Practice Quiz (Ch 1-3)

Which of the following statements about markets is most accurate?

Markets are usually a good way to organize economic activity

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

People face tradeoffs

The marginal benefit Colin gets from eating a fourth slice of pizza is

The total benefit Colin gets from eating four slices of pizza minus the total benefit Colin gets from eating three slices of pizza

Economists build economic models by

efficiency

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between

efficiency and equality

Denise decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

the enjoyment she would have received had she watched the video