Final cheat sheet

Final cheat sheet - 1 Suzi is thinking about going to a...

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1. Suzi is thinking about going to a fundraiser for the Recession Relief campaign. A ticket costs $15 and she will have to cancel her dog-sitting job that pays $20. The cost of attending the fundraiser is A. $35. 2. The scarcity principle indicates that __________ and the cost-benefit principle indicates __________. A. choices must be made; how to make the choices 3. The consumer’s reservation price of a good or service is a monetary measure of the __________ to the consumer. B. benefit of the good 4. The economic surplus of a particular action is B. the difference between the benefit and 5. Suppose a retail store was offering 10% off all prices on all goods. The incentive to take advantage of the 10% savings is __ C. directly related to the list price of the good. 6. The existence of the cost-benefit principle stems from __ B. the tradeoffs the scarcity principle indicates must be made. 7. If the total benefits of watching 1,2, and 3 baseball games on TV are 100, 120, and 125 then the marginal benefits are __ B. 100, 20, and 5. 8. In applying the cost-benefit principle one should calculate the: __ D. marginal cost and marginal benefit and choose that quantity of an activity where the marginal benefit equals the marginal cost. 9. If one fails to account for opportunity costs in decision making, then applying the cost-benefit rule will be flawed because __ B. the costs will be understated. 10. The production possibilities curve shows __ D. the maximum production of one good for every possible production level of the other good. 11. The slope of any production possibilities curve is __________ because __________. __ B. negative; to produce more of one good means less production of the other 12. Concave (bowed out) production possibilities curve would indicate __ C. a large economy with many workers and increasing opportunity costs. 13. Which of the following statements is always true? __ C. Comparative advantage does not require absolute advantage. 14. In actual practice, the gains from specialization are __ C. larger than those in the numerical examples from the textbook. 15. The _________ the difference between domestic opportunity costs and international opportunity costs, the __________ the potential benefits of trading with other countries. __ B. greater; greater 16. When a government reduces the ease with which international trade can occur, it is __ E. reducing the total amount of output available to domestic consumers. 17. Despite the benefits of specialization and exchange indicated in the theory of comparative advantage, some groups have opposed free trade agreements because: __ D. every individual does not gain from trade. 18. If an increase in the price of X causes the demand for Y to decrease, one can conclude that __ A. X and Y are complements. 19. Which of the following is not a characteristic of a market in
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Final cheat sheet - 1 Suzi is thinking about going to a...

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