Final Exam Flashcards
High school athletes who skip college to become professional athletes
a) usually do so because they cannot get into college
b) are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high school athletes
c) understand that the opportunity costs of attending college is very high
d) obviously do not understand the value of a college education
C`
Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
a) people respond to incentives
b) improvements in efficiency sometimes comes at the expense of equality
c) rational people think at the margin
d) people face trade offs
D
if an economy is producing efficiently then
a) it is possible to produce more of one good without producing less of another good
b) there is no way to produce more of one good without producing less of another good
c) it is possible to produce more of both goods without increasing quantities of inputs that are being used
d) it is not possible to produce more of any good at any cost
B
When the government redistributes income from the wealthy to the poor,
a) efficiency is improved but equality is not
b) people work less and produce fewer goods and services
c) both wealthy people and poor people benefit directly
d) the government collects more revenue in total
B
Production is efficient if the economy is producing at a point
a) inside the production possibility frontier
b) outside the production possibility frontier
c) on the production possible frontier
d) on or inside the production possibility frontier
C
A rational decision maker takes an action if and only if
a) the marginal cost of the action is zero
b) the marginal benefit of the action exceeds the marginal cost of the action
c) The marginal cost of the action exceeds the marginal benefit of the action
d) the opportunity cost of the action is zero
B
Ellie decides to spend two hours taking a nap rather than attending her class. Her opportunity cost of napping is
a) the value of her nap less the value of attending class
b) nothing since she valued sleep more than attendance at class
c) the $24 she could have earned if she had worked at her job for those two hours
d) the value of knowledge she would have received had she attended class
D
if the United States decides to trade with Mexico, we know that
a) it will not benefit either country because their cultural differences are too vast
b) Mexico and the United States can both benefit
c) Mexico will benefit, but trade with a less developed country could not benefit the United States
d) it will not benefit mexico because workers in the United States are more productive
B
What is the most important factor that explains differences in living standards across countries?
a) the level of unemployment
b) productivity
c) the quantity of money
d) equality
B
People are willing to pay more for a diamond than for a bottle of water because
a) water prices are held artificially low by governments, since water is necessary for life
b) the marginal cost of producing an extra diamond for exceeds the marginal cost of producing an extra bottle of water
c) the marginal benefit of producing an extra diamond for exceeds the marginal benefit of producing an extra bottle of water
d) producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have
C
Economist use the word equality to describe a situation in which
a) society is getting the maximum benefits from its scarce resources
b) each member of society has the same income
c) society’s resources are used efficiently
B
Rational people make decisions at the margin by
a) comparing marginal cost and marginal benefits
b) Following marginal traditions
c) thinking in black and white terms
A
Making rational decisions at the margin meant that people
a) make those decisions that do not impose a marginal cost
b) evaluate how easily a decision can be reversed if problems arise
c) compare the marginal costs and marginal benefits of each decison
C
when two countries trade with each other, it is most likely because
a) some people in the trade do not understand that one of the two countries will become worse off because of the trade
b) the opportunity costs of producing various goods are identical for the two countries
c) the two countries wish to take advantage of the principle of comparative advatange
C
Denis decides to spend three hours working over time rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is
a) the $30 she earns working
b) the $30 minus the enjoyment she would have received from watching the video
c) the enjoyment she would have received would she of watched the video
C
If Shawn can produce more donuts in one day than Sue can produce in one day, then
a) Shawn has a comparative advantage in the production of donuts
b) Sue has a comparative advantage in the production of donuts
c) Shawn has an absolute advantage in the production of donuts
d) Sue has an absolute advantage
C
Economist make assumptions to
a) provide issues for political discussions
b) make a complex world easier to understand
c) make it easier to teach economic concepts and analysis
B
For which of the following individuals would the opportunity cost of going to college be highest
a) a promising yound mathematician who will command a high salary once she earns her college degree
b) a student with average grades who has never held a job
c) a famous, highly paid actor who wants to take time away form show business to finish college and earn a degree
C
Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity costs of baseball bats is lower than Tom’s, the
a) Jim must have an absolute advantage
b) Tom mas a comparative advantage
c) Jim has a comparative advatange
C
Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is
a) .36 bushels of corn
b) 2.8 bushels of corn
c) 14 bushels of corn
B
opp cost of green beans = change in corn / change in green beans
Which is the most accurate statement about trade
a) trade can make every nation better off
b) trade makes some nations better off and others worse off
c) trade helps rich nations and hurts poor ones
A
Suppose the U.S. and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while mexico has a comparative advantage in auto parts. Also suppose the US has an absolute advantage in the production of both semiconductors and auto parts, the US should
a) not trade semiconductors and auto parts with Mexico
b) import semiconductors from Mexico and export auto parts to Mexico
c) export semiconductors to Mexico and import auto parts from Mexico
C
Suppose the US has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
a) the US should produce more pork than what it requires and export some of it to Mexico
b) the US should produce a moderate quantity of pork and import the remainder from Mexico
c) Mexico has nothing to gain from importing US pork
A
Mitch has $100 to spend and wants to but either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player costs $100, so he can buy only one. This illustrates the basic concept that
a) trade can make everyone better off
b) people face trade offs
c) rational people think at the margin
B
Productivity is defined as the
a) amount of goods and services produced from each unit of labor input
b) number of workers required to produce a given amount of goods and services
c) amount of labor that can be saved by replacing workers with machines
A
