Econ exam #1

Economists face an obstacle that many other scientists do not face. What is that obstacle?

It is often impractical to perform experiments in economics.

In considering how to allocate its scarce resources among its various members, a household considers:

each member's abilities, each member's efforts, each member's desires.

Economists make assumptions to

focus their thinking on the essence of the problem at hand

Instead of conducting laboratory experiments to generate data to test their theories, economists often

gather data from historical episodes of economic change.

An economic outcome is said to be efficient if the economy is

getting all it can get from the scarce resources it has available

Unemployment would cause an economy to

produce inside its production possibilities frontier

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

$108,000

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

$38,000

Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost of going to the movies?

$48

It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. What is the company's average cost?

$50

It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. What is the company's marginal cost?

$70

With respect to how economists study the economy, which of the following statements is most accurate?

Economists devise theories, collect data, and analyze the data to test the theories.

College-age athletes who drop out of college to play professional sports

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

A society allocates its scarce resources to various jobs. These scarce resources include:

land, people, machines

The overriding reason why households and societies face many decisions is that:

resources are scarce.

Resources are:

scarce for households and scarce for economies

Economics deals primarily with the concept of:

scarcity.

Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost of working?

value of leisure