ECON101_Practice Exam I Solutions

ECON101_Practice Exam I Solutions - Econ 101 Practice Exam...

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Econ 101 Practice Exam Page 1 Econ 101 Practice Exam Fall 2008 Multiple Choice: Choose the letter that most closely matches the correct answer. 1. Economics deals primarily with the concept of a. scarcity. b. poverty. c. change. d. power. 2. Approximately what percentage of the world's economies experience scarcity? a. 25% b. 50% c. 75% d. 100% 3. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a. goods are scarce. b. people face tradeoffs. c. income must be earned. d. households face many decisions. 4. The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. b. the value of the best opportunity a student gives up to attend college. c. zero for students who are fortunate enough to have all of their college expenses paid by someone else. d. zero, since a college education will allow a student to earn a larger income after graduation. 5. 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. 6. For which of the following individuals would the opportunity cost of going to college be highest? a. a promising young 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 from show business to finish college and earn a degree d. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball
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Econ 101 Practice Exam Page 2 7. 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. 8. After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal benefit of going to Cancun increases. b. The marginal cost of going to Cancun decreases.
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ECON101_Practice Exam I Solutions - Econ 101 Practice Exam...

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