1.A headline in The New York Times read: "Study Finds Enrollment Is Up at Colleges Despite Recession."Given what you now understand about opportunity cost, the headline should probably read: "Study FindsEnrollment Is Up at Colleges _______ Recession.a.Due tob.in Spite ofc.Because ofd.either A or C
2.When bad weather in India destroys the crop harvest, does this sound like a fall in the total "supply" of cropsor a fall in people's "demand" for crops?
3.By how much did national output fall during the Great Depression?
4.Which government agency might have helped to avoid much of the Great Depression had it acted morequickly and appropriately?
5.Assess the validity of the following statement in terms of incentives: A scientist who earns a percentage ofthe profits from any new medicine he or she may invent is likely to work longer hours in a laboratoryresearching new cures for diseases than a scientist who will get a handshake and a thank you note from theboss if he or she invents a new medicine.a.True. The potential for monetary reward provides an incentive to work harder.b.False. The opportunity cost of the time is the same, whether the reward is money or a handshake forinventing a new medicine.c.False. The chance to gain recognition from the boss would outweigh any potential monetary reward.d.False. The opportunity cost of the time is larger if the reward is recognition from the boss.
