EXAM 1 - Say a pill existed that made people selfless After...

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Say a pill existed that made people selfless. After taking it they were only interested in others not themselves. Under the coordination definition of economics: a. no economic problem would exist. B. there would still be an economic problem. c. there would be a political problem but not an economic problem. d. there would be a social problem but not an economic problem. Feedback: The coordination definition of economics focuses on the need for the coordination of activities and resources. Even if everyone were selfless, there would still be the need for coordinating the selfless actions so that those actions and resources are allocated efficiently. 2. "Another interest rate increase by the Federal Reserve should cause a decrease in inflationary pressures in the United States" is an example of a _____ statement about a _____ issue. a. normative; microeconomic b. positive; microeconomic c. normative; macroeconomic D. positive; macroeconomic. Feedback: Inflation and Fed are related to Macroeconomics. And not every sentence including “should” is normative. In this case “should” is used for cause-effect relationship. 3. The marginal benefit from consuming another unit of a good: a. must equal the marginal cost or the unit will not be consumed. b. must be less than the marginal cost or the unit will not be consumed. C. equals the increase in total benefits from consuming the unit.
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d. equals the total benefit obtained from the consumption of all prior units. Feedback: See the definition of marginal benefit in the text. 4. Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minutes for any calls above 600 minutes. Mary has used 300 minutes this month so far. What is her marginal cost per minute of making 2 more calls lasting 10 minutes each? a. $2.50 b. 25 cents c. 4 cents D. zero Feedback: Marginal cost is the cost of calling another minute. Since Mary has not yet reached 600 minutes, making another call adds nothing to her bill . 5. NBC10.COM reported in 2004: "Hundreds of roosters bred for fighting have been put to death at a Monmouth County farm. About 6,000 birds were euthanized on Monday after a raid on a Howell Township, N.J. ranch over the weekend, where authorities said illegal cockfights occurred. .... Cockfighting is against the law in New Jersey but remains legal in many other places, including southwestern states." What idea from Chapter 1 of the text does this story best illustrate? a. There ain't no such thing as a free lunch. b. The invisible hand is not always invisible. C. Social and political forces sometimes rein in market forces. d. Maintaining objectivity is easiest in positive economics. Feedback: It is possible to get many messages from this incident, but it clearly illustrates a
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This note was uploaded on 10/12/2008 for the course ECON 2030 taught by Professor Bong during the Fall '07 term at LSU.

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EXAM 1 - Say a pill existed that made people selfless After...

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