Econ 103 Exam 1 Review
A rational person does not act unless
the action produces marginal benefits that exceed marginal costs
Productivity can be increased by
Improving the education of workers.
Economic models are
created to duplicate reality.
Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then
fewer students will take degree courses in education and more will take accounting courses.
Economics is the study of
how society manages its scarce resources
Which of the following is NOT part of the opportunity cost of going on holiday?
the money you spent on food
Which of the following statements about microeconomics and macroeconomics is NOT true?
.The study of very large industries is a topic within macroeconomics.
Which of the following activities is most likely to produce an externality?
A student has a party in her room in the student hall of residence.
Which of the following involves a trade-off? a.Taking a nap b.All of these answers involve trade-offs .c.Watching a football game on Saturday afternoon d.Going to university e.Buying a new car
All
Which of the following situations describes the greatest market power?
Microsoft's impact on the price of desktop operating system.
Which of the following statements regarding the circular-flow diagram is true?
The factors of production are owned by households.
In which of the following cases is the assumption most reasonable?
To model the benefits of trade, an economist assumes that there are two people and two goods.
You are a rational person and planning to run a hot dog stand during a forthcoming fair. You originally estimated that you will generate sales revenue of €2000 and you have already spent c.the action produces marginal benefits that exceed marginal costs.d.the action makes money for the person.e.none of these answers.4.Which of the following activities is most likely to produce an externality?a.A student eats a hamburger in the student union.b.A student reads a novel for pleasure.c.A student sits at home and watches T.V.d.A student has a party in her room in the student hall of residence. 4€1000 building the hot dog stand. The hot dog stand is nearly completed but now you estimate total sales to be only €800 because the fair clashes with a major music festival in a nearby location.. You can complete the hot dog stand for another €300. Should you complete the hot dog stand? (Assume that there are no other costs -the hot dogs are costless to you.)
Yes
High and persistent inflation is caused by
governments increasing the quantity of money too much