Assignment #1

Use the following to answer questions 9 and 10: In the Island of Never Land, Wendy only bakes bread; John only picks berries, and Peter Pan only milks the cow. At the end of the day they satisfy their needs by trading among themselves. Since John picks berries and trades them for bread and milk, which of the following is true? A) someone beside John likes berries. B) John has an absolute advantage in picking berries. C) John likes berries. D) John would rather pick berries than milk the cow. E) John likes berries the most.

A) someone beside John likes berries.

Use the following to answer questions 9 and 10: In the Island of Never Land, Wendy only bakes bread; John only picks berries, and Peter Pan only milks the cow. At the end of the day they satisfy their needs by trading among themselves. The economic system in Never Land is based on A) a system in which every one is a jack of all trades. B) absolute advantage. C) specialization. D) exchange. E) specialization and exchange.

E) specialization and exchange.

If the average cost of transporting a passenger on the train from Albany to new York city is $65, it would be irrational for the railroad to allow any passenger to ride for less than $65. True or False

False

With careful planning, we can usually get something that we like without having to give up something else that we like. True or False

False

The average cost per seat on the 50-passenger Floating-On-Air Bus company's trip from Kansas City to St. Louis, on which no refreshments are served, is $45. In advance of a particular trip, three seats remain unsold. The bus company could increase its profit only if it a. charged any ticket price above $0 for the three remaining seats. b. charged at least $15 for each of the three remaining seats. c. charged at least $45 for each of the three remaining seats. d. paid three people to occupy the three remaining seats.

a. charged any ticket price above $0 for the three remaining seats.

The circular flow diagram of economic activity is a model of the: a. flow of goods, services, and payments between households and firms. b. influence of government on business behavior. c. role of unions and government in the economy. d. interaction among taxes, prices, and profits.

a. flow of goods, services, and payments between households and firms.

A rational person is one who a. possesses well-defined goals and seeks to achieve them. b. makes choices that are easily understood. c. is reasonable d. believes the claims made by infomercials. e. is highly cynical.

a. possesses well-defined goals and seeks to achieve them.

Henry decides to spend three hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is a. the $24 he could have earned working for three hours. b. nothing, because he enjoys playing golf more than working. c. the increase in skill he obtains from playing golf for those three hours. d. nothing, because he spent $24 for green fees to play golf.

a. the $24 he could have earned working for three hours.

For which of the following individuals would the opportunity cost of going to college be highest? a. a promising young mathematician who will command a high salary once she earns her college degree b. a student with average grades who has never held a job c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree d. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball

c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree

Refer to Figure 1. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? a. an increase in the availability of capital-producing resources b. a technological advance in the consumer-goods industries c. a general technological advance d. a decrease in unemployment

c. a general technological advance

Benefits from trade would not include a. the ability of people and nations to specialize. b. a greater variety of goods and services becoming available. c. less competition. d. lower prices.

c. less competition.

The central concern of economics is a. poverty. b. wealth accumulation. c. the conflict between capitalism and socialism. d. scarcity e. over consumption

d. scarcity