Microeconomics Exam 1

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

$0

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

$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 a. can't be determined without knowledge of the price b. are $28 c. are $12 d. are $16 e. are $40

$16

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 a. 0 b. $2 c. It depends on the benefits you recieve d. $20

$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 a. $5.00 b. $3.00 c. $2.50 d. $2.00 e. zero.

$2

You want to purchase 2 pizzas. The price is $8 per pizza, 2 for $15, 3 for $20. What will be the marginal cost to you of buying a 3rd pizza? a. $20 b. $12 c. $7 d. $5 e. zero, if you don't plan to eat the 3rd pizza (it becomes a sunk cost)

$5

Why do grocery stores offer "buy one, get one half off" specials? I. Its a way to offer an incentive to consumers (who might not ordinarily buy two units of the same item) to buy an extra item II. They are thinking at the margin, and they stand to make positive profit even if they sell the second unit at a lower price than the first unit III. Government regulations require them to hold such promotions from time to time. a. I only b. II only c. III only d. I and II

I and II

Supposed that there are 3 methods of financing the transportation of prisoners from point A to point B: I. The boat's captain is paid $100 by the government for every live prisoner that is loaded on board at Point A II. The boat's captain is paid $100 by the government for every live prisoner that is unloaded on board at Point B III. I. The boat's captain is paid $800 by the government for every live prisoner that is loaded on board at Point A a. I b. II c. III d. All methods affect the prisoner survival equally

II

Suppose a rational person ate a sushi resteraunt that charges $20 for its all you can eat sushi special. If this person ate 10 sushi rolls, which of the following statements is true? a. The total benefit of the 10 rolls must have been $20 b. The marginal benefit of the 10th roll must have been $20 c. The marginal benefit of the 10th roll must have been $2 d. The marginal benefit of the 10th roll must have been $0 e. The total benefit of the 10 rolls must have been $2

The marginal benefit of the 10th roll must have been $0

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

The value of that plateful to you is greater than 0

Your company is engaged in 2 projects, one of which has $25 million to date, the other of which has cost $10 million to date. It can only afford to finish one of the projects. The expected benefit from each project is the same. Which project should it finish? a. The $25 million project, because it has already invested so much b. The $10 million project, because it has cost so little thus far c. Whichever can be completed at the least additional cost d. Which will result in the lowest cost in total by the end of the project

Whichever can be completed at the least additional cost

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

all are assumptions of the economic model

Which of the following is an example of a scarce good? a. Coke b. Insulin c. Diamonds d. All are scarce goods

all are scarce goods

how can i raise the price 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

all of the above

the cost of skipping class a. is higher the day of an exam b. depends on how much you like the class c. is not affected by the tuition revenue you paid d. all of the above

all of the above

grocery shoppers who are willing to pay high prices at one supermarket in order to avoid long lines at another a. are not rational shoppers b. would do anything to save money c. are comparing the benefits and costs of their choice d. are not comparing the benefits and costs of their choice

are comparing the benefits and costs of their choice

A person has a comparative advantage in an activity whenever she a. can do the activity in less time than other people b. has an absolute advantage in the activity c. can perform the activity at a lower opportunity cost than can other people d. can do everything better than everyone else e. all of the above

can perform the activity at a lower opportunity cost

The idea that human behavior is self-interested assumes that people want a. more of everything b. material goods but not spiritual goods c. money d. to advance projects in which they are interested e. all of the above

to advance projects in which they are interested

Someone who, when confronted by a choice, says "It's simple: do both!" a. is a high demander. b. is an inefficient supplier. c. doesn't understand opportunity cost. d. is a go-getter.

doesn't understand opportunity cost.

In economics, the cost of something is

what you must give up to get it

You miss the last train home. After walk for an hour, you spot a taxi. Its driver wants to charge $150 to take you home, though the rise usually costs $30. You're mad, but feel you have no other option but to accept. Finding the taxi a. has made you better off and the driver worse off b. has made you worse off and the driver better off c. has both you and the driver better off d. has both you and the driver worse off e. has made the driver better off but left your well-being unchanged

has both you and the driver better off

Economics is a model of a. money b. buying and selling c. how people make choices d. how people should behave

how people make choices

The decision whether to purchase the breakfast "all you can eat" buffet versus ordering from the menu at fixed prices a. is a marginal decision b. is not a marginal decision, because the "all you can eat" price will be sunk once you've paid it c. depends on benefits and costs, but not on marginal benefits and marginal costs d. is not subject to the marginal principle

is a marginal decision

The economic model a. is about how money is made b. is about how people make choices c. assumes that people care most about money d. assumes that people have no choices to make

is about how people make choices

The concept of opportunity cost suggests that the cost to airlines of allowing employees to fly for free a. depends on the alternatives available to the employees b. is zero c. depends on the value employees place on free travel d. is greater at Christmas than in mid-February

is greater at Christmas than in mid-February

The cost to a ski instructor of taking a day off a. is higher on the weekend when more people ski b. falls when it snows c. rises when it rains d. rises when there are a lot of other instructors around, so competition is intense

is higher on the weekend when more people ski

the real cost of any action a. depends upon the number of suppliers b. is the cost to the consumer plus the cost to the producer c. is greater when demand shifts d. is the value of the alternative sacrificed e. all of the above

is the value of the alternative sacrificed

For which of the following is there a market? a. Orange juice b. pedigree dogs c. hiking in national forest land d. all of the above e. just a and b

just a and b

good economic decisions are those for which a. marginal benefits exceed marginal costs b. total benefits exceed total costs c. marginal costs are declining d. total costs are as low as they can be

marginal benefits exceed marginal costs

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 a. keep the motorcycle because you've paid so much for it b. keep the motorcycle unless you can find someone who will pay you at least $1000 for it c. sell the motorcycle for the best offer you can get d. sell the motorcycle for the best offer you can get, as long as it covers most of what you paid for it

sell the motorcycle for the best offer you can get

A good is "scarce" 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 exist d. something has to be given up to get more of it

something has to be given up to get more of it

A good is scarce when a. demand is greater than supply b. quantity demanded is greater than quantity supplied c. it is very rare d. there is a shortage e. something must be given up to get more of it

something must 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

that arises from a small increase in an activity

When deciding whether or not to undertake an activity, economist compare: a. the average cost of the activity versus the total benefits recieved b. the total cost of the activity against the total benefit recieved c. the total benefit of the activity against the total cost of production d. the additional cost of the activity against benefits received

the additional cost of the activity against benefits received

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

the existence of scarcity

A rational decision-maker takes action only if a. the average benefit is greater than the average cost b. the marginal benefit is greater than the marginal cost c. the total benefit is positive d. society will be made better off e. all of the above

the marginal benefit is greater than the marginal cost

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, a. the marginal cost of the fifth show is $20,000. b. the marginal cost of the fifth show is $40,000. c. the marginal cost of the fifth show is $200,000. d. the marginal cost of the fifth show is $50,000.

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

You want to build a new garage, and ask a contractor for a bid. He gives you a time and price. You ask him to complete the garage in half the time he proposes. What will happen to the price and why? a. The price will rise because your willingness to pay is obviously higher b. the price will rise because the contractor's opportunity cost will be higher c. the price will fall because the contractor can get your garage out of the way more quickly, and thus move on other projects d. The price will not affected because the relevant costs are sunk

the price will rise because the contractor's opportunity cost will be higher

The opportunity cost to college athletes on scholarship who stay in school is a. the wages they could make otherwise b. the value of the scholarship they recieve c. nothing, unless they are good enough to turn professional d. underestimated the value of a college education

the wages they could make otherwise

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

they cannot be affect by the decision in question

The cost of attending the last class before an exam includes a. whatever tuition you paid b. payments on the car that you drive to campus if you commute c. the cost of your dorm room if you live in dorms d. whatever you miss doing because you go to that last e. all of the above

whatever you miss doing because you go to that last

Who specializes in making products?

whoever has comparative advantage (lower opportunity cost)

Who has comparative advantage?

whoever has the lower opportunity cost

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

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

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 9 runs. It is only efficient fo you to take a 10th run if a. your marginal benefit is greater than $30 b. your marginal benefit is greater than $3 c. your total benefit will end up greater than $30 d. your marginal benefit is greater than 0 e. your total benefit ends up greater than your total costs

your marginal benefit is greater than 0

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 21 weeks and there are seven days in a week e. zero

zero