Principles of Microeconomics Quiz 1

As a person receives more of a good, the _______________ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint

marginal utility

Which of the following statements most likely lies within the realm of microeconomics? A. unemployment rises during a recession and falls during a expansion B. An increase in government spending will increase the aggregate demand for goods and services in the economy C. A rapid acceleration of the supply of money may create inflation D. An increase in labor costs will increase the additional cost of producing another bus.

An increase in labor costs will increase the additional cost of producing another bus.

A term referring to the fact that for too many goods, as the level of production increases, the average cost of producing each individual unit declines. A. skill B. Specialization C. Economies of scale D. Division of labor

Economies of scale

College-age athletes who drop out of college to play professional sports A. are not rational decision makers B. are well aware that their opportunity cost of attending college is very high C. are concerned more about present circumstances than their future D. underestimate the value of a college education

are well aware that their opportunity cost of attending college is very high

Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs C. acquiring the information relevant to a choice before making that choice D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Refer to the circular flow diagram. In the product market, A. households provide firms with labor, land, and capital B. households provide firms with saving for investment C. firms provide households with goods and services D. the government provides firms with inputs for the production process

firms provide households with goods and services

Mallory decides to spend five hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is A. The $50 she earns working B. The $50 minus the enjoyment she would have received from watching the video C. nothing since she would have received less than $40 of enjoyment from the video D. the enjoyment she would have received had she watched the video

the enjoyment she would have received had she watched the video

Which of the following is an example of a positive, as opposed to normative, statement? A. when the minimum wage is increased, unemployment is a predictable consequence B. the income tax rate should be increased to offset the budget deficit C. Increasing government spending is the best way to help the economy move out of a recession D. More than one of the above are positive statements

when the minimum wage is increased, unemployment is a predictable consequence