Micro Economic Ch1-1
A marginal change is best described as: 1. a change for the better. 2. a small, incremental change from the present situation. 3. a large, significant change from the present situation . 4. a change for the worse.
2. a small, incremental change from the present situation.
Public policy such as changes in the amount of taxes and subsidies can alter people's behavior by: 1. All of these answers are correct. 2. changing the benefits and the costs of an activity. 3. offering an incentive or a disincentive to engage in an activity 4. changing the opportunity cost of an activity.
1. All of these answers are correct.
Which of the following is true? 1. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 2. Government policies always improve upon both equality and efficiency. 3. Efficiency and equality occur only when our economic pie is cut into equal pieces. 4. As long as our economic pie continues to grow, everyone will automatically get a bigger piece.
1. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
If a tax on unhealthy food items like soda and candy bars causes people to purchase less of these items and eat more healthful alternatives. Which principle of economics does this illustrate? 1. People respond to incentives. 2. The cost of something is what you give up to get it. 3. People face tradeoffs. 4. Rational people think at the margin.
1. People respond to incentives.
Suppose the state of Ohio increases the tax on a pack of cigarettes and, in response to the policy change, Ohio smokers decide to buy cigarettes in neighboring states. Which principle of economics does this illustrate? 1. People respond to incentives. 2. The cost of something is what you give up to get it. 3. People face trade-offs. 4. Rational people think at the margin.
1. People respond to incentives.
Marginal thinking involves: 1. weighing the small incremental benefits against the small incremental cost of a decision. 2. comparing the total benefit and total cost of a decision. 3. accurately calculating the opportunity cost of a decision. 4. always acting in your own self-interest.
1. weighing the small incremental benefits against the small incremental cost of a decision.
Every time we choose to do one thing, we give up doing something else. This best describes the economic principle of: 1. self-interest. 2. opportunity cost. 3. marginal thinking. 4. monetary cost.
2. opportunity cost.
Adam has $200 to spend and wants to buy either a new amplifier for his guitar or a new cell phone. Both the amplifier and the cell phone cost $200, so he can only buy one. This illustrates the basic concept that: 1. everyone has an unlimited supply of resources. 2. people face trade-offs. 3. everyone is always acting in his or her own self-interest. 4. people respond to incentives.
2. people face trade-offs.
Monica has $500 to spend and wants to buy either a new snowboard or a new laptop. Both the snowboard and the laptop cost around $500, so she can only buy one. This illustrates the basic concept that: 1. everyone has an unlimited supply of resources. 2. people face trade-offs. 3. everyone is always acting in his or her own self-interest. 4. people respond to incentives.
2. people face trade-offs.
kurt decides to spend 2 hours working rather than hanging out with his friends. He earns $10 per hour for work. His opportunity cost of working is 1. $20 minus the value of the time spent with friends. 2. the utility or enjoyment he would have gotten from hanging out with his friends. 3. the $20 he earned working the extra two hours. 4. nothing as he has given nothing up to work the extra hours.
2. the utility or enjoyment he would have gotten from hanging out with his friends.
In economics, the phrase "no such thing as a free lunch" means 1. everyone is always acting in his or her own self-interest. 2. rational people think at the margin. 3. people face tradeoffs. 4. there is an unlimited supply of resources.
3. people face tradeoffs.
The main reason households and societies must make many decisions is because 1. people, by nature, tend to disagree. 2. goods and services are unlimited. 3. resources are scarce. 4. incomes fluctuate with business cycles.
3. resources are scarce.
A fundamental concept in economics is the idea of 1. banking. 2. money. 3. scarcity. 4. poverty.
3. scarcity.
Suppose a publishing company is deciding whether or not to print 50,000 additional copies of an economic textbook. The company should print the textbooks if: 1. the cost of printing the additional textbooks is zero. 2. the marginal cost of printing the extra books is greater than the marginal benefit (additional revenue) of selling the books. 3. the marginal benefit (additional revenue) from selling the extra books is greater than the marginal cost of printing the books. 4. they can get a good deal on the paper used to print the additional textbooks.
3. the marginal benefit (additional revenue) from selling the extra books is greater than the marginal cost of printing the books.
The concept of guns vs. butter represents the classic societal trade-off between spending on 1. health care vs. agriculture. 2. imports vs. exports. 3. goods vs. services. 4. military goods vs. consumer goods.
4. military goods vs. consumer goods.
In economics, we measure the cost of something as 1. usually impossible to quantify. 2. always measured in units of time given up to get it. 3. the dollar price you pay to buy it. 4. what you give up to get it.
4. what you give up to get it.
Efficiency means our economic pie is divided into equal slices True or False
False
Incentives are not important in economics. True or False
False
Normal cost of living expenses, such as room and board, are included in the opportunity cost of attending college. True or False
False
An incentive is anything that is designed to change behavior. True or False
True
Given an objective to minimize time spent shopping, deciding which "check-out" line to get into is an everyday example of marginal thinking. True or False
True