Econ 102 Exam 1 – Flashcards
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An incentive
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could be either a reward or a penalty.
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Which of the following is an example of a microeconomic decision?
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a multinational company deciding where to relocate its world headquarter an individual deciding how to allocate the time he or she has for work and leisure a small shoe factory deciding how much leather to purchase for the next quarter's production need
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An inducement to take a particular action is called
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the marginal cost.
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Factors of production include
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the economic system.
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Samantha goes to college to become an engineer. This is an example of an
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increase in entrepreneurship.
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Which of the following is NOT a factor of production?
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mineral resources
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Which of the following are considered factors of production used to produce goods and services? I. Land II. Labor III. Capital IV. Entrepreneurship
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I, II and III only
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Factors of production are grouped into four categories
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labor, capital, money, entrepreneurship.
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Differences in income are most directly related to which of the following economic question?
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In what quantities are various goods and services produced?
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When China builds a dam using few machines and a great deal of labor, it is answering the ________ part of one of the two big economic questions.
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"where"
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Which of the following is NOT a factor of production?
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a person developing a production schedule for a new product
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Which of the following is NOT an investment in human capital?
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A computer science student learns how to repair a laptop computer.
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When an economy produces more houses and fewer typewriters, it is answering the ________ part of one of the two big economic questions
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"how"
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In economics, the term "capital" refers to
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mineral resources.
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When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the ________ part of one of the two big economic questions.
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"how"
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The fact that a rock star earns $5 million a year while a teacher earns $25,0 00 annually is most directly an example of an economy answering the ________ part of one of the two big economic questions.
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"why"
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In the U.S. economy, which of the following statements is TRUE?
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Production is divided evenly between goods and services.
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Which of the following is NOT part of the first big economic question?
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For whom are goods and services produced?
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A natural resource, such as fishing territories, is considered an example of
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only capital.
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One economist says that raising taxes on gas would be in the social interest. What does this economist mean?
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Higher taxes on gas would benefit society as a whole.
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Entrepreneurs do all of the following EXCEPT
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come up with new ideas about what and how to produce.
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During the summer you have made the decision to attend summer school, which prevents you from working at your usual summer job in which you normally earn $6,000 for the summer. Your tuition cost is $3,0 00 and books and supplies cost $1,300. In terms of dollars, the opportunity cost of attending summer school is
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$4,300
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A cost due to an increase in activity is called
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a negative marginal benefit.
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A lawn service is deciding whether to add an additional employee to its summer crew. The marginal cost of hiring this worker depends on the
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total amount paid to all previously hired workers.
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The marginal benefit is the
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loss of the highest-valued alternative.
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The term "opportunity cost" points out that
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executives do not always recognize opportunities for profit as quickly as they should.
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Which of the following statements are CORRECT? I. The "highest-valued alternative given up to get something" is the opportunity cost. II. Wealthy economies don't experience opportunity costs. III. Scarcity creates opportunity costs.
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I and III
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Suppose that the government of New York state promises to decrease taxes to a firm if it decides to stay in New York instead of moving to another state. This policy on the part of the state constitutes ________, to make the ________ of the firm remaining in New York.
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a command; marginal benefit exceed the marginal cost
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From 8 P.M. to 10 P.M., Susan can attend a movie, study, or talk with friends. Suppose that Susan decides to go to the movie but thinks that, if she hadn't, she would otherwise have talked with friends. The opportunity cost of attending the movie is
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talking with friends and studying.
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In economics we learn that
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None of the above answers is correct.
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When the government hires people to serve in the army, these people are no longer available to do other work. This choice illustrates the concept of
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a social interest/private interest conflict.
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Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months
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the opportunity cost of studying economics must have risen.
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On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is
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working out at the gym, having breakfast with friends, and sleeping late.
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Opportunity cost means the
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accounting cost minus the marginal benefit.
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From 8 to 11 p.m., Sam can either attend a basketball game, a hockey match or the symphony. Suppose that Sam decides to attend the hockey match and thinks to herself that if she did not go to the match she would go to the symphony. Then the opportunity cost of attending the hockey match is
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going to the symphony.
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Jed had an exam score of 50 percentage points. There is an extra credit assignment that Jed can complete that will raise his exam score by 20 percentage points. Jed has determined that the extra credit assignment will take 10 hours of his time. Jed will complete the assignment if he values the
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20 percentage points more than the 10 hours of his time.
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A store remains open from 8 a.m. to 4 p.m. each weekday. The store owner is deciding whether to stay open an extra hour each evening. The owner's marginal benefit
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must be greater than or equal to the owner's marginal cost if the owner decides to stay open.
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The opportunity cost of attending college includes the cost of
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the highest valued alternative to attending college plus the cost of tuition.
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Normative economic statements
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describe what ought to be.
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"The rich should pay higher income tax rates than the poor" is an example of a
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normative statement.
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An economic model is
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a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.
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A good economic model
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includes only those features of the world that are needed for the purpose at hand.
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Which of the following is an example of a positive statement?
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Households are the primary source of saving.
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The statement "Managers with a college education earn $18 an hour while ski instructors who did not complete college earn $10" is
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a positive statement.
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Which of the following is a normative statement?
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The main reason why the United States has a trade deficit with China is because China's trade practices are unfair.
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Which of the following are TRUE regarding "positive" statements? I. They describe what "ought to be." II. They describe what is believed about how the world appears. III. They can be tested as to their accuracy.
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II and III
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