practice problems ch. 1 micro-econ – Flashcards
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Ch. 1 -117. An example of an externality is the impact of pollution from a factory on the health of people in the vicinity of the factory.
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true
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Ch. 1 - 137. The income of a typical worker in a country is most closely linked to productivity.
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true
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Ch. 1 -10. Approximately 75 percentage of the world's economies experience scarcity.
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False
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Ch. 1 -16. Economics is the study of how society manages its scarce resources.
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True
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Ch. 1 -17. In most societies, resources are allocated by a single central planner.
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False
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Ch. 1 -22. Economists use the phrase "There is no such thing as a free lunch," to illustrate how inflation increases prices.
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False
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Ch. 1 -25. Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is nothing, because he enjoys playing golf more than working.
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False
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Ch. 1 -32. Efficiency refers to the size of the economic pie; equity refers to how the pie is divided.
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True
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Ch. 1 -37. When government policies such as the welfare system try to help the most needy members of society, it increases the productivity of the needy in the society.
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False
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Ch. 1 -41. When the government redistributes income from the rich to the poor, people work less and produce fewer goods and services.
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True
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Ch. 1 -42. In economics, the cost of something is the dollar amount of obtaining it.
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False
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Ch. 1 -44. The opportunity cost of going to college is the value of the best opportunity a student gives up to attend college.
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True
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Ch. 1 -45. For most students, the largest single cost of a college education is the wages given up to attend school.
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True
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Ch. 1 -48. Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is the $24 she earns working.
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False
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Ch. 1 -49. Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is the enjoyment and exercise he would have received had he played tennis.
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True
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Ch. 1 -51. People make decisions at the margin by following tradition.
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False
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Ch. 1 -58. After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, the marginal benefit of Cancun must increase.
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False
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Ch. 1 -60. A rational decision maker takes an action only if the marginal benefit is less than the marginal cost.
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False
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Ch. 1 -72. Suppose your management professor has been offered a corporate job with a 30% pay increase. He has decided to take the job. For him, the marginal cost of leaving was greater than the marginal benefit.
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False
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Ch. 1 -89. Prices direct economic activity in a market economy by reducing scarcity of the goods and services produced.
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False
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Ch. 1 -91. An example of market power is a fast food restaurant in a college town.
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False
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Ch. 1 -92. An example of a firm with market power is a cable TV provider in St. Louis.
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true
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Ch. 1 -99. The "invisible hand" directs economic activity through advertising.
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False
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Ch. 1 -102. Both The Wealth of Nations and the Declaration of Independence share the point of view that individuals are best left to their own devices without the government guiding their actions.
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true
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Ch. 1 -105. A primary function of prices in a market economy is to provide participants with spending limits.
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false
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Ch. 1 -114. Causes of market failure include externalities and market power.
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true
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Ch. 1 - 116. An externality is the impact of a person's actions on that person's well-being.
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false
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Ch. 1 -117. An example of an externality is the impact of pollution from a factory on the health of people in the vicinity of the factory.
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true
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Ch. 1 - 137. The income of a typical worker in a country is most closely linked to productivity.
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true
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Ch. 1 -149. If the government wanted to enact a policy to increase living standards in the country, it might allow corporate tax write-offs for money spent on worker safety.
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false
