ECO 101 Midterm 1

Why are diamonds more expensive than water? Pick the statements below that answer this question. (i) Water is scarcer than diamonds. (ii) Diamonds are more difficult to mine and produce than water.(iii) Diamonds are scarcer than water. (iv) Many more people buy diamonds as compared to water.

(ii) and (iii)

Suppose that Abby spends 5 hours fishing, paying license fees of $50, rather than working at her job that pays $10 hour. What is the economic cost of her decision to fish? 100 50 60 70 nothing, since she enjoys fishing much more than working anyway.

100

Human capital is used by economists to mean: man-made goods that are used to help make other goods. the physical space (warehouse) where production occurs. the education of the workforce. Training and on the job experience. financial backing. technology

the education of the workforce. Training and on the job experience.

Which economist is generally credited as the father of modern economics? Adam Smith Paul Krugman Karl Marx Milton Friedman John Maynard Keynes

Adam Smith

Which of the following are the main ideas of economics? These decisions should be made in such a way as to stretch the available resources to their fullest and best use. All the above represent main ideas of economics. Because resources are scarce, we cannot make all the goods and services that society desires. Resources used to make goods and services desired by society are scarce. Because we cannot make all the goods and services that society desires, individuals must continually face trade-offs and make decisions.

All the above represent main ideas of economics.

Rick Grimes and Daryl Dixon have recently decided to open a consulting business. Use the following list to answer the following question: I. The newly renovated studio where both work. II. A business seminar that Rick attended III. A business loan from a friend to help them get started IV. Daryl's knowledge and experience of navigating the market V. The state-of-the-art technology they use to monitor the market Which of the items above would an economist classify as human capital? All would be considered human capital by an economist III and IV II and IV V only I, II, and V

II and IV

Economics primarily addresses the problems associated with: Money Government policies Shortages or surpluses. Scarcity Poverty

Scarcity

The capitalist economic system places a greater emphasis on __________ while the socialist system places a greater emphasis on ___________. Self-interest; collective interest Collective interest; collective interest Self-interest; self-interest Collective interest; self-interest

Self-interest; collective interest

Let's suppose last night you decided to spend one extra hour studying for this exam. Which of the following IS NOT a potential opportunity cost of that decision? An hour of not studying for another class. The extra hour you could have watched Netflix and chilled. The hour on the phone you could have spent reassuring your parents that yes, you are eating right and getting enough sleep. The slightly higher grade you will get on this test as a result. The hour of work you could have completed during that time.

The slightly higher grade you will get on this test as a result.

The economic system that answers the Three Questions of society the way they have always been answered is a(n) Outdated economy Soviet economy Traditional economy Command economy Market economy

Traditional economy