Macro economics test study

Laws that enforce chemical hazard control are examples of government intervention that is intended to reduce

Externalities

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

False

In a market economy, who makes the decisions that guide most economic activity

Firms and households

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

resources are scarce

Consider miray's decision to go to college. If she goes it will be 24,000 on tuition, 12,000 on room and boards, and 1,900 on books. If she doesn't go, she will earn 16,000 working and spend 8,000 on room and board. What is her cost of going to college

45,900

Trade between countries tends to

Increase both competition and specialization

A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

It depends on the marginal cost of serving more clients and marginal revenute he will earn from serving more clients

Which of the following is an example of and externality

Malik's bird chirps loudly during the night, waking his neighbors

A rational for government involvement in a market economy is

Markets sometimes fail to produce a fair distribution of economic well being, fail to produce an efficient allocation of resources, and property rights have to be enforced.

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

In a market economy, economic activity is guided by

Self interest and prices

Alana decided to spend 2 hours working over time rather than going shopping with her friends. She earns 11$ per house for overtime work. Her opportunity cost of working is

The enjoyment she would have received had she gone shopping for

When computing the opportunity cost of attending a professional football game as a spectator, you should include

The price you pay for the ticket and the value of your time

An individual deciding how to allocate her limited time is dealing with both scarcity and trade offs

True

The opportunity cost of an item is

What you give up to get that item

Large or persistent inflation is almost always caused by

excessive growth in the quantity of money

To improve living standards, policy makers should

formulate policies designed to increase productivity

Central planning refers to

government guiding economic activity. Today many countries that had this system have abandoned it.

A rational decision maker

takes an action only if the marginal benefit of that action exceeds the marginal cost of that action

People are willing to pay more for a diamond than for a bottle of water because

the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.