Question 1

Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as:

Accepted Answer

A)  ignoring sunk costs.
B)  a trade-off.
C)  irrational decision making.
D)  a normative choice.E) C) and D)
F) All of the above

Question 2

After paying the membership fee for a warehouse club like Costco, members are able to purchase items at a discounted price. Suppose the price of one pound of chicken is $4.99 at a typical grocery store but $2.99 at Costco. Also suppose the annual price of a Costco membership is $60. The marginal cost of your 5th pound of chicken purchased at Costco is:

Accepted Answer

A)  $2.99.
B)  $2.00.
C)  −$2.00.
D)  $62.99.E) A) and D)
F) None of the above

Question 3

When the price of milk rises, there is no change in the amount of dog food purchased. This is an example of:

Accepted Answer

A)  indifference trade-off between the two goods.
B)  the interaction between two correlated goods.
C)  two items that are uncorrelated.
D)  the value people place on dogs versus milk.E) None of the above
F) A) and B)

Question 4

Making a decision "on the margin" involves comparing:

Accepted Answer

A)  additional benefits against additional costs.
B)  total benefits against total costs, including benefits and costs from past decisions.
C)  sunk costs against opportunity costs.
D)  all of the benefits you could expect to get, without considering costs.E) B) and D)
F) A) and B)

Question 5

A fast-food chain announces a "buy one get one free" offer on breakfast sandwiches bought before 9am. This is an example of:

Accepted Answer

A)  the use of incentives.
B)  a macroeconomic decision.
C)  hoarding scarce resources.
D)  trade-offs.E) All of the above
F) B) and C)

Question 6

Economists have observed that economic growth generally leads to improved standards of living. This observation is most related to the field of:

Accepted Answer

A)  microeconomics.
B)  public policy.
C)  macroeconomics.
D)  financial economics.E) B) and D)
F) None of the above

Question 7

Which of the following questions would be studied in microeconomics?

Accepted Answer

A)  Why did our economic growth rate slow down during the 2000s?
B)  How did the recession end in 2009 if unemployment continued to rise?
C)  How will the legalization of marijuana in Colorado affect the market for cigarettes?
D)  When should Congress raise taxes in order to tackle the debt crisis?E) A) and D)
F) B) and C)

Question 8

Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings?

Accepted Answer

A)  She does not count the value of the time it takes her to sort and clip coupons as a cost.
B)  She does not count the cost of the gas she uses driving extra miles to multiple grocery stores.
C)  She does not count the value of the time it takes her to check out at multiple stores and use multiple coupons, compared to a trip to one store with no coupons.
D)  All of these are correct.E) B) and C)
F) B) and D)

Question 9

Which of the following is an example of a positive incentive?

Accepted Answer

A)  Deciding not to play golf due to rain
B)  Making a donation to the Red Cross
C)  Hiring 10 new workers as you expand your operations
D)  Offering a reward to anyone who finds your missing petE) A) and D)
F) B) and C)

Question 10

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Accepted Answer

A)  innovation.
B)  efficiency.
C)  sustainability.
D)  economic quantity.E) A) and D)
F) A) and B)

Question 11

A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the third movie?

Accepted Answer

A)  $1
B)  $8
C)  $4
D)  $2E) A) and D)
F) C) and D)

Question 12

You're trying to determine whether to spend your Saturday afternoon attending a street festival, working to earn $100, or studying for your midterm exam. You really don't want to work, so you flip a coin between attending the street festival and studying. The coin flip determines that you should stay home and study. The opportunity cost of your time spent studying includes:

Accepted Answer

A)  the loss of $100 worth of wages and the joy from going to the street festival.
B)  earning a high score on your midterm and thus improving your grade in the class.
C)  the benefit that you could have received from attending the street festival.
D)  the time you spent deciding and using a coin flip to determine your Saturday afternoon activity.E) C) and D)
F) B) and D)

Question 13

When we assume that consumers want to pay the lowest price possible, we assume that consumers are:

Accepted Answer

A)  cheap.
B)  deceitful.
C)  rational.
D)  informed.E) B) and C)
F) A) and B)

Question 14

Which is not a characteristic of a good economic model?

Accepted Answer

A)  Focuses on important details
B)  Predicts cause and effect
C)  Utilizes vague assumptions
D)  Describes the world accuratelyE) B) and D)
F) A) and B)

Question 15

The two most important actors of the economy are:

Accepted Answer

A)  land and capital.
B)  households and firms.
C)  firms and capital.
D)  exports and imports.E) All of the above
F) A) and B)

Question 16

An economic model:

Accepted Answer

A)  exactly explains what happens in the real economy.
B)  discards unnecessary details to clearly demonstrate the central principles of the economic activity.
C)  approximates all facets of what happens in the real economy.
D)  does not make clear assumptions about the economic activity.E) A) and D)
F) C) and D)

Question 17

Which of the following is an example of a normative statement?

Accepted Answer

A)  College tuition rates are rising.
B)  Twenty-eight percent of U.S. adults have a bachelor's degree.
C)  The average income of a college graduate exceeds that of the average high school graduate.
D)  State governments should pay for the first two years of college at public institutions.E) A) and D)
F) A) and C)

Question 18

Which of the following is considered a microeconomic issue?

Accepted Answer

A)  Chinese economic growth has declined.
B)  The Federal Reserve cuts key interest rates in order to stimulate lending.
C)  Walmart decides to add more self-checkout machines as the cost of labor rises.
D)  India experiences a reduction in unemployment after opening its borders to trade.E) None of the above
F) B) and D)

Question 19

Which of the following is an example of a normative statement?

Accepted Answer

A)  Tom is a college student.
B)  Immigration into the United States should be encouraged.
C)  The cost of basic health insurance rose from the previous year.
D)  The federal minimum wage is $7.25.E) None of the above
F) C) and D)

Question 20

The famous saying, "There is no such thing as a free lunch," is an example of which economic concept?

Accepted Answer

A)  Maximization
B)  Trade-offs
C)  Basic necessities
D)  The income effectE) None of the above
F) B) and C)

Exam 1: Economics and Life

Which of the following is an example of a normative statement?

Correct Answer
verified

Which of the following is considered a microeconomic issue?

Correct Answer
verified

The famous saying, "There is no such thing as a free lunch," is an example of which economic concept?

Correct Answer
verified

An economic model:

Correct Answer
verified

Which of the following is an example of a positive incentive?

Correct Answer
verified

The two most important actors of the economy are:

Correct Answer
verified

Economists have observed that economic growth generally leads to improved standards of living. This observation is most related to the field of:

Correct Answer
verified

Which is not a characteristic of a good economic model?

Correct Answer
verified

A fast-food chain announces a "buy one get one free" offer on breakfast sandwiches bought before 9am. This is an example of:

Correct Answer
verified

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Correct Answer
verified

Making a decision "on the margin" involves comparing:

Correct Answer
verified

When the price of milk rises, there is no change in the amount of dog food purchased. This is an example of:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings?

Correct Answer
verified

When we assume that consumers want to pay the lowest price possible, we assume that consumers are:

Correct Answer
verified

Which of the following questions would be studied in microeconomics?

Correct Answer
verified

Which of the following is an example of a normative statement?

Correct Answer
verified

Correct Answer
verified

Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as:

Correct Answer
verified

Exam 1: Economics and Life

Which of the following is an example of a normative statement?

Correct AnswerverifiedShow Answer

Which of the following is considered a microeconomic issue?

Correct AnswerverifiedShow Answer

The famous saying, "There is no such thing as a free lunch," is an example of which economic concept?

Correct AnswerverifiedShow Answer

An economic model:

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive incentive?

Correct AnswerverifiedShow Answer

The two most important actors of the economy are:

Correct AnswerverifiedShow Answer

Economists have observed that economic growth generally leads to improved standards of living. This observation is most related to the field of:

Correct AnswerverifiedShow Answer

Which is not a characteristic of a good economic model?

Correct AnswerverifiedShow Answer

A fast-food chain announces a "buy one get one free" offer on breakfast sandwiches bought before 9am. This is an example of:

Correct AnswerverifiedShow Answer

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Correct AnswerverifiedShow Answer

Making a decision "on the margin" involves comparing:

Correct AnswerverifiedShow Answer

When the price of milk rises, there is no change in the amount of dog food purchased. This is an example of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings?

Correct AnswerverifiedShow Answer

When we assume that consumers want to pay the lowest price possible, we assume that consumers are:

Correct AnswerverifiedShow Answer

Which of the following questions would be studied in microeconomics?

Correct AnswerverifiedShow Answer

Which of the following is an example of a normative statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified