CH 1 - HW 1

Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.6. ______ should specialize in truck sales and ______ should specialize in car sales. A. Joe; Ralph B. Ralph; Larry C. Larry; Ralph D. Larry; Joe

B. Ralph; Larry

1. The scarcity principle indicates that __________ and the cost-benefit principle indicates __________. A. choices must be made; how to make the choices B. choices must be made; the costs can never outweigh the benefits of the choices C. rare goods are expensive; the costs should outweigh the benefits of the choices D. rare goods are expensive; the costs can never outweigh the benefits of the choices.

A. choices must be made; how to make the choices

Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.5. Joe's opportunity cost of selling a car is ______ than Ralph's, and Joe's opportunity cost of selling a car is ______ than Larry's. A. less; more B. more; less C. less; less D. more; more

A. less; more

Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.3. For Joe, the opportunity cost of selling a truck is: A. 9 fewer cars sold. B. 1 fewer car sold. C. 4 fewer cars sold. D. 1/3 car not sold.

B. 1 fewer car sold.

5. If the total benefits of watching 1, 2, and 3 baseball games on TV are 100, 120, and 125 then the marginal benefits are A. 100, 120, and 125. B. 100, 20, and 5. C. 100, 609, and 41.67. D. 100, 240, and 375.

B. 100, 20, and 5.

Dent'nScratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.1. ________ has an absolute advantage for selling cars and __________ has an absolute advantage for selling trucks. A. Joe; Joe B. Larry; Ralph C. Ralph; Larry D. Larry; Joe

B. Larry

3. The opportunity cost of an activity is the value of A. an alternative forgone. B. the next-best alternative forgone. C. the least-best alternative forgone. D. the difference between the chosen activity and the next-best alternative forgone

B. the next-best alternative forgone.

4. If the marginal costs of 1, 2, and 3 hours of talking on the phone are $50, $75, and $105, then the total costs are A. $50, $150, and $315. B. $50, $41.67, and $115. C. $50, $125, and $230. D. $50, $175, and $405.

C. $50, $125, and $230.

6. One thing that distinguishes normative principles from positive principles is that A. normative principles are pessimistic and positive principles are optimistic. B. normative principles reflect the social norms of the community, and positive principles reflect universal truths. C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions. D. normative principles tell us how people actually make economic decisions, and positive principles tell us how people should make decisions

C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions.

Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.4. For Ralph, the opportunity cost of selling a truck is: A. 9 fewer cars sold. B. 1/3 car sold. C. 3 fewer cars sold. D. 1/4 car not sold.

D. 1/4 car not sold.

Larry C: 10 // T:5 Joe C: 9 // T:9 Ralph C: 3 // T:12 8.2. For Larry, the opportunity cost of selling a truck is A. 10 fewer cars sold. B. 1/2 car not sold. C. 1 fewer car sold. D. 2 fewer cars sold.

D. 2 fewer cars sold.

7. According to the equilibrium principle, A. unregulated markets tend to reach equilibrium prices and quantities without government regulation. B. once a market has reached equilibrium, price will not change. C. collective action cannot improve on individual action. D. market equilibrium exploits all opportunities for individual gain, but may not exploit gains possible through collective action.

D. market equilibrium exploits all opportunities for individual gain, but may not exploit gains possible through collective action.

2. According to the cost-benefit principle, A. the lowest cost activity usually gives the lowest benefit. B. a person should always choose the activity with the lowest cost. C. a person should always choose the activity with the greatest benefit. D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits.

D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits.