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10 Cards in this Set
- Front
- Back
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1. Economics is best defined as the study of
A. prices and quantities. B. inflation and interest rates. C. how people make choices under the conditions of scarcity and the results of the choices. D. wages and incomes. E. none of the above. |
C. how people make choices under the conditions of scarcity and the results of the choices.
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2. The range of topics or issues that fit within the definition of economics is
A. limited to market activities, e.g., buying soap. B. limited to individuals and firms. C. extremely wide, requiring only the ideas of choice and scarcity. D. very limited. E. none of the above. |
C. extremely wide, requiring only the ideas of choice and scarcity.
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3. The principle of scarcity applies to
A. the poor exclusively. B. all consumers. C. all firms. D. everyone; consumers, firms, governments, and nations. E. none of the above. |
D. everyone; consumers, firms, governments, and nations.
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4. When a person decides to pursue an activity as long as the extra benefits are at least equal to the extra costs, that person is
A. violating the cost-benefit principle. B. following the scarcity principle. C. following the cost-benefit principle. D. pursuing the activity too long. E. none of the above. |
C. following the cost-benefit principle.
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5. The scarcity principle indicates that __________ and the cost-benefit principle indicates __________.
A. choices must be made; how to make the choices B. choices must be made; the costs can never outweigh the benefits of the choices C. rare goods are expensive; the costs should outweigh the benefits of the choices D. rare goods are expensive; the costs can never outweigh the benefits of the choices E. none of the above. |
A. choices must be made; how to make the choices
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6. The 7th glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will
A. realize he has had too much soda to drink and go home. B. drink the 7th glass and continue until the marginal benefit of drinking another glass of soda is zero. C. volunteer to empty out the fountain. D. not drink the 7th glass. E. none of the above. |
B. drink the 7th glass and continue until the marginal benefit of drinking another glass of soda is zero.
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7. Dean decided to play golf rather than prepare for his exam in economics that is the day after tomorrow. One can infer that
A. Dean has made an irrational choice. B. Dean is doing poorly in his economics class. C. the economic surplus from playing golf exceeded the surplus from studying. D. the cost of studying was less than the cost of golfing. E. none of the above. |
C. the economic surplus from playing golf exceeded the surplus from studying.
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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.
8. The opportunity cost of attending Elite U is A. $50,000 B. $10,000 C. $20,000 D. $15,000 E. none of the above. |
C. $20,000
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9. The opportunity cost of attending State College is
A. $30,000 B. $20,000 C. $15,000 D. $10,000 E. none of the above. |
C. $15,000
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10. The opportunity cost of an activity is the value of
A. an alternative forgone. B. the next-best alternative forgone. C. the least-best alternative forgone. D. the difference between the chosen activity and the next-best alternative forgone. E. none of the above. |
B. the next-best alternative forgone.
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