Econ-100

Workers in the United States enjoy a high standard of living because a. unions in the United States keep the wage high. b. we have protected our industry from foreign competition. c. the United States has a high minimum wage. d. workers in the United States are highly productive. e. None of the above is true.

d

Which of the following are trade-offs faced by a family deciding whether to buy a new car? Check all that apply. a. A newer model offers better protection and functions but is more expensive than an older model. b. An increase in the family's car payment means the family will be unable to afford a vacation. c. The vehicle is available in several colors.

a&b

Which of the following products would be least capable of producing an externality? a. Stereo equipment b. Inoculations against disease c. Education d. Food e. Cigarettes

d

Because people respond to incentives, we would expect that if the average salary of accountants increases by 50 percent while the average salary of teachers increases by 20 percent, a. students will shift majors from education to accounting. b. students will shift majors from accounting to education. c. fewer students will attend college. d. None of the above is true.

a

Foreign trade a. allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home. b. allows a country to avoid trade-offs. c. makes the members of a country more equal. d. increases the scarcity of resources. e. is none of the above.

a

Which of the following statements is true about a market economy? a. Market participants act as if guided by an "invisible hand" to produce outcomes that promote general economic well-being. b. With a large enough computer, central planners could guide production more efficiently than markets. c. Taxes help prices communicate costs and benefits to producers and consumers. d. The strength of a market system is that it tends to distribute resources evenly across consumers.

a

You win $200 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 3% interest. Which of the following is the opportunity cost of putting the $200 in a bank account for one year? a. The value you could obtain by spending the money now b. The $206 you would have a year from now c. Nothing, because you won the money

a

Which of the following are trade-offs faced by a professor deciding how much time to spend preparing for class? Check all that apply. a. The better the lecture, the better the professor's chances of tenure, but time spent preparing the lecture decreases the time the professor has available to work on research. b. The professor has taught the same subject for 4 years. c. The more the professor prepares, the better the lectures, but the less free time the professor can enjoy doing something else.

a&c

Which of the following involve a trade-off? a. Buying a new car b. Going to college c. Watching a football game on Saturday afternoon d. Taking a nap e. All of the above involve trade-offs.

e

High and persistent inflation is caused by a. OPEC raising the price of oil too much. b. governments increasing the quantity of money too much. c. regulations raising the cost of production too much. d. unions increasing wages too much.

b

In the short run, a. an increase in inflation temporarily increases unemployment. b. a decrease in inflation temporarily increases unemployment. c. inflation and unemployment are unrelated. d. the business cycle has been eliminated.

b

Which of the following activities is most likely to produce an externality? a. A student reads a novel for pleasure. b. A student has a party in her dorm room. c. A student eats a hamburger in the student union. d. A student sits at home and watches television.

b

Which of the following are trade-offs faced by a company president deciding whether to open a new factory? Check all that apply. a. The president has been with the company for 20 years. b. The firm can either open a new factory or expand its current factory. c. The firm is currently making profits.

b

productivity can be increased by a. raising union wages. b. improving the education of workers. c. raising minimum wages. d. restricting trade with foreign countries.

b

Which of the following are trade-offs faced by a member of Congress deciding how much to spend on national parks? Check all that apply. a. The president likes white flowers and wants to see more in parks. b. Money spent on national parks benefits park visitors, but alternatively the money could be spent on highways to benefit drivers. c. Congress can spend either a small amount on a lot of parks or a large amount on a single national park.

b & c

Suppose you find $20. If you choose to use the $20 to go to the football game, your opportunity cost of going to the game is a. nothing, because you found the money. b. $20 (because you could have used the $20 to buy other things). c. $20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game. d. $20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game, plus the cost of the dinner you purchased at the game. e. none of the above.

c

Which of the following are trade-offs faced by a recent college graduate deciding whether to go to graduate school? Check all that apply. a. She graduated college with distinction. b. She is currently studying biology. c. If she goes to graduate school, she won't be able to start a new job and repay her existing student loans.

c

Which of the following is not part of the opportunity cost of going on vacation? a. the money you spent on airline tickets b. the money you could have made if you had stayed home and worked c. the money you spent on food d. the money you spent on a Broadway show

c

Which of the following situations describes the greatest market power? a. a farmer's impact on the price of corn b. a student's impact on college tuition c. Microsoft's impact on the price of desktop operating systems d. Volvo's impact on the price of autos

c

You have spent $1,000 building a hot-dog stand based on estimates of sales of $2,000. The hot-dog stand is nearly completed, but now you estimate total sales to be only $800. You can complete the hot-dog stand for another $300. Should you complete the hot-dog stand? (Assume that the hot dogs cost you nothing.) a. No. b. There is not enough information to answer this question. c. Yes.

c

Raising taxes and increasing welfare payments a. proves that there is such a thing as a free lunch. b. reduces market power. c. improves efficiency at the expense of equality. d. improves equality at the expense of efficiency. e. does none of the above.

d

Referring to question 17, your decision rule should be to complete the hot-dog stand as long as the cost to complete the stand is less than a. $100. b. $300. c. $500. d. $800.

d

Trade-offs are required because wants are unlimited and resources are a. marginal. b. efficient. c. unlimited. d. scarce. e. economical.

d

A rational person does not act unless a. the action makes money for the person. b. the action is ethical. c. the action produces marginal costs that exceed marginal benefits. d. the action produces marginal benefits that exceed marginal costs. e. None of the above is true.

d

An increase in the price of beef provides a. no information because prices in a market system are managed by planning boards. b. information that tells consumers to buy more beef. c. information that tells consumers to buy less pork. d. information that tells producers to produce more beef

d

Economics is the study of how a. to reduce our wants until we are satisfied. b. society manages its unlimited resources. c. to fully satisfy our unlimited wants. d. society manages its scarce resources. e. to avoid having to make trade-offs.

d