Question 1

The Scarcity Principle applies to:

Accepted Answer

A) poor people primarily. 
B) consumers primarily. 
C) firms primarily. 
D) everyone. 
A) poor people primarily. 
B) consumers primarily. 
C) firms primarily. 
D) everyone.

Question 2

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The present availability of 24-hour service has arisen because:

Accepted Answer

A) flexibility was not valued 100 years ago. 
B) it was impossible to provide 24-hour service 100 years ago. 
C) the cost of providing 24-hour service is much lower today. 
D) government forced banks to become more convenient. 
A) flexibility was not valued 100 years ago. 
B) it was impossible to provide 24-hour service 100 years ago. 
C) the cost of providing 24-hour service is much lower today. 
D) government forced banks to become more convenient.

Question 3

A study of the impact of various government policies on economic growth would be considered:

Accepted Answer

A) microeconomics. 
B) macroeconomics. 
C) government economics. 
D) marginal economics. 
A) microeconomics. 
B) macroeconomics. 
C) government economics. 
D) marginal economics.

Question 4

According to the Incentive Principle:

Accepted Answer

A) it is irrational to perform volunteer services. 
B) people will always take the highest-paying job they are offered. 
C) benefits are more important than costs in making a decision. 
D) people tend to do more of something when its benefits are greater. 
A) it is irrational to perform volunteer services. 
B) people will always take the highest-paying job they are offered. 
C) benefits are more important than costs in making a decision. 
D) people tend to do more of something when its benefits are greater.

Question 5

The opportunity cost of an activity includes the value of:

Accepted Answer

A) all of the alternatives that must be forgone. 
B) the next-best alternative that must be foregone. 
C) the least-best alternative that must be foregone. 
D) the chosen activity minus the value of the next-best alternative. 
A) all of the alternatives that must be forgone. 
B) the next-best alternative that must be foregone. 
C) the least-best alternative that must be foregone. 
D) the chosen activity minus the value of the next-best alternative.

Question 6

The accompanying table below shows the relationship between the number of times you get your car washed each month and your total monthly benefit from car washes. Each car wash costs $15.   
$$\begin{array} { | c | c | } 
\hline \text { Number af Car Washes Per Month } & \text { Tatal Munthly Benefit fram Car Washes } \
\hline 0 & \$ 0 \
\hline 1 & \$ 20 \
\hline 2 & \$ 36 \
\hline 3 & \$ 48 \
\hline 4 & \$ 56 \
\hline 5 & \$ 60 \
\hline
\end{array}$$  
How many times a month should you get your car washed?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 7

Macroeconomics differs from microeconomics in that macroeconomics focuses on:

Accepted Answer

A) individual choices and group behavior in individual markets. 
B) the performance of national economies and ways to improve that performance. 
C) production in specific markets. 
D) prices in specific markets. 
A) individual choices and group behavior in individual markets. 
B) the performance of national economies and ways to improve that performance. 
C) production in specific markets. 
D) prices in specific markets.

Question 8

Refer to the accompanying table below. The marginal benefit of the 5?? unit of activity is: $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$

Accepted Answer

A) $50 
B) $44 
C) $10 
D) $5 
A) $50 
B) $44 
C) $10 
D) $5

Question 9

The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:

Accepted Answer

A) microeconomics. 
B) a normative economic principle. 
C) the Scarcity Principle. 
D) macroeconomics. 
A) microeconomics. 
B) a normative economic principle. 
C) the Scarcity Principle. 
D) macroeconomics.

Question 10

If individuals are rational, they should choose actions that yield the:

Accepted Answer

A) largest total benefits. 
B) smallest total costs. 
C) smallest economic surplus. 
D) largest economic surplus. 
A) largest total benefits. 
B) smallest total costs. 
C) smallest economic surplus. 
D) largest economic surplus.

Question 11

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 round-trip airfare is $600, but you have a frequent-flyer 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 $1,400. Your only alternative use for your frequent-flyer 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 Chicago-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?

Accepted Answer

A) $100 
B) $450 
C) $500 
D) $550 
A) $100 
B) $450 
C) $500 
D) $550

Question 12

Pat can either drive to work, which takes half an hour and uses $1.50 worth of gas, or take the bus, which takes an hour and costs $1.00. How should Pat get to work?

Accepted Answer

A) Pat should take the bus because it costs $0.50 less than driving. 
B) Pat should drive because it saves half an hour relative to taking the bus. 
C) Pat should drive if saving half an hour is worth $0.50 or more. 
D) Pat should take the bus if saving half an hour is worth $0.50 or more. 
A) Pat should take the bus because it costs $0.50 less than driving. 
B) Pat should drive because it saves half an hour relative to taking the bus. 
C) Pat should drive if saving half an hour is worth $0.50 or more. 
D) Pat should take the bus if saving half an hour is worth $0.50 or more.

Question 13

Which branch of economics is most likely to study differences in countries' growth rates?

Accepted Answer

A) microeconomics 
B) normative economics 
C) macroeconomics 
D) experimental economics 
A) microeconomics 
B) normative economics 
C) macroeconomics 
D) experimental economics

Question 14

You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?

Accepted Answer

A) $8 
B) $12 
C) $22 
D) $57 
A) $8 
B) $12 
C) $22 
D) $57

Question 15

A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 3ʳᵈ hour of work?

Accepted Answer

A) $5,400 
B) $5,520 
C) $1,200 
D) $1,240 
A) $5,400 
B) $5,520 
C) $1,200 
D) $1,240

Question 16

One thing that distinguishes normative economic principles from positive economic principles is that:

Accepted Answer

A) normative principles are pessimistic and positive principles are optimistic. 
B) normative principles reflect social norms, and positive principles reflect universal truths. 
C) normative principles tell us how people should behave, and positive principles tell us how people will behave. 
D) normative principles tell us how people will behave, and positive principles tell us how people should behave. 
A) normative principles are pessimistic and positive principles are optimistic. 
B) normative principles reflect social norms, and positive principles reflect universal truths. 
C) normative principles tell us how people should behave, and positive principles tell us how people will behave. 
D) normative principles tell us how people will behave, and positive principles tell us how people should behave.

Question 17

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:

Accepted Answer

A) $5. 
B) $15. 
C) $20. 
D) $35. 
A) $5. 
B) $15. 
C) $20. 
D) $35.

Question 18

Refer to the accompanying table below. The marginal cost of the 3?? unit of this activity is:  
$$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$

Accepted Answer

A) $30 
B) $25 
C) $20 
D) $10 
A) $30 
B) $25 
C) $20 
D) $10

Question 19

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ________ would be ________.

Accepted Answer

A) benefit; $12,000 
B) cost; $15,000 
C) economic surplus; $3,000 
D) economic surplus; $12,000 
A) benefit; $12,000 
B) cost; $15,000 
C) economic surplus; $3,000 
D) economic surplus; $12,000

Question 20

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

Accepted Answer

A) $5 
B) $1 
C) $50 
D) $20 
A) $5 
B) $1 
C) $50 
D) $20

Exam 1: Thinking Like an Economist

The Scarcity Principle applies to:

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The present availability of 24-hour service has arisen because:

A study of the impact of various government policies on economic growth would be considered:

According to the Incentive Principle:

The opportunity cost of an activity includes the value of:

Macroeconomics differs from microeconomics in that macroeconomics focuses on:

Refer to the accompanying table below. The marginal benefit of the 5?? unit of activity is: Units of Activity Tatal Cast Tatal Benefit 0 \ 0 \ 0 1 \ 30 \ 100 2 \ 40 \ 160 3 \ 60 \ 190 4 \ 100 \ 210 5 \1 50 \ 220 6 \2 10 \ 225

The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:

If individuals are rational, they should choose actions that yield the:

Pat can either drive to work, which takes half an hour and uses $1.50 worth of gas, or take the bus, which takes an hour and costs $1.00. How should Pat get to work?

Which branch of economics is most likely to study differences in countries' growth rates?

One thing that distinguishes normative economic principles from positive economic principles is that:

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:

Refer to the accompanying table below. The marginal cost of the 3?? unit of this activity is: Units of Activity Tatal Cast Tatal Benefit 0 \ 0 \ 0 1 \ 30 \ 100 2 \ 40 \ 160 3 \ 60 \ 190 4 \ 100 \ 210 5 \1 50 \ 220 6 \2 10 \ 225

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ________ would be ________.

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her would be .