Question 1

You won a free ticket to see the latest Star Trek movie this Friday night (which you can costlessly resell for its face value of $15) .Your favorite band is also performing on Friday and is your only alternative activity.Friday is your last chance to see either the movie or the band.Tickets to see your favorite band cost $30, and on any given day, you would be willing to pay as much as $50 for a ticket.Based on this information, what is your opportunity cost of going to see the Star Trek movie on Friday?

Accepted Answer

A)  $0
B)  $30
C)  $35
D)  $50E) A) and B)
F) B) and C)

Question 2

Which of the following would not be studied in macroeconomics?

Accepted Answer

A)  The causes of the Great Depression.
B)  The growth rate of the U.S.economy.
C)  How a sharp increase in gasoline prices is likely to affect SUV sales.
D)  The impact of government spending on the economy.E) B) and C)
F) A) and C)

Question 3

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 round­trip airfares are $600, but you have a frequent­flyer 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 frequent­flyer 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 Chicago­Atlanta round­trip airfares are $450.If the Chicago­Atlanta round­trip air fare were $350, should you use the coupon to go to Miami?

Accepted Answer

A)  No, your economic surplus would be ­$50.
B)  No, your economic surplus would be ­$100.
C)  Yes, your economic surplus would be $50.
D)  Yes, your economic surplus would be $400.E) C) and D)
F) None of the above

Question 4

The average benefit of n units of an activity is the:

Accepted Answer

A)  total benefit of n units divided by n.
B)  n divided by the total benefit of n units.
C)  n times the total benefit of n units.
D)  extra benefit from carrying out one additional unit of the activity.E) A) and B)
F) B) and C)

Question 5

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 State College is:

Accepted Answer

A)  $35,000
B)  $30,000
C)  $20,000
D)  $15,000E) B) and D)
F) A) and B)

Question 6

Economists recognize that because people have limited resources:

Accepted Answer

A)  government intervention is necessary.
B)  they have to make trade­offs.
C)  they will never be happy.
D)  our future is bleak.E) A) and C)
F) C) and D)

Question 7

If a person takes an action if, and only if, the extra benefits from taking that action exceed the extra costs, then that person is:

Accepted Answer

A)  not following the Cost­Benefit Principle.
B)  following the Scarcity Principle.
C)  following the Cost­Benefit Principle.
D)  not rational.E) C) and D)
F) B) and C)

Question 8

The Scarcity Principle applies to:

Accepted Answer

A)  all decisions.
B)  only market decisions, e.g., buying a car.
C)  only non­market decisions, e.g., watching a sunset.
D)  only the poor.E) A) and B)
F) All of the above

Question 9

If all the world's resources were to magically increase one hundredfold, then:

Accepted Answer

A)  people would still have to make trade­offs.
B)  economics would no longer be relevant.
C)  scarcity would disappear.
D)  trade­offs would become unnecessary.E) A) and D)
F) A) and C)

Question 10

Suppose a retail store was offering 10% off list prices on all goods.The benefit of the 10% savings is:

Accepted Answer

A)  unrelated to the list price of the good.
B)  negatively related to the list price of the good.
C)  positively related to the list price of the good.
D)  zero since costs and benefits shouldn't be measured proportionally.E) C) and D)
F) A) and C)

Question 11

The Scarcity Principle states that:

Accepted Answer

A)  people don't have enough money to buy what they want.
B)  society will eventually run out of resources.
C)  with limited resources, having more of one thing means having less of another.
D)  some countries have fewer resources than others.E) C) and D)
F) B) and D)

Question 12

The following table shows the relationship between the speed of a computer's CPU and its benefits and costs.Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation) , and only the CPU speeds listed below are available for purchase.  Application of the Cost­Benefit Principle would lead one to purchase a ______ computer.

Accepted Answer

A)  2.0GHz
B)  2.5GHz
C)  3.0GHz
D)  4.0GHzE) All of the above
F) A) and D)

Question 13

Economics is the study of:

Accepted Answer

A)  the financial concerns of businesses and individuals.
B)  the role of government in limiting the choices people make.
C)  choice in the face of limited resources.
D)  whether we will have enough resources in the future.E) A) and B)
F) All of the above

Question 14

Refer to the table below.The average cost of 4 units of this activity is:

Accepted Answer

A)  $20
B)  $25
C)  $30
D)  $40E) All of the above
F) None of the above

Question 15

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs)  fell.Why?

Accepted Answer

A)  Higher gas prices lowered the benefit of driving an SUV.
B)  Higher gas prices increased the benefit of driving an SUV.
C)  Higher gas prices increased the cost of driving a SUV.
D)  Higher gas prices lowered the cost of driving a SUV.E) C) and D)
F) None of the above

Question 16

Frank owns an apple farm and plans to spend 4 hours today picking apples.The number of apples he can pick per hour depends on the total number of hours he spends working in either the east orchard or the west orchard in the manner shown in the table below. nd hour he spends picking in the east orchard? A) 8 apples B) 24 apples C) 32 apples D) 64 apples" class="answers-bank-image d-inline" rel="preload" > What is the marginal benefit to Frank of the 2nd hour he spends picking in the east orchard?

Accepted Answer

A)  8 apples
B)  24 apples
C)  32 apples
D)  64 applesE) B) and D)
F) A) and D)

Question 17

Suppose the marginal cost of the 1st hour of talking on the phone is $50, the marginal cost of the 2nd hour is $75, and the marginal cost of the 3rd hour is $105.In this case, the total cost of talking on the phone for 3 hours is:

Accepted Answer

A)  $315
B)  $105
C)  $230
D)  $150E) All of the above
F) C) and D)

Question 18

Refer to the table below.The marginal cost of the 3rd unit of this activity is: rd unit of this activity is:   A) $30 B) $25 C) $20 D) $10" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  $30
B)  $25
C)  $20
D)  $10E) A) and B)
F) B) and C)

Question 19

Suppose there are two parallel highways between two cities with approximately equal traffic.What would you expect to happen if the state began charging tolls to drive on one of those highways?

Accepted Answer

A)  More drivers would drive on the non­toll road, making the toll road less congested.
B)  More drivers would drive on the toll road making the non­toll road less congested.
C)  Traffic would remain evenly divided between the two roads as drivers continuously sought the less­congested route.
D)  Traffic would decrease on both roads.E) B) and C)
F) A) and B)

Question 20

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities.  The President of State U decides to hire fundraising employees as long as their average benefit exceeds their average cost.This results in ______ employees being hired and a net benefit (total donations minus total labor costs)  of ______.

Accepted Answer

A)  5; $17,080
B)  5; $67,080
C)  4; $60,000
D)  4; $22,000E) A) and B)
F) A) and C)

Exam 1: Thinking Like an Economist

Suppose there are two parallel highways between two cities with approximately equal traffic.What would you expect to happen if the state began charging tolls to drive on one of those highways?

Correct Answer
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The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell.Why?

Correct Answer
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Which of the following would not be studied in macroeconomics?

Correct Answer
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Correct Answer
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Correct Answer
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If a person takes an action if, and only if, the extra benefits from taking that action exceed the extra costs, then that person is:

Correct Answer
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If all the world's resources were to magically increase one hundredfold, then:

Correct Answer
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The Scarcity Principle applies to:

Correct Answer
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The average benefit of n units of an activity is the:

Correct Answer
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Suppose the marginal cost of the 1^st hour of talking on the phone is $50, the marginal cost of the 2^nd hour is $75, and the marginal cost of the 3^rd hour is $105.In this case, the total cost of talking on the phone for 3 hours is:

Correct Answer
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Correct Answer
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The Scarcity Principle states that:

Correct Answer
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Correct Answer
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Economics is the study of:

Correct Answer
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Economists recognize that because people have limited resources:

Correct Answer
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Correct Answer
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Refer to the table below.The marginal cost of the 3^rd unit of this activity is:

Correct Answer
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Refer to the table below.The average cost of 4 units of this activity is:

Correct Answer
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Suppose a retail store was offering 10% off list prices on all goods.The benefit of the 10% savings is:

Correct Answer
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Correct Answer
verified

Exam 1: Thinking Like an Economist

Suppose there are two parallel highways between two cities with approximately equal traffic.What would you expect to happen if the state began charging tolls to drive on one of those highways?

Correct AnswerverifiedShow Answer

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell.Why?

Correct AnswerverifiedShow Answer

Which of the following would not be studied in macroeconomics?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a person takes an action if, and only if, the extra benefits from taking that action exceed the extra costs, then that person is:

Correct AnswerverifiedShow Answer

If all the world's resources were to magically increase one hundredfold, then:

Correct AnswerverifiedShow Answer

The Scarcity Principle applies to:

Correct AnswerverifiedShow Answer

The average benefit of n units of an activity is the:

Correct AnswerverifiedShow Answer

Suppose the marginal cost of the 1st hour of talking on the phone is $50, the marginal cost of the 2nd hour is $75, and the marginal cost of the 3rd hour is $105.In this case, the total cost of talking on the phone for 3 hours is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Scarcity Principle states that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economics is the study of:

Correct AnswerverifiedShow Answer

Economists recognize that because people have limited resources:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the table below.The marginal cost of the 3rd unit of this activity is:

Correct AnswerverifiedShow Answer

Refer to the table below.The average cost of 4 units of this activity is:

Correct AnswerverifiedShow Answer

Suppose a retail store was offering 10% off list prices on all goods.The benefit of the 10% savings is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Suppose the marginal cost of the 1^st hour of talking on the phone is $50, the marginal cost of the 2^nd hour is $75, and the marginal cost of the 3^rd hour is $105.In this case, the total cost of talking on the phone for 3 hours is:

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Refer to the table below.The marginal cost of the 3^rd unit of this activity is:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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