Econ: Exam 1 quiz questions

Each donut that you consume for breakfast costs $.75. The first donut gives you $2.00 worth of pleasure, with each subsequent donut providing $.50 less pleasure than the previous one. What is the marginal cost of the 3rd donut? $1.75 $1.00 $.75 $.25

$.75 The marginal cost of each donut, including the third, is $.75.

Each donut that you consume for breakfast costs $.75. The first donut gives you $2.00 worth of pleasure, with each subsequent donut providing $.50 less pleasure than the previous one. What is the marginal benefit of the third donut? $1.00 $.25 $.75 $1.75

$1.00 The marginal benefit of the first donut is $2.00. The marginal benefit of the second donut is $1.50. The marginal benefit of the third donut is thus $1.00.

Your opportunity cost of cutting hair at your barbershop is $20 per hour. Electricity costs $6 per hour, and your weekly rent is $250. You normally stay open nine hours per day. What is the marginal cost of staying open for one more hour? $26 $250 $37 $276

$26 The marginal cost of staying open another hour is $26, or the opportunity cost of an hour of your time plus the cost of electricity.

Economics Airlines currently spends $20,000 per month in airport fees and $10,000 per flight for fuel, crew, and airplane maintenance. Economics Airlines currently offers 5 flights from State College to Detroit and is considering offering a 6th. If each seat ticket costs $500, how many customers must fly on the 6th flight in order for Economics Airlines to be willing to run it? 10 40 60 20

20 The marginal cost of operating a 6th flight is $10,000, so since each seat costs $500, 20 customers must fly.

Economics Airlines currently spends $20,000 per month in airport fees and $10,000 per flight for fuel, crew, and airplane maintenance. Economics Airlines currently offers 5 flights from State College to Detroit and is considering offering a 6th. If each seat ticket costs $500, how many customers must fly on the 6th flight in order for Economics Airlines to be willing to run it? 60 20 10 40

20 The marginal cost of operating a 6th flight is $10,000, so since each seat costs $500, 20 customers must fly.

Mark can produce 50 baseballs in a month and Katie can produce 60 baseballs in a month. Also, Mark can produce 40 bats in a month and Katie can produce 30 bats in a month. What is Mark's opportunity cost of producing 20 bats? 12.5 baseballs. 50 baseballs. None of these 8 baseballs. 25 baseballs.

25 baseballs. It would take Mark 1/2 month to produce 20 bats. In that time, Mark could have produced 25 baseballs.

Consider the following table which shows the yield per acre of cotton and wheat in two countries, USA and Mexico: In Mexico, the opportunity cost of producing 1 unit of cotton is.. YIELD PER ACRE USA Mexico Cotton 8 9 Wheat 5 12 4/3 units of wheat. 12 units of wheat. None of these 3/4 units of wheat. 8 units of wheat.

4/3 units of wheat. Mexico would have to use 1/9 of an acre of land to produce 1 unit of cotton. Had they chosen to use that land for the production of wheat, they could have produced 4/3 units of wheat.

Mark can produce 20 baseballs in a month and Katie can produce 25 baseballs in a month. Also, Mark can produce 10 bats in a month and Katie can produce 15 bats in a month. What is Katie's opportunity cost of producing 30 bats? 50 baseballs. 30 baseballs. 20 baseballs. 15 baseballs. 60 baseballs.

50 baseballs. It would take Katie 2 months to produce 30 bats. In that time, Katie could have produced 50 baseballs.

_________ would be concerned with the inflation rate. Both a microeconomist and a macroeconomist A microeconomist Neither a microeconomist nor a macroeconomist A macroeconomist

A macroeconomist Aggregate measures are Macroeconomics issues.

___________ would be concerned with the price of pharmaceuticals. Both a microeconomist and a macroeconomist A microeconomist Neither a microeconomist nor a macroeconomist A macroeconomist The price of individual goods (or specific industries) is a Microeconomics issue.

A macroeconomist The price of individual goods (or specific industries) is a Microeconomics issue.

Which of the following is a positive statement? The federal government should spend more on research to curb pollution in the U.S. Pollution is a more important problem in the U.S. than it is in Canada. The price of gas in the U.S. is already too high, so the government should decrease the federal gas tax. An additional $1.00 tax on gasoline will reduce the amount that Americans drive by 20%.

An additional $1.00 tax on gasoline will reduce the amount that Americans drive by 20%. Positive statements do not contain judgments, but are statements of fact.

"Grade inflation is a more important problem than class attendance at Penn State" is an example of an empirical statement. a normative statement. a positive statement. a fallacy.

a normative statement. Normative statements are value driven.

Which of the following statements about economic models is FALSE? Economic models eliminate details that are irrelevant to expose the aspects of the relationship that are important to the problem posed. Economic models provide a simplified abstraction of reality useful for examining specific aspects of behavior. Economic models are based on facts and not assumptions about the relationship between variables. Economic models are not useful if they oversimplify important aspects of the relationship that is being considered.

Economic models are based on facts and not assumptions about the relationship between variables. Economic models are used to simplify reality and to focus on the important relationship.

Mark can produce 50 baseballs in a month and Katie can produce 60 baseballs in a month. Also, Mark can produce 40 bats in a month and Katie can produce 30 bats in a month. ______________has the absolute advantage in the production of bats, and _____________ has the comparative advantage in the production of bats. Katie; Mark Mark; Katie Mark; Mark Katie; Katie

Mark; Mark Mark can produce more bats in a month than Katie can, so Mark has the absolute advantage in the production of bats. Also, Mark's opportunity cost of producing a given number of bats is lower than Katie's, so Mark has the comparative advantage in the production of bats.

Assume Nebraska and Virginia each have 100 acres of farmland. The following table gives hypothetical figures for yield per acre in the two states: Suppose the two states decide that they want to produce 900 total units of wheat. What is the maximum amount of cotton that they could produce? Nebraska Virginia Wheat 10 5 Cotton 7 2

None of these. Virginia has the comparative advantage in the production of wheat, so they should use all of their land to produce the wheat. This would yield 500 units of wheat. Nebraska would then have to produce the other 400 units of wheat which would require 40 acres of land. Nebraska could then use its other 60 acres of land to produce cotton, which would yield 420 units of cotton.

Consider the following table which shows the yield per acre of cotton and wheat in two countries, USA and Mexico: _____________ has the absolute advantage in the production of wheat, and __________ has the comparative advantage in the production of wheat. YIELD PER ACRE USA Mexico Cotton 10 6 Wheat 30 10 Mexico; Mexico. USA; USA. USA; Mexico. Mexico; USA.

USA; USA. USA can produce a given amount of wheat using fewer resources than Mexico, and USA can produce a given amount of wheat at a lower opportunity cost than Mexico.

Your opportunity cost of cutting hair at your barbershop is $20 per hour. Electricity costs $6 per hour, and your weekly rent is $250. You normally stay open nine hours per day. Each haircut costs $10. If you stay open a tenth hour, you can give three haircuts. Should you stay open for the 10th hour? No. The marginal benefit is lower than the marginal cost. No. You cannot cover all of your expenses. Yes. The marginal cost of staying open for another hour is zero because all of the costs are sunk. Yes. The marginal benefit is greater than the marginal cost.

Yes. The marginal benefit is greater than the marginal cost. The marginal benefit of staying open another hour is $30 - 3 haircuts times $10 per haircut. The marginal cost is $26 -- $20 is the opportunity cost of your time plus $6 to pay for your electricity.

You can either go to a movie, go to a concert, or go out to eat tonight. You decide that your first choice is going to a concert, second choice is going out to eat, and third choice is going to a movie. So, you go to a concert. The opportunity cost of this decision is... going to a movie. going out to eat. both going out to eat and going to a movie. going to a concert.

going out to eat. Opportunity cost is the value of the next best alternative.

When economists say ceteris paribus, they mean... considering all aspects of a relationship between two variables. assuming that the original statement is correct. allowing all variables to change to reflect the reality of the situation being considered. holding all other variables fixed in order to focus on the two variables in question.

holding all other variables fixed in order to focus on the two variables in question.

Economics is the study of... how markets function to distribute goods equitably and facilitate growth. how individuals make decisions based on their own self-interest. how government can control markets to make allocations more efficient. how societies allocate their scarce resources to satisfy their unlimited wants.

how societies allocate their scarce resources to satisfy their unlimited wants.

Allocative efficiency implies that the system allocates resources to provide firms the most profit. people what they want at the lowest possible cost. the most efficient production technology. the government the most tax revenue.

people what they want at the lowest possible cost.

An increase in a country's technology would most likely move the country further up its production possibilities curve. move the country to a point closer to its production possibilities curve shift its production possibilities curve to the left shift its production possibilities curve to the right

shift its production possibilities curve to the right The two things that would shift a country's PPC to the right are an increase in resources and an increase in technology.

A cost that has already been incurred is a(n) marginal cost. unnecessary cost. sunk cost. avoidable cost.

sunk cost.

You purchase a $35 ticket to see a concert at the Bryce Jordan Center. The day before the concert, a friend calls to invite you to a party the same night as the concert. An economist would say that the $35 that you spent on the concert ticket should not be taken into account in your decision because it is a(n) _______________. sunk cost. avoidable cost. unnecessary cost. marginal cost.

sunk cost. A sunk cost is one that has already been paid and cannot be recovered.

Your opportunity cost of attending college is the value of what you would be doing if you weren't in school. only the cost of your tuition, books and fees. the value that you attach to not working. your living expenses - food, rent, car insurance.

the value of what you would be doing if you weren't in school. Opportunity cost is the value of the next best alternative.