Econ Exam #1

Suppose the most you would be willing to pay to have a freshly washed car before going out on a date is $5.00. The smallest amount for which you would be willing to wash someone else's car is $4.00. You are going out this evening and your car is dirty. How much economic surplus would you receive from washing it?

$1

Tom is a mushroom farmer. He invests all his spare cash in additional mushrooms, which grow on otherwise useless land behind his barn. The mushrooms triple in weight during their first year, after which time they are harvested and sold at a constant price per pound. Tom's friend Dick asks Tom for a loan of $200, which he promises to repay after 1 year. How much interest will Dick have to pay Tom in order for Tom to recover his opportunity cost of making the loan?

$400

Caitlyn buys a new phone for $700. We can conclude that Select one: a. ​she must value the new phone more than the $700. b. ​she is $700 worse off. c. ​she would have been happier if she had saved the money instead. d. ​whoever sold her the phone is $700 worse off.

a

Ginger bought a phone that came with a $10 rebate. Ginger should fill out and mail in the rebate form if: a. the opportunity cost of the time and trouble of sending in the rebate form is less than $10. b. the opportunity cost of the time and trouble of sending in the rebate form is more than $10. c. she would have bought the phone without the rebate, and so sending in the rebate form involves no opportunity cost. d. Ginger's surplus from purchasing the phone was less than $10.

a

It's a Sunday, and Mason is ranking his choice of activities in the following order: study for an economics exam on Monday, play video games, swim at the pool with friends, or listen to music. If Mason chooses to study for his economics exam, what is the opportunity cost of this choice? Select one: a. ​play video games b. ​swim with friends c. ​listen to music d. ​all of the above

a

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways? a. More drivers would drive on the non-toll road, making the toll road less congested. b. More drivers would drive on the toll road making the non-toll road less congested. c. Traffic would remain evenly divided between the two roads as drivers continuously sought the less-congested route. d. Traffic would decrease on both roads.

a

The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity a. marginal benefit b. total benefit c. average benefit d. economic benefit

a

The law of comparative advantage indicates that if a group of individuals wants to maximize their joint output, then each good should be supplied by Select one: a. the low opportunity cost producer. b. the person with the lowest wage rate. c. the person that can accomplish the task most rapidly. d. the person with the most advanced technical knowledge.

a

The supply curve graphically illustrates Select one: a. the quantity of a good or service producers are willing to supply at alternative prices. b. the difference between the current supply of a good or service and the potential supply producers are capable of producing. c. the quantity of a good or service consumers will purchase at alternative prices. d. the difference between the current supply of a good or service and the potential amount consumers are willing to purchase.

a

What effects do specialization and trade have on the allocation of resources and the level of production of a society? Select one: a. They create a more efficient allocation of resources and an increase in the level of production. b. They create a less efficient allocation of resources and an increase in the level of production. c. They create a more efficient allocation of resources and a decrease in the level of production. d. They create a less efficient allocation of resources and a decrease in the level of production.

a

A rational person is someone: a. who does not have well-defined goals. b. with well-defined goals who tries to fulfill those goals as best as he or she can. c. who doesn't worry about costs and benefits. d. who only considers the financial benefits and financial costs of making a choice.

b

Economists recognize that because people have limited resources: a. government intervention is necessary. b. they have to make trade-offs. c. they will never be happy. d. our future is bleak.

b

If the price of a good or service is higher than the equilibrium price Select one: a. excess demand is likely to push prices lower. b. producers are likely to produce more than consumers are willing to purchase. c. consumers will want to purchase more than producers are willing to produce. d. excess supply is likely to push prices higher. Feedback

b

The price of a good will tend to fall when Select one: a. there is excess demand for the good. b. there is excess supply of the good. c. demand for the good increases. d. the supply of the good decreases.

b

When the price of a good increases, Select one: a. the quantity demanded will also increase. b. the quantity demanded will decrease. c. the quantity supplied will decrease. d. the opportunity cost of producing the good will increase, causing the supply to fall.

b

​Steve and Jada work in a restaurant making meals consisting of a sandwich and a salad. For every sandwich Steve makes, he gives up making two salads. For every sandwich Jada makes, she gives up making 1 salad. Which of the following is correct? Select one: a. ​Steve has a comparative advantage in producing sandwiches. b. ​Jada has a comparative advantage in producing sandwiches. c. Steve has a comparative advantage in producing both sandwiches and salads. d. ​Neither Steve nor Jada has a comparative advantage in producing sandwiches.

b

The field of economics that would be most concerned with a recent fall in interest rates is: a. microeconomics. b. macroeconomics. c. economic naturalism. d. marginal economics.

b, macroeconomics Macroeconomics focuses on overall national economic growth and factors that affect the overall economy such as the impact of changing interest rates on total spending in the economy.

If the Internet helps buyers learn about the availability of products and find potential sellers more quickly, Select one: a. the volume of trade will decline. b. transaction costs will rise. c. the gains from trade will increase. d. buyers will be better off, but sellers will be worse off.

c

Individuals economize and respond predictably to Select one: a. positive incentives, but not negative incentives. b. negative incentives, but not positive incentives. c. both positive and negative incentives. d. neither positive or negative incentives.

c

The economizing problem is essentially one of deciding how to make the best use of Select one: a. limited resources to satisfy limited wants. b. unlimited resources to satisfy limited wants. c. limited resources to satisfy virtually unlimited wants. d. unlimited resources to satisfy unlimited wants.

c

The expression "There's no such thing as a free lunch" means Select one: a. if one person gains, someone else must lose. b. each person must pay for exactly what he or she receives. c. when scarce resources are used to produce one good they are unavailable to produce others. d. you cannot have a free lunch at the expense of someone else.

c

The owners of the Cheesy Burger Restaurant must decide how many new employees to add to their existing number of workers.Based on the information below, how many workers should the owners add if a worker earns $9 per hour? ​ Number of Workers Total Revenues per Hour 1 $30 2 $48 3 $62 4 $72 5 $80 6 $84 ​ Select one: a. six workers because that increases total revenue the most from the initial level b. one worker because that worker increases average revenue the most c. four workers because the fifth costs more than that worker increases total revenue d. two workers because hiring more is risky

c

The price of an airline ticket from Denver to Chicago costs $450. A bus ticket costs $150. Traveling by plane takes 2 hours compared with 32 hours by bus. Other things constant, Erica would gain by choosing air travel if, and only if, she values her time at more than Select one: a. $5 per hour. b. $9.38 per hour. c. $10 per hour. d. $300 per hour. Feedback

c

Which of the following marketing pieces takes the concept of marginalism into account? Select one: a. Computers, monitors and other technical equipment in local dumps are causing $1 million dollars in environmental damage; Vote yes to allocate $100,000 in cleanup spending. b. Help save the manatees; Contribute to the campaign to raise $10,000. c. A new environmental regulation will require spending an additional $100 million and would reduce the damage by $120 million. d. If a company's gross revenues are declining, it should increase its spending on advertising.

c

Which branch of economics is most likely to study differences in countries' growth rates? a. microeconomics b. normative economics c. macroeconomics d. experimental economics

c Macroeconomics is the study of the performance of national economies and the policies that governments use to try to improve that performance.

Colorado experiences a record snowfall during the winter season. What impact will this have on the market for snowmobiles? Select one: a. The supply of snowmobiles will increase and the price of snowmobiles will increase. b. The supply of snowmobiles will increase and the price of snowmobiles will fall. c. The demand curve for snowmobiles will decrease and the price of snowmobiles will fall. d. The demand curve for snowmobiles will increase and the price of snowmobiles will rise.

d

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that Select one: a. cheating will be completely eliminated. b. fewer students will attempt to cheat. c. the amount of cheating will be unaffected. d. any of the above is possible because student behavior is unpredictable.

d

The basic principles of economics are Select one: a. important only to professional economists. b. complex and difficult to understand. c. necessarily abstract. d. reflective of common sense.

d

Pop Quiz: How Do You Stop Sea Captains From Killing Their Passengers? According to the video, During the 1700s, the British government paid sea captains to take felons to Australia. At first, it didn't work so well; about many felons died or arrived arrived beaten, starved, and sick. What incentive change was proposed and worked? Select one: a. Force the captains to bring a doctor along. b. Require them to bring lemons to prevent scurvy. c. Have inspections. d. Raise captains' salaries. e. Instead of paying for each prisoner that walked on the ship in Great Britain, the government should only pay for each prisoner that walked off the ship in Australia.

e