Econ 102: Chapter 1
If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $3000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is
$10,100
Cassie has spent $800 on quilt making that she expects to sell for $1,500. She discovers she would need to spend another $200 to complete the task or can sell it "as is" for $900. What is the marginal cost of completing the task?
$200
Cassie has spent $800 on quilt making that she expects to sell for $1,500. She discovers she would need to spend another $200 to complete the task or can sell it "as is" for $900. What is the marginal benefit of selling it "as is"
$900
One major assumption of economics is that people
Act in pursuit of self interest
Positive or normative? Better insurance benefits increase the incentive of some individuals to work. This statement is best described as
Positive
Positive or normative? The amount of education that one has is an important factor in the determination of his or her wage rate. This is best described as
Positive
Cassie has spent $800 on quilt making that she expects to sell for $1,500. She discovers she would need to spend another $200 to complete the task or can sell it "as is" for $900. What should she do?
Purchase the period fabric, complete the task, and sell the quilt
T/F? Economic resources include financial capital and money
False
T/F? Economics studies incorrect or correct behaviors
False
T/F? Examining the conditions that could lead to inflation in an economy is an example of microeconomics topic
False
T/F? Physical capital refers to stocks and bonds
False
T/F? Suppose that to move more people off the wait list for organ donations, surgeons and hospitals are developing a market for organ swapping. This is an example of a macroeconomics topic
False
The accumulated skills and training workers have
Human capital
Economics can be described as the study of how people use _________________ resources to satisfy _________________ wants
limited, unlimited
"By 2015, no individual in the U.S. should earn less than $20,000 a year" is an example of
normative statement
Economics is the study of how
people make choices
In economics, items that are used to produce goods and services are known as
resources
The study of economics arises due to
scarcity
If the marginal cost of producing a television is constant at $200, then a firm should produce the item if...
the marginal benefit is greater than or equal to $200
Economic analysis is a tool that
Aids decision making
Which of the following is NOT one of the basic questions that an economic system attempts to answer? a. How much goods and services will be produced b. For whom will goods and services be produced c. How to eliminate choices d. What to produce
C
Which of the following statements is a positive economic statement? a. The Congress should pass the President's tax package b. Tax rebates should favor rich people because they pay more taxes c. The President's budget included an increase in unemployment insurance payments
C
Central planning is a key characteristic of which economic system?
Command and control
Which of the following is an element of a command economy? a. Means of production are privately owned b. Market decides distribution c. The market decides what will be produced d. Production decisions are centralized
D
Which of the following would an economist classify as capital? a. Corporate bond b. $50 bill c. Post office employee d. A guitar used by a musician
D
Macro or micro? The effects of a lower income tax rates on the nation's total production of goods and services.
Macro
Micro or macro? Inflation and unemployment
Macro
Micro or macro? What determines the minimum wage?
Macro
_________________ involves undertaking an activity until its marginal benefit equals marginal cost
Marginal analysis
What is the type of mechanism that answers the basic economic questions through a decentralized decision-making process?
Market system
Macro or micro? The effect of increased union wages on the cost of producing automobiles
Micro
Micro or macro? How will Apple decide on a selling price for the iPad
Micro
Studying how the management of Hewlett Packard decides how many computers to produce and the price to charge for its computers would be considered
Microeconomics
You own the Star Wars six DVD set. The opportunity cost of watching these DVDs for the second time
The value of the alternative use of the time spent watching the DVDs
T/F? Economics assumes that economic agents behave rationally meaning they make the best decision given their knowledge of the costs and benefits
True
T/F? In the market for factors of production, households earn income by supplying factors of production to firms
True
If you eat at a sushi restaurant that charges $20 for its all you can eat sushi special, then the marginal cost of your 10th piece of sushi is
Zero
The way that a society uses or allocates resources to satisfy human wants is called
an economic system
Economics is the study of the _________ people make to attain their goals, given their _________ resources
choices, scarce
The basic economic problem of scarcity
has always existed and will continue to exist