Econ 102-4001 Chapter 1 & 2 Exam

Assume point A on a linear production possibilities curve represents the combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup of coffee is:

1/3 of a cappuccino.

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich? 15 smoothies 3 smoothies 5 smoothies 1/3 of a smoothie

1/3 of a smoothie.

The figure below shows the production possibilities curve for the island of Genovia: The opportunity cost of producing one ton of agricultural products in Genovia is: 1,000 cars. 1/50 of a car. 1/5 of a car. 1 car.

1/50 of a car.

Refer to the figure below. The opportunity cost of producing one bushel of corn is: ½ of a bushel of wheat. 2 bushels of wheat. 250 bushels of wheat. 500 bushels of wheat.

2 bushels of wheat.

Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:

The value she places on seeing the movie.

Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:

an application of the Cost-Benefit Principle.

Refer to the figure below. It is efficient for this farmer to:

grow 500 bushels of wheat and 250 bushels of corn.

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. What is the opportunity cost of using the coupon for the Miami trip?

$450

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is:

0

Refer to the table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out? 5 3 2 4

3

Refer to the table below. Martha's opportunity cost of making of a pie is: 80 cakes. 4/3 of a cake. 3/4 of a cake. 8 cakes.

3/4 of a cake

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. Should you use the frequent flyer coupon to go to Miami?

No, your benefit is less than your cost.

If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers. natural absolute relative comparative

absolute

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.

You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:

borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.

Consider a graph of a production possibilities curve. If a producer is operating at an inefficient point, then that producer: cannot produce more of one good without giving up some of the other good. must be specializing in activities for which it has a comparative advantage. must be at an unattainable point on the production possibilities curve. can produce more of one good without producing less of the other good.

can produce more of one good without producing less of the other good.

Refer to the table below. Based on their comparative advantages, Pat should specialize in _______, and Corey should specialize in _______.

delivering pizza; making pizza

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Given that driving to campus to buy the concert ticket was rational for Matt, Matt should: not drive to campus to buy the books because the $5 he would save is only two percent of the cost of the books, and that is much less than the 25 percent he saved on the concert ticket. drive to campus to buy the books because the $5 he would save is more than he saved by driving to campus to buy the concert ticket. not drive to campus to buy the books because the cost of gas and his time must certainly be more than the $5 he would save. drive to campus to buy the books because the books are cheaper at the bookstore than online.

drive to campus to buy the books because the $5 he would save is more than he saved by driving to campus to buy the concert ticket.

If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an: unattainable point. efficient point. inefficient point. undesirable point.

efficient point.

In general, individuals and nations should specialize in producing goods ______ other individuals or nations. for which they have a lower opportunity cost compared to for which they have a higher opportunity cost compared to that they can produce more quickly than that they can produce less quickly than

for which they have a lower opportunity cost compared to

The benefits to specialization are even greater when two trading partners have:

large differences in opportunity costs.

The opportunity cost of an activity includes the value of:

the next-best alternative that must be foregone.

Points that lie outside the production possibilities curve are ______, and points that lie inside the production possibilities curve are ______. inefficient; efficient unattainable; attainable efficient; inefficient attainable; unattainable

unattainable; attainable

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour.

1; 4/5

Refer to the table below. Martha's opportunity cost of making a cake is: 3/4 of a pie. 60 pies. 4/3 of a pie. 6 pies.

4/3 of a pie

ack has a ticket to see Bo Bice for which he paid $30 yesterday. He takes an unpaid day off from work to get ready for the concert. When he arrives at the concert, five different people offer him $70 for his ticket. Jack decides to keep his ticket. At the time he makes this decision, his opportunity cost of seeing Bo Bice is:

70

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending Elite U is:

70,000

Your scholarship depends on your maintaining a 3.5 cumulative GPA. Your GPA for last semester was 3.6, which brought your cumulative GPA down. What must be true?

Last semester's grades were lower than your overall GPA.

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. Picture Which of the following is true? Alex has both an absolute advantage and a comparative advantage over Lou in both tasks. Lou has both an absolute advantage and a comparative advantage over Alex in both tasks. Lou has a comparative advantage over Alex in cleaning. Alex has a comparative advantage over Lou in cleaning.

Lou has a comparative advantage over Alex in cleaning.

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. Picture If Alex and Lou work out an efficient arrangement for these two chores, then under that arrangement: Alex and Lou each would do half of the cooking and half of the cleaning. Alex would do all of the cleaning, while Lou would do all the cooking. Lou would do all of the cleaning, while Alex would do all of the cooking. Lou would do all of the cleaning and all of the cooking.

Lou would do all of the cleaning, while Alex would do all of the cooking.

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:

State College

According to the Principle of Increasing Opportunity Cost, in expanding the production of any good, we should start by utilizing the resources that: we have the least of. we have the most of. have the lowest opportunity cost. have the highest opportunity cost.

have the lowest opportunity cost.

Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of:

inconsistent reasoning; saving $20 is saving $20.

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an: efficient point. unattainable point. ideal point. inefficient point.

inefficient point.

Jody has purchased a non-refundable $75 ticket to attend a Miley Cyrus concert on Friday night. Subsequently, she is asked to go to out dinner at no expense to her. If she uses cost-benefit analysis to choose between going to the concert and going out to dinner, the opportunity cost of going out to dinner should include:

only the entertainment value of the concert.

Refer to the table below. Based on their comparative advantage, Martha should specialize in _______ while Julia should specialize in _______. cakes; pies pies; cakes both pies and cakes; neither pies nor cakes neither pies nor cakes; both pies and cakes

pies; cakes

If you have a comparative advantage in a particular task, then: you have specialized in that task, while others have not. you are better at it than other people. you give up more to accomplish that task than do others. you give up less to accomplish that task than do others.

you give up less to accomplish that task than do others.