Microeconomics Exam 1

A trade that can make both countries better off would be

1.5 umbrellas for 1 fish.

This is a schedule of the marginal benefits and marginal costs for product "X". Quantity 1 2 3 4 5 Marginal benefit $15 $10 $8 $7 $2 Marginal cost $6 $7 $7 $8 $9 Use the marginal principle to predict how much X will be consumed

3

If they charge you $12 for an "all you can consume" pass, how many will you consume?

5

If you buy a motorcycle for $1000 and then discover that you hate riding it and will never ride it again, the best thing to do is

sell the motorcycle for the best offer you can get

A good is "scarce", as economists use the term, only when

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

A good is "scarce" when.

something must be given up to get more of it.

You want to purchase two pizzas. The price is $8 per pizza, 2 for $15, 3 for $20. What will be the marginal cost to you of buying a third pizza?

$5

The costs that influence decisions are always

. marginal costs.

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

0

If Clemson raises the price of on-campus parking, you would expect to see

an increase in the demand for off-campus parking

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

The fact that more pedestrians were killed after laws made cars safer demonstrates that

people respond to incentives.

Could you ever have too much environmental protection? Correct!

Yes, if the marginal costs are greater than the marginal benefits.

Which of the following explain my decision to go to the weight room now rather than to a movie ?

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

Grocery shoppers who are willing to pay high prices at one supermarket in order to avoid long lines at another

are comparing the benefits and costs of their choice.

The opportunity cost to college athletes on scholarship who stay in school

are the wages they could make otherwise.

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

at the margin, you value two hours of movie watching more than two hours of studying economics

The economic model

b. is about how people make choices.

Could there ever be too little pollution?

Yes, if the marginal benefits of the additional pollution reduction are less than the marginal costs.

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

If you pay $2 for each ride you take on a roller coaster, and you are about to take your tenth and last ride for the day, the marginal cost of that ride is

$2

You see this deal at the supermarket: one frozen pizza for $3.00, two for $5.00. Your marginal cost for the second pizza is

$2.00

If those benefits and costs are yours, how much would you be willing to pay for a pass that would let you consume all the X you wanted?

$42 (Add up all Marginal Benefit)

If England can make 10 umbrellas or 5 smoked fish in a day while Norway can make 5 umbrellas or 5 smoked fish,

England has the comparative advantage in umbrellas and Norway has it in fish.

Based on the concept of opportunity cost, where would you expect to have the least trouble finding someone to clean your house?

In a low-income area with high unemployment.

You are considering whether to take one last ski run before going home. You paid $30 for your lift ticket (which gives you the right to ski all day), and have taken nine runs. It is only efficient for you to take a tenth run if

Marginal benefit greater than 0

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?

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

Which of the following costs will you consider when deciding whether it is efficient to take a hike one afternoon?

The studying you won't be able to do. c. The wear and tear on your hiking boots. a. The gas it takes to get to the hiking trail.

In the absence of trade, what does a smoked fish cost in England?

Two umbrellas.

Can you ever have too much safety?

Yes, if the marginal benefits of safety are less than the marginal cost.

Which of the following is an example of a scarce good?

a. Big Macs. You Answered c. Oil. b. Television sets. Correct Answer d. All are scarce goods.

The idea that "people respond to incentives" would lead us to conclude that single parent births

a. will increase if public child support increases.

If a buyer values a product at $19 and a seller' opportunity cost of selling the product is $14, the gains from trade

are $5

Which of the following is true of the statement "All pollution must be stopped"?

b. It ignores the importance of comparing marginal benefits and marginal costs c. It ignores the fact that to get more of anything, we must give up something else d. It does not consider that we may have too much pollution control

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

b. if I give lots of surprise quizzes. a. if I take attendance and grade on it. c. if I offer money to students who come to class.

The cost of letting senior citizens into a $5 movie for free

b. is lower if the senior citizen would not have gone to the movie without the free pass. a. is higher on a Saturday night than a Monday night.

For which of the following is there a market?

c. Hiking in national forest land. b. Pedigree dogs. a. Orange juice.

The cost of skipping class

c. is not affected by the tuition revenue you paid. is higher the day of an exam. b. depends on how much you like the class.

How can I raise the cost of coming to class?

charge an admission fee e. none of them. c. give extra homework to anyone who shows up Correct! d. All of the options. b. schedule class at inconvenient times

Sunk costs are irrelevant to economic decisions because

they cannot be affected by the decision in question.

The cost of attending the last class before an exam includes

whatever you miss doing because you go to that class.

Smith accidentally runs his car off the road into deep snow. Jones happens along in a tow truck, and offers to haul Smith out for the outrageous price of $300. Smith, though angered by the high price, considers he has no choice and pays the $300. Smith's welfare was and Jones' was _____ as a result of Jones passing by.

enhanced, enhanced

Which of the following is a substitute for gasoline?

ethanol. b. a car pool. c. more fuel efficient cars.

You are considering renting a car and driving to Seattle for Christmas. Which of the following would be marginal costs that you will consider in making your decision?

gasoline a. the car rental price

Economics is a model of

how people make choices.

If you paid $25,000 for your car just a short while ago, but the best offer you can get for it now is $12,000. You should only sell the car

if its worth to you is less than $12,000.

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

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

Which of the following is an example of a scarce good?

insulin and coca cola

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 concept of opportunity cost suggests that the cost to airlines of allowing their employees to fly for free

is greater at Christmas than in mid-February

The cost to a ski instructor of taking a day off

is higher on the weekend when more people ski.

Most economists believe that the assumption of rationality

is how humans behave in all circumstances.

Paul decides to spend an hour playing basketball rather than studying. The tradeoff

is the benefit to his knowledge and grades he would get from studying for an hour.

The real cost of any action

is the value of the alternative sacrificed

Good economic decisions are those for which

marginal benefits exceed marginal costs.

Movie-goers who are willing to put up with long lines at a cinema to get a lower price are

none of them.

If it costs a theater $180,000 to put on four shows, and the cost would rise to $200,000 if the theater adds a fifth show,

the marginal cost of the fifth show is $20,000

If you are searching for a new pair of skis, it makes sense to keep looking as long as

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

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

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

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

would fall if tougher penalties are enacted.

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.