eco exam 1

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways?

More drivers would drive on the non-toll road, making the toll road less congested.

Curly used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn't cost him anything to visit. Is Curly correct?

No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe

Some states have started giving tax credits to homeowners who install solar panels. This is an example of:

Using the incentive principle to encourage homeowners to switch to solar energy.

Every time you go to the grocery store, you try to choose the shortest line. But all of the lines always seem to be the same length. Why?

Everyone else is trying to choose the shortest line too.

Which of the following would not be analyzed in microeconomics?

How to make the largest profit?

During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why?

The opportunity cost of attending college is lower because students are less likely to have good full-time jobs.

The incentive principle is an example of:

a positive economic principle.

An economic naturalist is described as someone who

applies economic insights to everyday life.

if the government wanted to use the incentive principle to discourage smoking, it could:

increase taxes on cigarettes, effectively raising the price.

Last year interest rates fell. The field of economics that would be most concerned with this is:

macroeconomics

By convention, there are two major divisions of economics, called:

microeconomics and macroeconomics.

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of:

microeconomics.

one thing that distinguishes normative principles from positive principles is that:

normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions.