econ 1

A circular-flow diagram is a model that A. helps to explain how the economy is organized B. helps to explain how participants in the economy interact with one another C. incorporates all aspects of the real economy D. Both (a) and (b) are correct

Both (a) and (b) helps to explain how the economy is organized AND helps to explain how participants in the economy interact with one another

A barber currently cuts hair for 50 clients per week and earns a profit. he is considering expanding this operation in order to serve more clients. Should he expand? A. It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients B. Yes, because cutting hair is profitable C. No, because he may no be able to sell more services D. It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients

It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.

If the United States decides to trade with Mexico, we know that A. Mexico will benefit, but trade with a less developed country could not benefit the United States B. it will not benefit Mexico because workers in the United States are more productivity C. Mexico and the United States can both benefit D. It will not benefit either country because their cultural difference are too vase.

Mexico and the United States can both benefit

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that ... A. people face tradeoffs B. people respond to incentives C. trade can make everyone better off D. rational people think at the margin

People face trader-offs. (what you give up)

When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included? A. Your full room-and-board expenses should always be included. B. You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. C. None of your room-and-board expenses should eve be included. D. You should include only the amount by which you room-and-board expenses exceed the income you earn while attending college.

You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.

The economy has the ability to produce at what points?

any point on the curve, PPF

The economy cannot produce at which points?

any point outside of the curve, PPF

An economic theory about international trade that is based on the assumption that there are only two countries trading goods A. is useless, since the real world has many countries trading many goods B. can be useful only in situations involving two countries involving two countries and two goods C. can be useful ini helping economists understand the complex world of international trade involving many countries and many goods D. can be useful in the classroom, but is useless in the real world

can be useful ini helping economists understand the complex world of international trade involving many countries and many goods

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that A. people face tradeoffs B. rational people. think at the margin C. people respond to incentives D. improvements in efficient sometimes come at the expense of equality

people face trade-offs

The phenomenon of scarcity stems from the fact that A. most economies' production methods are not very good B. in most economies, wealthy people consume disproportionate quantities of goods and services C. governments restrict production of too many goods and services D. resources are limited

resources are limited

Production possibilities frontiers are usually bowed outward. This is because A. it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced B. resources are specialized; that is, some are better at producing particular goods rather than other goods. C. the more resources a society uses to produce one good, the fewer resources it has available to produce another good D. of the effects of technological change.

resources are specialized; that is, some are better at producing particular goods rather than other goods.

A rational decisionmaker A. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions B. ignores marginal changes and focuses instead on the "big picture" C. takes an action only if the marginal benefit of that action exceed the marginal cost of that action D. ignores the likely effects of government policies when he or she makes choices.

takes an action only if the marginal benefit of that action exceed the marginal cost of that action

A production possibilites frontier shifts outward when A. opportunity costs are lessened B. the desires of the economy's citizens change C. at least one of the basic principles of economics is violated D. the economy experiences economic growth

the economy experiences economic growth

Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is A. the $30 minus the enjoyment she would have received from watching the video B. nothing, since she would have received less than $30 of enjoyment from the video C. the $30 she earns working D. the enjoyment she would have received had she watched the video

the enjoyment she would have received had she watched the video

When computing the opportunity cost of attending a concert you should include A. the value of your time, but not the price you pay for the ticket B. the price you pay for the ticket and value of your time C. the price you pay for the ticket, but not the value of your time D. Neither the price of the ticket nor the value of your time

the price you pay for the ticket and value of your time