Mirco TOPHAT final Hammock FSU

5) Suppose I buy a nice dinner for $15. I was willing to pay $25 for it, and the restaurant would have been willing to sell it for as little as $11. What is the total gain to both sides?

14

46) You increase production at your ice cream factory by 50 gallons per day. This requires you to pay an additional $100 in costs for cream, natural and artificial flavoring, sugar, guar gum, and tapioca starch. What is the marginal cost of this increase in production?

2

7) If the opportunity cost of watching one episode of your favorite show on Netflix is the $5 you would have earned from working for half an hour, then the opportunity cost of working for an hour is... watching ______ episodes of your favorite show on Netflix.

2

12) If you are willing to pay $40 for Top Hat access, but a guy in an alley sells you a black market access code for $20, your consumer surplus is...

20

59) Suppose the market for onions is perfectly competitive, and it's an increasing cost industry. Also suppose that right now, firms are making positive economic profits. When this market reaches a long run equilibrium, will the price be higher or lower than it is right now? a) The price will be lower. b) The price will be higher. c) The price will be the same. d) There is not enough information to determine this.

A

6) A country with a comparative advantage in producing a good... a) has the lowest opportunity cost of production. b) has the highest opportunity cost of production. c) can produce more of the good than any other country. d) will be poorer as a result of trading with its neighbors for other goods.

A

16) In your spare time you drive for Uber. You pick up a passenger and take her to Madison Social, for which you are paid $15. You would have been willing to drive her there for $9. Your producer surplus is...

6

11) Suppose the administration of FSU decides to fire all advisors and administrators, leaving only faculty, cleaning staff, and support staff, and by doing so it manages to cut costs significantly. The price of one year's tuition at FSU falls from $6,500 to $4,000. Which of the following will occur, ceteris paribus? a) The quantity of students who choose to attend FSU will rise. b) The quantity of students who choose to attend FSU will fall. c) Other universities will lower their tuition. d) Cars will become more fuel efficient.

A

14) If a person's income goes up, and that person buys more chicken sandwiches, then we can conclude that for this person... a) chicken sandwiches are a normal good. b) chicken sandwiches are an inferior good. c) chicken sandwiches are substitutes. d) chicken sandwiches are complements.

A

15) Consider the supply curve for sour cream. If the price of sour cream falls, then... a) the quantity supplied will fall. b) the quantity supplied will rise. c) the supply will rise. d) none of the above.

A

20) Suppose the market for smartphones is in equilibrium. A new battery technology is invented which makes phones last a week without needing to be recharged. What happens in the market for smartphones? a) Demand shifts to the right, price rises, quantity rises. b) Demand shifts to the left, price falls, quantity falls. c) Supply shifts to the right, price falls, quantity rises. d) Supply shifts to the left, price falls, quantity rises.

A

23) Producer Surplus is... a) The area above the supply curve and below the price. b) The area above the demand curve and below the price. c) The difference between the demand and supply. d) The difference between what consumers are willing to pay and what they actually pay.

A

27) Of the following goods, which is likely to have the most elastic demand? a) candy b) heroine c) antiretroviral drugs for treating HIV d) gasoline

A

29) Your income rises by 10%, and the quantity of raisins that you purchase falls by 5%. Which of the following is correct? a) The income elasticity of demand for raisins is -0.5, and raisins are an inferior good. b) The income elasticity of demand for raisins is 0.5, and raisins are a normal good. c) The income elasticity of demand for raisins is -2, and raisins are an inferior good. d) The income elasticity of demand for raisins is 2, and raisins are a normal good.

A

38) Which one of these functions is the most inelastic?

A

39) For every hour you spend studying for your economics exam, you will improve your grade by 3 points. For every hour you spend studying for your Physics exam, you will improve your grade by 4 points. For every hour your friend Albert spends studying for his economics exam, his grade will improve by 8 points. For every hour he spends studying for his physics exam, his grade will improve by 16 points. Which of the following is correct? a) Your opportunity cost of studying enough to improve your grade on your economics exam by 1 point is 1 1/3 points on your physics exam, and you have a comparative advantage in economics. b) Albert's opportunity cost of studying enough to improve his grade on his economics exam by 1 point is 2 points on his physics exam, and he has a comparative advantage in economics. c) You have an absolute advantage in studying for physics. d) You can both benefit by specializing according to comparative advantage and trading points.

A

50) Your company produces 5000 doodads at a total cost of $2 million. It sells them for $600 each. What is your company's profit? a) $1 million b) $2 million c) $3 million d) $5 million

A

51) Your company produces 5000 doodads at a total accounting cost of $2 million. It sells them for $600 each. If you changed your business to produce thingies instead, you would earn a $5 million accounting profit. What is your company's economic profit? a) -$4 million b) $0 c) $1 million d) $2 million

A

54) Here's a typical exam question: Suppose the market for wheat is in equilibrium, with firms earning zero economic profit. Scientists discover that eating lots of carbohydrates is actually good for you, and everyone begins eating a lot more bread. Which of the following will occur? a) Demand for wheat rises, driving the price up, and causing firms to enjoy positive economic profits. b) Demand for wheat falls, driving the price down, and causing firms to suffer negative economic profits. c) The supply of wheat falls as firms exit the wheat market, driving the price down, and causing profits to fall. d) The marginal cost curve for wheat farms shifts upward.

A

57) Here's a question straight off of an old exam: In a decreasing cost industry, as firms exit the industry and industry output decreases, costs will... a) rise. b) stay the same. c) fall. d) rise, then fall. e) fall, then rise

A

74) Which of the following is an example of moral hazard? a) When businesses know that the government will bail them out if they suffer large losses, businesses start taking bigger risks. b) When the government passes a law that says people with pre-existing conditions cannot be denied health insurance, a large number of smokers with lung cancer sign up for insurance. c) When your employer's business becomes more successful, you are more likely to steal from it. d) When people can produce pollution without any taxes or fines, they produce more pollution.

A

85) Which of these jobs is likely to pay the highest salary? a) Offshore oil platform engineer, which requires a bachelor's degree and a master's degree, as well as working offshore for months at a time, in a dangerous environment, producing extremely valuable oil b) Economics professor, which requires a difficult-to-obtain doctoral degree, but then allows years of comfortable, safe indoor work, producing research that almost no one reads and teaching material that almost no one cares about c) Elementary school teacher, which requires four years of college and teaching certification, and allows a person to obtain a safe, (mostly) indoor job with summers (mostly) off d) Recycling sorter at a waste disposal facility, which requires a high school degree and passing a simple test

A

89) Show Correct Answer Your business is considering building a new factory that will cost $500,000 today. It will take years to get ready for production. The first new units of output will roll off the assembly line ten years from now, and will bring in $1,000,000 in revenue. The interest rate is 5%. Is the factory worth building? Use Present Value to compare dollar values across time. a) Yes, because the benefits ($613,900) are greater than the costs ($500,000). b) Yes, because the benefits ($1,000,000) are greater than the costs ($500,000). c) No, because the benefits ($500,000) are less than the costs ($613,900). d) No, because the interest rate will rise.

A

90) ABC company has Average Fixed Costs of $12, Average Variable Costs of $20, Total Revenue of $4,000, and produces 100 units of output. Which of the following is correct? a) It is earning positive economic profit. b) It is earning zero economic profit. c) It is earning negative economic profit. d) It is not possible to tell from the information provided.

A

13) If the surgeon general announces that wearing shoes is bad for your posture, which of the following will occur? a) Demand for shoes will shift to the right. b) Demand for shoes will shift to the left. c) Quantity of shoes demanded will rise. d) The supply of shoes will fall.

B

18) A new program to teach computer science more effectively graduates its first class of computer scientists, resulting in a significant increase in the number of programmers and software engineers available. Which of the following will occur? a) The wages of programmers will rise. b) The supply of software will shift to the right. c) The supply of software will shift to the left. d) The demand for software will shift to the left.

B

19) If the price of chicken feed (which is fed to chickens) goes up, which of the following will happen in the market for chicken sandwiches? a) Supply will shift to the right, and price will fall. b) Supply will shift to the left, and price will rise. c) Demand will shift to the right, and price will rise. d) Demand will shift to the left, and price will fall.

B

26) Your height is 60 inches, but you lose your shins in a tragic gardening accident. As a result, your new height is 48 inches. The percent change in your height is... a) -25% b) -20% c) -12% d) 12%

B

28) The price of internet access rises from $50 per month to $70 per month. The quantity of streaming service subscriptions falls from 200 million to 175 million. What is the Arc Cross-Price Elasticity of Demand? a) 0.4 b) -0.4 c) -0.3125 d) 0.3333

B

30) Which of the following goods (or services) is likely to have inelastic supply? a) Memory chips, which are produced in big factories that can also produce central processors and graphics processors b) Higher education, which requires instructors with a PhD (which usually take 4 to 6 years to complete) c) Bawdy stories in army barracks or a sports locker room d) Mass produced notebook paper

B

36) A $1 per pound tax is imposed on cucumbers. The own-price elasticity of demand for cucumbers is 1.5, and the elasticity of supply for cucumbers is 0.7. Which of the following is correct? a) The burden of the tax will fall mostly on consumers. b) The burden of the tax will fall mostly on producers. c) The burden of the tax will fall equally on consumers and producers. d) The burden of the tax will be zero.

B

40) Suppose it is 2,500 B.C.E. and the market for wheat in Egypt is in equilibrium. Two things then happen at the same time. First, the Nile fails to flood that year, so it does not deliver vital nutrients to the land around the river. Second, the Pharaoh imposes a tax of one senyu per bushel on wheat, to be paid by consumers. Which of the following is correct? a) The price rises and quantity is indeterminate. b) The price is indeterminate and quantity falls. c) The price is indeterminate and quantity rises. d) Price rises and quantity falls.

B

44) Suppose you are going to a movie. You're excited to go to this; you would have paid up to $30 to go to this movie, though you actually paid $12. For simplicity, assume you are going alone. Yes, it's sad, but you have unusual taste in movies, so no one wants to join you. While you are driving to the theater, you get a call from a friend, who excitedly tells you that your favorite musical artist is performing a surprise show at a local tavern. If you turn around right now, you can make it before the music starts. It will cost you $12 to get into the tavern. You would be willing to pay up to $120 to see this artist. What is the economically rational thing to do? In case it matters to you, you've already paid for your movie ticket, and can't get your money back. You can't scalp your tickets. a) Go to the movie. b) Go to the musical performance. c) Watch part of the movie, then leave and see part of the musical performance. d) Skip them both and go home.

B

49) Which of the following companies is not likely to be able to benefit from significant economies of scale? a) Tesla, a car company that plans to sell electric cars to the masses. b) Taylor's Tailors, a company that makes unique bespoke (i.e., custom) suits for men. c) HTC, a company that used to make phones but now plans to be the number one producer of Virtual Reality headsets. d) HT Apparel, a company that plans to use robotic sewing machines to produce standardized textiles at a lower cost than ever before.

B

52) Which of the following goods best fits the assumptions underlying perfect competition? a) Prescription eyeglasses b) Common wheat c) Pickup trucks d) Wine

B

56) In the long run in a perfectly competitive market, economic profit will tend to converge toward, and stay around, a) positive economic profit. b) zero economic profit. c) negative economic profit. d) This is a trick question; profit does not tend to move toward any particular level.

B

62) A reminder: What is the rule for profit maximization for a monopolist? a) Total Revenue = Total Cost b) Marginal Revenue = Marginal Cost c) Price > Average Variable Cost d) Produce at the minimum of Average Total Cost

B

70) A monopoly produces at MC=MR, resulting in a price of $50, quantity of 1,000 units, ATC of $30, and AVC of $20. What should this firm do? a) Produce in the short run, but shut down in the long run. b) Produce in the short run and the long run. c) Shut down in the short run, but produce in the long run. d) Shut down in the short run and the long run.

B

73) Which of the following is an economically reasonable argument for health inspections of restaurants? a) Restaurants have no competition, and therefore no incentive to improve food safety and cleanliness. b) Customers cannot easily get information about which restaurants are safe, and restaurants have little incentive to tell customers about problems. c) Restaurant owners do not care if their customers get sick. d) Restaurants always want to produce goods of the lowest quality in order to minimize costs.

B

75) Which of the following is not an example of the Tragedy of the Commons? a) Rhinos live on public land, where it is illegal for anyone to own, use, kill, harm, or harass them. They are nonetheless being hunted to extinction. b) Raphael does not enjoy cleaning, so when his friends come over to visit, they find that his bathroom is very unpleasant to use. They stop visiting him. c) Many farmers are located next to a river (which is public property). Runoff from their farms results in so much fertilizer in the river that it kills all the fish and makes it unsafe to drink. d) We all share some resistance to bacterial infection, but when someone doesn't finish their dose of antibiotics, the bacteria mutate and become antibiotic resistant, making us all a bit more vulnerable to disease.

B

76) Which of the following is the economists' view of government? a) A democratic government acts in such a way as to make its citizens better off; it effectively takes their preferences and translates them into beneficial policy action. b) Governments are made up of rationally self-interested individuals, operating within a system of rules. Their actions are determined by their preferences and the incentives created by the system of rules. c) Governments exist to mobilize society in preparation for armed conflict and to collectively direct economic resources, in order to achieve the goals set by the ruling party. d) Governments exist so that they can take control of private resources, and instead direct them for the benefit of all. The government should determine who produces what, and who gets to consume which goods and services.

B

79) Economic analysis suggests that bureaucrats and public-sector managers have a strong incentive to a) make sure that their budgets are as small as possible so more funds will be available for other government programs. b) expand their budgets to sizes beyond what would be considered economically efficient, to increase their power and prestige. c) ensure that their budgets are exactly the size that would be considered economically efficient, so that resources are not wasted and no important tasks are left undone. d) economize on their spending and return unspent funds to the general treasury.

B

8) The opportunity cost for you to prepare a decent meal is one hour of work, which would earn you $10. The opportunity cost for Chef Enzo to prepare a decent meal is five minutes of work, which would earn him $2. Which of the following terms of trade would benefit you and Chef Enzo? a) Chef Enzo prepares a meal for you for $1. b) Chef Enzo prepares a meal for you for $8. c) Chef Enzo prepares a meal for you for $20. d) You prepare a meal for Chef Enzo, who pays you $5.

B

82) Which of the following is a disadvantage of having a dictator? a) Decision making takes a long time. b) Decisions made by the dictator do not take into account the preferences of many people. c) Reaching agreement on decisions is costly due to all the different groups that must be consulted. d) Decisions are often unclear or watered-down due to the compromises that must be made.

B

83) Social Security is a government program that transfers income from young, working people to retirees. It is not a savings program. The problem with this program is that the number of retirees is climbing rapidly as the number of young people paying for them rises very slowly. The result will be a significantly increased tax burden on younger workers. If the program had been altered twenty years ago to create actual savings to pay for future retirees, or if benefits had been altered, this problem could have been avoided, or at least reduced. Why didn't politicians act to take care of this problem earlier? a) The nature and magnitude of the demographic problem was not yet clear. b) Politicians have no incentive to address problems that will not appear until they have left office. c) Politicians are indebted to young voters who elected them and do not want taxes to go up. d) The elderly are rationally ignorant about the benefits of the Social Security program.

B

87) Suppose the equilibrium interest rate in the mortgage market is 6%. The government imposes a usury law, which declares that interest rates above 2% are illegal. What happens? a) The market failure is corrected, resulting in more lending taking place. b) A shortage of mortgage loans occurs. c) A surplus of mortgage loans occurs. d) The government collects tax revenue, and the burden of the usury law is determined by the relative elasticities of supply and demand.

B

91) The market for cheddar cheese in equilibrium, and then two things happen at the same time. Consumers decide that Wensleydale cheese is much tastier, and many switch away from cheddar cheese. Also, the price of milk rises, making cheese production more costly. Which of the following is correct? a) The equilibrium price of cheddar cheese rises, the equilibrium quantity of cheddar cheese falls. b) The change in the equilibrium price of cheddar cheese is indeterminate, the equilibrium quantity of cheddar cheese falls. c) The equilibrium price of cheddar cheese falls, the change in the equilibrium quantity of cheddar cheese is indeterminate. d) The equilibrium price of cheddar cheese rises, the change in the equilibrium quantity of cheddar cheese is indeterminate.

B

17) A tornado destroys several carpet factories in North Georgia. Which of the following occurs? a) The quantity of carpet supplied rises. b) The price of carpet falls. c) The carpet supply curve shifts to the left. d) The carpet supply curve shifts to the right.

C

21) Suppose the market for potato chips is in equilibrium, and then two things happen at the same time: The price of potatoes (which are used to make potato chips ) goes up, and a big sporting and social event occurs. Eating lots of potato chips is traditional at this big sporting event. Which of the following is correct? a) Price rises, quantity falls. b) Price falls, quantity is indeterminate. c) Price rises, quantity is indeterminate. d) Price is indeterminate, quantity rises.

C

31) Suppose the market for coffee is in equilibrium. An FDA report is released documenting a variety of significant health benefits of drinking coffee every day. What happens in the market for coffee (the drink—not the bean)? a) Supply shifts to the right, price falls, quantity rises. b) Supply shifts to the left, price rises, quantity falls. c) Demand shifts to the right, price rises, quantity rises. d) Demand shifts to the left, price falls, quantity falls.

C

34) Suppose the equilibrium price of toilets is $250. The government imposes a $600 minimum price for each toilet. Which of the following is not likely to occur? a) Toilet manufacturers produce more toilets than consumers are willing to buy. b) Consumers prefer to keep old, inefficient, unreliable toilets rather than replacing them with new ones. c) Toilet manufacturers produce the lowest-quality toilets possible, while also complying with regulations. d) The market in used toilets (removed from renovation projects or demolition sites) grows larger (meaning more buyers and sellers).

C

41) You are repainting your house, and currently can paint one room each day. You call a friend in , and now you can paint 1.5 rooms per day. The marginal product of your friend is... a) 1.5 rooms per day. b) 1 room per day. c) 0.5 rooms per day. d) 0 rooms per day.

C

42) You are operating a house painting business (because you got so good at it from painting your own house). You currently have yourself and two other employees, and you can paint a total of 2 rooms per day. Adding a fourth worker will allow you to paint an additional 0.5 rooms per day. What does adding the fourth worker do to your average product? a) Average product rises. b) Average product stays the same. c) Average product falls. d) Average product falls, then rises.

C

48) Suppose you have a box that has a height of 40 inches and a width of 10 inches. What is its area? a) 10 square inches b) 40 square inches c) 400 square inches d) 4,000 square inches

C

55) The shutdown rule implies that only the Marginal Cost Curve above Average Variable Costs is relevant. This section of the Marginal Cost Curve is upward sloping, and the Equimarginal Principle means that as price rises, the quantity of output a firm produces will rise. This relationship between price and quantity produced is known as... a) The Law of Diminishing Returns b) The First Law of Demand c) The Law of Supply d) The Law of Unintended Consequences e) The Second Law of Demand

C

63) The efficient amount of output is where the marginal cost to society is equal to the marginal benefit to society. Is this where the monopolist produces? a) Yes, because the monopolist produces at MC = MR. b) Yes, because the monopolist maximizes profit, and is therefore efficient by definition. c) No, the efficient output is where MC = D, because Demand represents the marginal benefits to society. d) No, because firms earning a profit must be inefficient.

C

65) Which of the following is correct? a) A monopoly's profit-maximizing output is efficient. b) Average Total Cost pricing regulation results in the efficient amount of output. c) A monopoly that does not have enough revenue to pay its variable costs will shut down immediately. d) Imposing marginal cost pricing on a monopoly will increase its profits.

C

66) You go to the bookstore, or go to an online vendor, and find that they will offer you an academic discount for software. You have to present a faculty or student ID. What kind of price discrimination is this? a) First Degree b) Second Degree c) Third Degree

C

72) Consider broadcast radio and television (broadcast radio and television are transmitted over radio waves through the air, like to your car radio, or to a television with an antenna, which I'm sure none of you use). What kind of good are these? a) A private good, because they are privately produced. b) A public good, because they are publicly produced. c) A public good, because they are nonrivalrous and nonexcludeable. d) A private good, because they are rivalrous and excludeable.

C

78) How much higher would you guess the average person's income is today than it was in 1950, in real (i.e., inflation-adjusted) terms? a) 25% higher. b) 50% higher. c) 270% higher. d) 500% higher.

C

92) People running IT (information technology) departments have a persistent problem: many users do not use good security procedures. They open attachments from strangers, visit risky websites, and generally do things that are bad for their devices. The real problem, though is an incentive problem: When I do something that gets my computer infected with malware, I hurt myself, but I also endanger everyone else using the same network. That is, I only pay some of the costs of my risky behavior; the rest of the costs fall on other users. This is an example of... a) the Tragedy of the Anticommons. b) Information Asymmetry. c) a Negative Externality. d) Adverse Selection.

C

10) Suppose the price of tomato sauce is $4 per jar, but then rises to $7 per jar. The Law of Demand states that... a) demand will rise. b) demand will fall. c) quantity demanded will rise. d) quantity demanded will fall.

D

22) Consumer Surplus is... a) The area above the supply curve and below the price. b) The area above the demand curve and below the price. c) The difference between the price and the cost of production. d) The difference between what consumers are willing to pay and what they actually pay.

D

24) Equilibrium is efficient because... a) Total surplus is maximized. b) Marginal benefit equals marginal cost. c) Every unit that is produced has a benefit to consumers greater than (or equal to) the cost of its production. d) All of the above.

D

25) What is the title of the official in charge of making sure markets reach equilibrium? a) Secretary of the Treasury b) Chairman of the Federal Reserve c) President of the Chamber of Commerce d) None of the above

D

32) In equilibrium... a) total surplus is maximized. b) quantity supplied equals quantity demanded. c) supply intersects demand. d) all of the above

D

33) Suppose the government imposes a maximum annual tuition on bachelor's degree-granting institutions of $2,000 per year. Which of the following is not likely to occur? a) Universities will cut costs, resulting in a lower-quality educational experience. b) There will be more people trying to get into colleges and universities than these schools can handle, resulting in long wait-lists for admissions. c) Some people will set up fake or fraudulent bachelor's degree programs to attempt to make money off of the increased number of would-be students. d) Universities will compete for students more intensely, resulting in more and larger scholarships.

D

43) Suppose your company has $1 million in explicit costs, and could rent out its buildings to earn a revenue of $0.5 million. Its equipment could be rented out for another $0.25 million. What is your economic cost? a) $1 million b) $1.25 million c) $1.5 million d) $1.75 million

D

58) Which of the following statements is correct? a) In an increasing cost industry, the long run supply curve slopes upward. b) In a constant cost industry, the long run supply curve is horizontal. c) In a decreasing cost industry, the long run supply curve slopes downward. d) all of the above

D

67) Which of these answers correctly ranks the markets from most competitive to least competitive? a) Potatoes, onions, cavendish bananas b) Diamonds, 24K gold, sapphires c) Smartphones, organic chicken, organic beef d) Common wheat, fast food, cable internet service

D

71) Which of the following correctly summarizes positive and negative externalities? a) If there is a negative externality, people do too little of a bad thing. If there is a positive externality, people do too much of a bad thing. b) If there is a negative externality, government policy will fix the market failure. If there is a positive externality, government policy will not fix the market failure. c) If there are negative or positive externalities, government policy cannot improve on the market equilibrium. d) If there is a negative externality, people do too much of a bad thing. If there is a positive externality, people do too little of a good thing.

D

80) What is the pattern in voting outcomes for the tables we just saw? a) Voting always results in funding being approved. b) Voting never results in funding being approved. c) Voting always results in an efficient outcome if the benefits of the program are greater than the costs of the program. d) When voters pay in proportion to benefits received, efficient policy is likely to pass, and inefficient policy is unlikely to pass.

D

84) Which of the following best summarizes chapters 5 and 6, on market failure and public choice economics? a) Markets are always inefficient, so government intervention is necessary to make sure most parts of the economy can function. b) Government intervention is always inefficient, and markets are always efficient, so it is best to leave markets alone and unregulated. c) Markets and government usually work very well, so it doesn't really matter if we use one system or the other. d) Markets often work well, but fail in predictable ways. Government intervention might fix these problems, but government is itself prone to failure. As a result, efficiency may not be attainable.

D

86) Suppose you are able to signal to a potential employer that you are very productive. Which of the following is correct? a) You are more likely to be hired. b) You are likely to be paid more. c) You are likely to be able to negotiate other employment terms to your benefit. d) All of the above.

D

88) The U.S. government provides targeted assistance to particular industries through programs like the Export-Import Bank (which gives low-interest loans to U.S. business to encourage exports). Suppose a politician proposes expanding the program to domestic production as well, with the federal government backing crowdfunded projects and making loans to businesses. Which of the following objections might an economist make? a) Consumers and private investors are better judges of which businesses worth investing in. b) Businesses are likely to use lobbying and political contributions to obtain loans, resulting in wasted resources due to rent seeking. c) If these investments turn out to be unprofitable, taxpayers will have to pay for the loss, rather than the officials that made the investment. This does not encourage wise investing. d) All of the above. e) None of the above.

D

4) The value of the best thing you give up to get something is... a) marginal cost. b) sunk cost. c) fixed cost. d) opportunity cost.

D. opportunity cost

47) Which of the following is correct? a) Average Fixed Cost declines as output rises. b) Marginal Cost falls as Marginal Product initially rises, but when diminishing returns set in, Marginal Cost rises as Marginal Product falls. c) Marginal Cost passes through the minimum of AVC and ATC. d) Average Total Cost is the sum of Average Variable Cost and Average Fixed Cost. e) All of the above. f) None of the above.

E

77) A survey question (no right or wrong answer): Which of the following best describes your experience? a) Prior to studying economics at university I was aware of dairy price supports, and my views on this policy have not changed. b) Prior to studying economics at university I was aware of dairy price supports, but now my views on this policy have changed. c) Prior to studying economics at university I was not aware of dairy price supports. I now have an opinion on whether or not dairy price supports are a good idea. d) Prior to studying economics at university I was not aware of dairy price supports. I still don't have an opinion on whether or not dairy price supports are a good idea (or I don't care).

any answer

64) Which of the following would you prefer? (This is a survey question with no right or wrong answer.) a) Really cheap hardware and software for phones and computers, but very little improvement over time. b) Really expensive hardware and software for phones and computers, but rapid improvement over time. c) Something in between.

any answer, the point is to show a tradeoff