AREC 202 questions for final

By convention, there are two major divisions of economics called A) marginal benefit and marginal cost B) microeconomics and macroeconomics C) reservation price and opportunity cost D) rational economics and irrational economics

B)

Refer to the table below the marginal benefit of the 5th unit of activity is: A) $10 B) $44 C) $5 D) $50

A) $10

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average costfor a meal is: A) $4. B) $6. C) $0.25. D) $5.

A) $4

the scarcity principle applies to... A) all decisions B) only the poor C) only non market decisions ie. watching a sunset D) only market decisions ie. buying a car

A) all decisions

According to the incentive principle, people will be less likely to smoke if the government: A) increases taxes on cigarettes, effectively raising the price. B) invests more money in cancer research. C) subsidizes hospitals treating lung disease. D) increases taxes on smoking cessation devices such as nicotine patches

A) increases taxes on cigarettes, effectively raising the price

Economics is the study of: A) choice in the face of limited resources B) the financial concerns of business and individuals C) whether we will have enough resources in the future D) the role of government in limiting the choices people make

A) the choice in the face of limited resources

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a 10) smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to makea smoothie. Which of the following statements is correct? A) Tracy should specialize in sandwiches and smoothies. B) Dan should specialize in sandwiches, and Tracy should specialize in smoothies. C) Dan should specialize in smoothies, and Tracy should specialize in sandwiches. D) Dan should specialize in both sandwiches and smoothies.

B) Dan should specialize in sandwiches, and Tracy should specialize in smoothies.

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can alsocatch more fish per hour than can Maryann. Therefore: A) There are no gains to specialization and trade for Maryann. B) Maryann should specialize in the activity for which she has a comparative advantage. C) There are no gains to specialization and trade for Ginger. D) Ginger should specialize in the activity for which she has an absolute advantage.

B) Maryann should specialize in the activity for which she has a comparative advantage.

The United States generally has a comparative advantage in the development of technology because it has: A) large amounts of natural resources. B) a disproportionate share of the world's best research universities. C) patent laws, which no other country has. D) the greatest need for new technology.

B) a disproportionate share of the world's best research universities.

Consider a graph of a production possibilities curve. If a producer is operating at an inefficient point, then that producer: A) must be at an unattainable point on the production possibilities curve. B) can produce more of one good without producing less of the other good. C) must be specializing in activities for which it has a comparative advantage. D) cannot produce more of one good without giving up some of the other good.

B) can produce more of one good without producing less of the other good.

if both supply and demand decrease simultaneously, the new equilibrium price is________ and the new equilibrium quantity is ________ A)lower; lower B)indeterminate; lower C)indeterminate; higher D)lower; indeterminate

B) indeterminate; lower

When a U.S. firm engages in outsourcing, it benefits ________ and harms ________. A) the firm; the U.S. consumers of the firm's products B) the U.S. consumers of the firm's products; the firm's U.S. employees C) the U.S. consumers of the firm's products; the firm D) the U.S. consumers of the firm's products; the firm's foreign employees

B) the U.S. consumers of the firm's products; the firm's U.S. employees

A seller's reservation price is generally equal to: A)the buyer's reservation price. B)the seller's marginal cost. C)the seller's average cost. D)the market price.

B) the sellers marginal cost

You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. Fromexperience, you know that going to see a movie gives you $20 worth of enjoyment,and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. Should you go see a movie or work as a math tutor? A) You should go to the movies. B) You should work as a math tutor. C) You should do neither. D) Both options are equally good.

B) you should work as a math tutor

You have two options for how to spend the afternoon. You can either go see a 10) movie with your roommate or work as a tutor for the Math Department. Fromexperience, you know that going to see a movie gives you $20 worth of enjoyment,and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon? A) $8 B) $57 C) $12 D) $22

C) $12

4) You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, 4) in concert on Saturday. Assume that $35 is the most you would have been willing topay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is your opportunity cost of going to work on Saturday? A) $9 B) $0 C) $35 D) $36

C) $35

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170.Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of driving to campus to buy the concert ticket last week was: A) $2 B) $16 C) $4 D) $9

C) $4

If Al has an absolute advantage over Beth in preparing meals, then: A) the problem of scarcity applies to Beth but not to Al. B) Al's opportunity cost of preparing a meal is lower than is Beth's. C) Al can prepare more meals in a given time period than Beth. D) it takes Al more time to prepare a meal than Beth.

C) Al can prepare more meals in a given time period than Beth

Tony notes that an electronics store is offering a flat $20 of all prices in the store. Tony reasons that if he wants to be something price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then its not a good idea. this is an example of: A) the proper application of the cost benefit principle B) inconsistent reasoning because prices are sunk costs C) rational choice because saving 40% is better than saving 4% D) inconsistent reasoning; saving $20 is saving $20

D) inconsistent reasoning; saving $20 is saving $20

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. Theround-trip airfares are $600, but you have a frequent-flyer coupon worth $500 thatyou could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If the Chicago-Atlanta round-trip air fare were $350, should you use the coupon to go to Miami? A) No, your economic surplus would be -$100. B) Yes, your economic surplus would be $400. C) Yes, your economic surplus would be $50. D) No, your economic surplus would be -$50.

C) Yes, your economic surplus would be $50.

The equilibrium price and quantity of any good or service is established by: A)only demanders. B)government regulations. C)both demanders and suppliers. D)only suppliers

C) both demander and suppliers

Refer to the figure below. The opportunity cost of increasing medical care from 200 to 400 units is ________ the opportunity cost of increasing medical care from 400to 600 units. A) greater than B) twice as much as C) less than D) exactly the same as

C) less than

With ATMs it is possible to retrieve cash from the bank at any time. one hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3pm. the present availability of 24-hour service has arisen because: A) flexibility was not valued 100 years ago B) government forced banks to become more convenient C) the cost of providing 24 hour service is much lower today. D) it was impossible to provide 24 hour service 100 years ago

C) the cost of providing 24 hour service is much lower today.

In a free market, if the price of a good is above the equilibrium price, then; A)suppliers, dissatisfied with growing inventories, will raise the price. B)demanders, wanting to ensure they acquire the good, will bid the price lower. C)suppliers, dissatisfied with growing inventories, will lower the price. D)government needs to set a lower price

C)suppliers, dissatisfied with growing inventories, will lower the price.

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. Theround-trip airfares are $600, but you have a frequent-flyer coupon worth $500 thatyou could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If you do not use the frequent-flyer coupon to fly to Miami, should you go to Miami? A) No, because there are no benefits in the trip. B) Yes, your benefit is equal to your cost. C) Yes, your benefit is more than your cost. D) No, your benefit is less than your cost.

D) No, your benefit cost is less than your cost.

Production possibilities curves for large economies are generally bow-shaped because: A) as more resources are used to produce a good, those resources become less expensive. B) opportunity costs tend to decrease with increases in production. C) specialization gives some producers a comparative advantage. D) opportunity costs tend to increase with increases in production.

D) opportunity costs tend to increase with increases in production.

Every time you go to the grocery store, you try to wait in the shortest line. But the lines always seem to be roughly the same length. Why? A) the cashiers work at the same speed B) the cashiers do not have an incentive to work faster C) random chance equals the length of the lines D) other people are trying to choose the shortest line too

D) other people are trying to choose the shortest line too

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n): A) consumption possibilities curve. B) production function. C) supply curve. D) production possibilities curve.

D) production possibilities curve.