Introductory Microeconomics Chp. 1 Quiz

The principle that "trade can make everyone better off" applies to interactions and trade between

All of the above are correct.

Trade

Allows specialization, which reduces costs.

Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that

Both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie.

Opportunity cost is measured in terms of:

Either monetary value or time.

According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

People respond to incentives.

When the government redistributes income from the wealthy to the poor,

People work less and produce fewer goods and services.

Efficiency

Refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.

Katie is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000.

She should replace the carpeting but not replace the roof.

Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?

The difference between living expenses at Notre Dame and her second choice, but not how much she spent applying to Notre Dame.

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

The marginal cost of going to Ft. Lauderdale decreases.