Test _1 - Test#1 Spring 2006 BA 315 Economy Industry and...

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Spring 2006 Student Name:________________ BA 315: Economy, Industry, and Competitive Analysis Charles H. Lundquist College of Business University of Oregon Ali Emami Please identify the letter of the choice that best completes the statement or answers the question. For questions marked with (*), support your answers by showing your calculations, words, or graphs. Correct answers without such supports will not receive any credit . Please do not attach extra paper. Each question is worth ½ point. ____ 1. The word “economy” comes from the Greek word oikonomos , which means a. “environment.” b. “production.” c. “one who manages a household.” d. “one who makes decisions.” ____ 2. Economists use the phrase "There is no such thing as a free lunch," to illustrate the principle that a. inflation almost always results in higher prices over time. b. nothing is free in a market economy. c. making decisions requires trading off one goal against another. d. if something looks too good to be true, it probably is not worth pursuing. ____ 3. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is a. the value to Maurice of the option he would have chosen had Option B not been available. b. the value to Maurice of Options A, C and D combined. c. $100. d. $300. ____ 4. A furniture maker currently produces 100 tables per week and sells them for a profit. She is considering expanding her operation in order to make more tables. Should she expand? a. Yes, because making tables is profitable. b. No, because she may not be able to sell the additional tables. c. It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables. d. It depends on the average cost of producing more tables and the average revenue she will earn from selling more tables. ____ 5. Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is a. the $24 she earns working. b. the $24 minus the enjoyment she would have received from watching the video. c. the enjoyment she would have received had she watched the video. d. nothing, since she would have received less than $24 of enjoyment from the video. ____ 6. A rational decision maker a. ignores marginal changes and focuses instead on “the big picture.” b. ignores the likely effects of government policies when he or she makes choices. c. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. d.
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This test prep was uploaded on 04/22/2008 for the course ECON 315 taught by Professor Aliemami during the Spring '08 term at Oregon.

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Test _1 - Test#1 Spring 2006 BA 315 Economy Industry and...

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