Eco 113

Consider Noah's decision to go to college. If he goes to college, he will spend $80,000 on tuition, $15,000 on room and board, and $4,000 on books. If he does not go to college, he will earn $22,000 working in a store and he will spend $13,000 on room and board. Noah's cost of going to college is ?

$108,000

Most economists believe that an increase in the quantity of money results in ?

1. an increase in the demand for goods and services 2. lower unemployment in the short run 3. higher inflation in the long run

The business cycle is measured by the ?

1. production of goods and services. 2. number of people employed.

Government policies designed to equalize the distribution of economic well-being include ?

1. the welfare system 2. unemployment insurance 3. progressive income tax

Approximately what percentage of the world's economies experience scarcity?

100%

Which of the following is not an example of scarcity?

Miranda has an unlimited supply of oranges in her orchard.

A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?

People respond to incentives

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

People respond to incentives

When calculating the cost of college, which of the following should you probably not include?

The cost of rent for your off-campus apartment

The opportunity cost of an item is ?

What you give up to get that item

Rational people make decisions "at the margin" by comparing ?

additional costs and benefits

which of the following is the primary cause of inflation?

an increase in the quantity of money

Economists use the word equality to describe a situation in which ?

each member of society has the same income

When the government redistributes income from the wealthy to the poor

equality is improved, but efficiency is not

Economics is the study of ?

how society manages its scarce resources

The tradeoff between inflation and unemployment ?

implies that policies designed to reduce unemployment also increases inflation

An increase in the overall of prices in an economy is referred to as ?

inflation

The amount of goods and services produced from each unit of labor input is called ?

productivity

A marginal change is a ?

small, incremental adjustment

Efficiency means that ?

society is getting the maximum benefits from its scarce resources.

The opportunity cost of going to college is ?

the value of the best opportunity a student gives up to attend college.

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is ?

the value of the knowledge she would have received had she attended class

High-school athletes who skip college to become professional athletes ?

understand that the opportunity cost of attending college is very high