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| 1 | |
The Scarcity Principle implies that: |
| | A) | having more of one thing generally means having less of another. |
| | B) | trade-offs are necessary when making decisions. |
| | C) | nothing, even if it is given to you, is ever really free. |
| | D) | all of the above are implied by the Scarcity Principle. |
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| 2 | |
An individual should take an action if, and only if: |
| | A) | the extra benefits from taking the action are at least as great as the extra cost. |
| | B) | the extra benefits from taking the action are at least as great as the sunk cost. |
| | C) | the implicit benefits from taking the action are at least as great as the implicit cost. |
| | D) | the average benefits from taking the action are at least as great as the average cost. |
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| 3 | |
The economic surplus to an individual from consuming a good is given by: |
| | A) | the total benefits the individual receives from consuming the good. |
| | B) | the total benefits the individual receives from consuming the good minus the total costs the individual incurs from consuming the good. |
| | C) | the total amount the individual pays for the good minus the total costs involved with the production of the good. |
| | D) | the amount of the good that remains after you are satisfied with your initial consumption. |
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| 4 | |
Suppose Tara chooses to engage in an activity that she values at $80 on a night in which she faced two alternatives, all of which do not or would not have cost her any money. She values one alternative at $60 and another at $30. The opportunity cost to her of engaging in the activity is: |
| | A) | $90 |
| | B) | $80 |
| | C) | $60 |
| | D) | $140 |
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| 5 | |
An individual could save $150 on item A, which represents 40% of the original cost, or $100 on B, which represents 50% of the original cost. Which of the following statements is true? |
| | A) | The individual should consider the savings on item A to be largest because it is highest in absolute terms. |
| | B) | The individual should consider the savings on item B to be largest because it is highest proportionally to the original price. |
| | C) | The individual should consider the savings on item A to be largest because it was originally the most expensive. |
| | D) | The individual should consider the savings on item B to be largest as long as he or she desires item B more than item A. |
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| 6 | |
Use the following cost table to answer the following question. | | | Quantity | Total Costs | 0 | $0 | 1 | $100 | 2 | $220 | 3 | $360 | 4 | $580 |
Given the cost table above, the marginal cost associated with the third quantity equals: |
| | A) | $100 |
| | B) | $120 |
| | C) | $140 |
| | D) | $360 |
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| 7 | |
Use the following cost table to answer the following question.
| | | | | Quantity | Marginal Benefit | Average Cost | Marginal Cost | 1 | 2.99 | 1.00 | 1.00 | 2 | 2.99 | 2.00 | 3.00 | 3 | 2.99 | 3.00 | 5.00 | 4 | 2.99 | 4.00 | 7.00 |
Given the information on benefits and costs above, the optimal quantity equals: |
| | A) | 1 |
| | B) | 2 |
| | C) | 3 |
| | D) | 4 |
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| 8 | |
Which of the following statements is true regarding decision making? |
| | A) | People should ignore implicit costs. |
| | B) | People should measure costs and benefits as proportions rather than absolute dollar amounts. |
| | C) | People should consider average costs and average benefits when making decisions. |
| | D) | None of the above. |
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| 9 | |
Suppose the monetary payoff associated with recycling aluminum cans increases. One should expect that: |
| | A) | more aluminum cans will be recycled. |
| | B) | fewer aluminum cans will be recycled. |
| | C) | the number of aluminum cans recycled will not change. |
| | D) | the quality of aluminum cans used will increase. |
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| 10 | |
Microeconomics focuses on the study of: |
| | A) | individual choices and of group behavior in individual markets. |
| | B) | the performance of national economies and of the policies that governments use to try to improve that performance. |
| | C) | the determinants of overall employment and the total value of national output. |
| | D) | the determinants of consumption, investment, government expenditures, and net exports. |
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