Chapter 1 Quiz
Workers in the United States enjoy a high standard of living because
workers in the United States are highly productive
Which of the following activities is most likely to produce an externality?
A student has a party in her dorm room
Foreign trade
allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home
Which of the following products would be least capable of producing an externality?
food
High and persistent inflation is caused by
governments increasing the quantity of money too much
Raising taxes and increasing welfare payments
improves equality at the expense of efficiency
An increase in the price of beef provides
information that tells producers to produce more beef
Trade-offs are required because wants are unlimited and resources are
scarce
A rational person does not act unless
the action produces marginal benefits that exceed marginal costs
Which of the following statements is true about a market economy?
Market participants act as if guided by an "invisible hand" to produce outcomes that promote general economic well-being
You have spent $1,000 building a hot-dog stand based on estimates of sales of $2,000. The hot-dog stand is nearly completed, but now you estimate total sales to be only $800. You can complete the hot-dog stand for another $300. Should you complete the hot-dog stand? (Assume that the hot dogs cost you nothing.)
Yes
Productivity can be increased by
improving the education of workers
Which of the following involve a trade-off?
All of these involve trade-offs. buying a new car. going to college. watching a football game on Saturday afternoon. taking a nap.
Suppose you find $20. If you choose to use the $20 to go to the football game, your opportunity cost of going to the game is
$20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game
You have spent $1,000 building a hot-dog stand based on estimates of sales of $2,000. The hot-dog stand is nearly completed, but now you estimate total sales to be only $800. (Assume that the hot dogs are cost you nothing.) Using the information given your decision rule should be to complete the hot-dog stand as long as the cost to complete the stand is less than
$800
Which of the following situations describes the greatest market power?
Microsoft's impact on the price of desktop operating systems
In the short run,
a decrease in inflation temporarily increases unemployment
Economics is the study of how
society manages its scarce resources
Because people respond to incentives, we would expect that if the average salary of accountants increases by 50 percent while the average salary of teachers increases by 20 percent,
students will shift majors from education to accounting
Which of the following is not part of the opportunity cost of going on vacation?
the money you spent on food