First Test Micro Econ- QUIZ

A person has a comparative advantage in activity X when that person's:

opportunity cost is lower for him than for other trading partners.

Institutions that support economic growth are the ones that:

provide incentives for entrepreneurs to take risks and innovate

In the opening story, the payment to captains of prisoner transport ships for each convict who arrived in Australia instead of for each convict who boarded the ship:

saved the lives of hundreds of convicts

What is thinking on the margin?

Making choices by comparing the additional benefits and additional costs from doing a little bit more of some activity.

Each of the following ideas is central to economics, EXCEPT:

"good institutions can eliminate economic trade-offs."

A customer at a fast-food restaurant may choose to order a burger for $4.00 and fries for $1.50 or order a value meal (that includes the burger, fries, and a drink) for $6.00. What is the marginal cost of the drink if the customer orders the value meal?

$0.50

Susan quits her administrative job, which pays $40,000 a year, to finish her 4-year college degree. Her annual college expenses are $8,000 for tuition; $900 for books; and $2,500 for food. The opportunity cost of attending college for the year is:

$48,900

How is the unemployment rate related to the opportunity cost of college?

As the unemployment rate increases, the opportunity cost of attending college falls because fewer opportunities for employment exist.

In the market for pharmaceuticals, the issue of "drug lag" illustrates which of the following ideas?

Lives are being lost because safe drugs that are still in the testing stage have not yet been approved.

What are the institutions that help foster the appropriate incentives for economic growth?

a dependable legal system, property rights, and competitive and open markets

The basic postulate of economics indicates that changes in incentives influence the:

choices of individuals with regard to a wide range of activities, including those generally perceived as social or political.

Suppose the United States government wants to encourage individuals to save more of their income. The easiest way for the government to realize this goal is to:

develop incentives such as tax breaks on savings in order to encourage more savings.

A grocery store is running a "buy-one-get-another-at-one-half-off" promotion on a dozen doughnuts. So the first dozen is $6, and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is:

greater than $3.

Inflation is primarily caused by:

the government printing too much money.

In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is:

the value of studying economics.

The opportunity cost of a choice is:

the value of the opportunities lost

When it comes to getting the flu shot, most people consider _______, not _________.

their self-interest; the social interest

Every day people rely on the work of others to provide us with food, clothing, and shelter. These people work for our benefit because:

they benefit by doing so

In an effort to clean the air, many communities impose restrictions on the burning of garbage. This policy causes more garbage to be buried underground, potentially increasing groundwater contamination. What concept does this example represent?

trade-offs

Suppose that you study hard, master the principles of economics, and earn a good grade in your economics class. This is an example of a good institution because: everybody gets good grades.

your self-interest in getting good grades aligns with the social interest of having people who understand economics.