Econ_002_Final_Exam_1_ - Econ 002 Final Exam SU07 Student:...

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Econ 002 Final Exam SU07 Student: ___________________________________________________________________________ 1. The central concern of economics is A. poverty. B. wealth accumulation. C. the conflict between capitalism and socialism. D. scarcity. E. overconsumption 2. The cost-benefit principle indicates that an action should be taken A. if the total benefits exceed the total costs. B. based on flipping a coin or speaking with a psychic. C. if the average benefits exceed the average costs. D. if the net benefit (benefit minus cost) is zero. E. if the extra benefit is greater than or equal to the extra costs. 3. The opportunity cost of an activity is the value of A. an alternative forgone. B. the next-best alternative forgone. C. the least-best alternative forgone. D. the difference between the chosen activity and the next-best alternative forgone. E. the alternative one would have preferred to choose. 4. Economic surplus is A. the benefit gained by taking an action. B. the price paid to take an action. C. the difference between the benefit gained and the cost incurred of taking an action. D. the wage someone would have to earn in order to take an action. E. the amount one person gains at another's expense when negotiating. 1
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5. Economists use models to A. create situations that cannot be directly observed. B. describe each individual's choice behavior C. illustrate general patterns of behavior. D. avoid having to make assumptions. E. prove that the cost-benefit principle is correct. 6. The cost that we can not avoid whether or not an action is taken, is called A. opportunity cost B. average cost C. sunk cost D. marginal cost E. total cost of the action 7. If a nation has the lowest opportunity cost of producing a good, that nation has a(n) A. comparative advantage. B. absolute advantage. C. comparative and absolute advantage. D. absolute advantage and possibly a comparative advantage. E. relative advantage. 8. If a given production combination is efficient, then it must be A. beyond the production possibilities curve. B. possible to expand production of one good without lowering the amount of the other. C. on the production possibilities curve. D. either an attainable or unattainable point. E. the best combination out of all possible combinations. 9. Large developed countries can produce more of practically everything than can a small less developed country. Therefore, A. the large country has no incentive to trade with the smaller country. B. it would be impossible for the smaller country to have a comparative advantage in making any products that the larger country wants to buy. C. trade between the countries is more likely to benefit the large country and harm the smaller country. D. trade between the countries is more likely to benefit the small country and harm the larger country.
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This note was uploaded on 03/30/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Summer '08 term at Pennsylvania State University, University Park.

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Econ_002_Final_Exam_1_ - Econ 002 Final Exam SU07 Student:...

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