Econ final studying #1

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino? Question options: A) 2 1/2 Russian tea cakes B) 2/5 of a Russian tea cake C) $2.50 D) $1.00

A

The highest valued alternative that must be given up to engage in an activity is the definition of Question options: A) opportunity cost. B) marginal benefit. C) marginal cost. D) economic equity.

A

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of A) trade-off. B) efficiency. C) optimization. D) equity.

A

Which of the following is a positive economic statement? Question options: A) If the price of iPhones falls, a larger quantity of iPhones will be purchased. B) The standard of living in the United States should be higher. C) The U.S. government should not have bailed out U.S. auto manufacturers. D) The government should revamp the health care system.

A

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes? Question options: A) pure profit B) marginal revenue C) net benefit D) marginal costs E) gross earnings

B

Economists assume that individuals Question options: A) prefer to live in a society that values fairness above all else. B) behave in unpredictable ways. C) will never take actions to help others. D) are rational and respond to incentives.

D

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats." Refer to Scenario 1-2. Had the firm not produced and sold the last 300 hats, would its profit be higher or lower, and by how much? Question options: A) Its profit will be $1,100 higher. B) Its profit will be $1,000 lower. C) Its profit will be $100 lower. D) Its profit will be $100 higher.

D

Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics student, you rightly conclude that Question options: A) the cost of having one's own space outweighs the benefits. B) Soo Jin did not have a choice; her roommate was a slob. C) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $950. D) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $250.

D

In economics, the term "equity" means Question options: A) economic benefits are distributed fairly. B) only elected officials have high standards of living. C) everyone has an equal standard of living. D) the hardest working individuals consume all they want.

A

Economists reason that the optimal decision is to continue any activity up to the point where the Question options: A) marginal benefit is zero. B) marginal benefit equals the marginal cost. C) marginal benefit is greater than the marginal cost. D) marginal cost is zero.

B

If the marginal cost for Dinky's Donuts to advertise one additional day each week in the local newspaper is $200, then Dinky's Donuts should advertize that additional day Question options: A) as long as the weekly marginal cost does not rise. B) as long as the marginal benefit the company receives each week is just equal to or greater than $200. C) until the marginal benefit the company receives reaches zero. D) only if the marginal benefit the company receives each week is greater than $200 plus an acceptable profit margin.

B

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________. Question options: A) decreases; neither benefit B) increases; they both benefit C) decreases; they both benefit D) increases; only one party benefits

B

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. Question options: A) market B) variable C) model D) trade-off

C

In economics, choices must be made because we live in a world of Question options: A) greed. B) unemployment. C) scarcity. D) unlimited resources.

C

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats." Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental revenue received from the sale of the last 300 hats is Question options: A) gross profit. B) gross earnings. C) marginal revenue. D) sales revenue.

C

Which of the following is a normative economic statement? Question options: A) The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. B) Rising global demand for coal has led to increases in the price of coal. C) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable. D) With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased.

C

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? Question options: A) a only B) b only C) c only D) a and b E) a, b, and c

E