ECON 201 Ch 1

Which of the following describe some of the trade-offs faced by a company president deciding whether to open a new factory? Check all that apply.

The firm can either pay out more of its profit to shareholders or earn additional profit next year by increasing production, The firm can either open a new factory or upgrade existing equipment.

You were planning to spend Saturday working at your part-time job, but a friend asks you to go skiing. Which of the following are included in the true cost of going skiing? Check all that apply.

The rental of any ski equipment you need, The cost of a lift ticket, The wages you forgo by going skiing

Now suppose you had been planning to spend the day studying at the library. What is the cost of going skiing in this case? Check all that apply.

The value of your time spent studying, The cost of a lift ticket, The rental of any ski equipment you need

Suppose Americans decide to save more of their incomes. If banks lend this extra saving to businesses, which use the funds to build new factories, this leads to ____________ growth in productivity because workers will have __________ equipment with which to work.

faster, more

Guaranteeing everyone in society the best healthcare possible will likely ________ equality and _________efficiency.

increase, decrease

Paying laid-off workers unemployment benefits until they find a new job will likely _____________equality and ___________efficiency.

increase, decrease

A 1996 bill reforming the federal government's antipoverty programs limited many welfare recipients to only two years of benefits. This change gives people the incentive to find a job ___________quickly than if welfare benefits lasted forever. The loss of benefits after two years will result in the distribution of income becoming ____________ equal. In addition, the economy will be ____________ efficient because of the change in working incentives.

more, less, more

The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $3 million. If it would cost $1 million to finish development and make the product, you____________go ahead and do so. The most you should pay to complete development is $____________ million.

should, $3

Which of the following describe some of the trade-offs faced by a family deciding whether to buy a new car? Check all that apply.

An increase in the family's car payment means the family will be unable to afford a vacation, Fuel-efficient cars are more expensive, but regular cars require spending more on gas, A larger vehicle means saving time by not having to make multiple trips somewhere, but a smaller vehicle is cheaper.

During the Revolutionary War, the American colonies could not raise enough tax revenue to fund the war effort fully; to make up the difference, the colonies decided to print more money. Printing money to cover expenditures is sometimes referred to as an inflation tax.

Anyone who is holding money

You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological.

Determine the benefits of what you give up by going on the vacation, and compare them to the benefits of going on vacation.

Breaking up Standard Oil (which once owned 90% of all oil refineries) into several smaller companies

Efficiency

Instituting laws against driving while intoxicated

Efficiency

Prohibiting smoking in public places

Efficiency

Regulating cable TV prices

Efficiency

Imposing higher personal income tax rates on people with higher incomes

Equality

Providing some poor people with vouchers that can be used to buy food

Equality

True or False: Labor unions are the primary reason the standard of living in the United States has changed over time.

False

True or False: Only factory owners will benefit from the higher productivity because they will receive a return on their additional investment.

False

True or False: Society receives a "free lunch" when it builds new factories.

False

Which of the following statements support the reality that your standard of living is different from that of your parents or grandparents when they were your age? Check all that apply.

Many families have two or more cars, whereas having any motor vehicle was a luxury in the early 20th century, A cutting-edge television comes with HD, 3D, and SmartTV technology, while your grandparents likely enjoyed at most a black-and-white television in the early years, In the United States, the average person's life expectancy was roughly 78 years in 2010, but only 70 years in 1960.

Which of the following describe some of the trade-offs faced by a member of Congress deciding how much to spend on national parks? Check all that apply.

Money spent on national parks benefits park visitors, but alternatively the money could be spent on highways to benefit drivers, Congress can spend either a small amount on a lot of parks or a large amount on a single national park.

You win $100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5% interest. Which of the following is included in the opportunity cost of spending $100 now?

The $105 you would have a year from now if you put it in the bank

Which of the following describe some of the trade-offs faced by a professor deciding how much time to spend preparing for class? Check all that apply.

The better the lecture, the better his chances of tenure, but time spent preparing the lecture decreases the time he has available to work on research, The more he prepares, the better his lectures, but the less he prepares, the more free time he can enjoy doing something else.

Which of the following describe some of the trade-offs faced by a recent college graduate deciding whether to go to graduate school? Check all that apply.

Graduate school means fewer years of on-the-job experience, If she goes to graduate school, she won't be able to spend as much time with her family, Taking out more student loans means she may not able to purchase the new car she needs.

Which of the following provides an explanation for your answers regarding efficiency?

Which of the following provides an explanation for your answers regarding efficiency?