. All of the above e. None of the above

e. None of the above

When I visit family in Connecticut, I usually drive rather than fly. Therefore, using the economic way of thinking, you can deduce that a. at the margin, I get more benefits from driving than from flying b. I must dislike flying a lot c. I must like driving a lot d. All of the above e. None of the above

e. None of the above

Beth is a student in Clemson's Honors College and Rob is not. Because students in Clemson's Honors Program receive free tickets to plays held at the Brooks Center while non-honors students do not, a. the opportunity cost to Beth of attending a Brooks Center play is less than the opportunity cost to Rob. b. Beth will go to more Brooks Center plays than Rob will. c. Beth will get greater net benefits from Brooks Center plays than Rob will. d. All of the above. e. None of the above.

e. None of the above.

So many people have become addicted to opioid pain medications that additional restrictions on opioid sales have been proposed. From the rising addiction rates, we can conclude that a. the benefits of tighter restrictions would be greater than the costs. b. opioids create more costs than benefits at the margin. c. additional restrictions would generate more benefits than costs at the margin. d. All of the above. e. None of the above.

e. None of the above.

Your very smart and athletic friend turns down a football scholarship at Clemson to play minor league baseball for the Braves. As economists, we can conclude that a. your friend gets higher benefits from playing minor league baseball than from playing college football. b. receiving a salary is something your friend values greatly. c. your friend values education less than you do - you chose to pay for a Clemson education. d. All of the above. e. None of the above.

e. None of the above.

The difference between a marginal cost and an opportunity cost is a. marginal cost is the cost of the last unit, while opportunity cost is the cost of the opportunity sacrificed. b. marginal cost involves decisions "at the margin", while opportunity cost involves alternatives. c. opportunity cost makes up only part of marginal cost. d. All of the above e. There is no difference

e. There is no difference

According to Miller, Benjamin and North (and many economists), the primary factor explaining why some countries are rich and some are poor is a. different allocations of resources b. better geographical locations c. the level of agricultural output d. the nature of comparative advantage e. the quality of institutions such as legal systems

e. the quality of institutions such as legal systems

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. d. they don't reflect what people actually value. e. they cannot be affected by the decision in question.

e. they cannot be affected by the decision in question.

If you pay $400 for a season pool pass at a private club, the marginal cost to you of swimming on any given weekday will be a. $400. b. $10 if you swim 40 times. c. $20 if the swim season lasts twenty weeks. d. $3 if the swim season lasts twenty-one weeks and there are seven days in a week e. zero

e. zero