review exercise 1_sol

review exercise 1_sol - ECO 201 Review Exercise: Ch 1, 2 ,...

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ECO 201 Review Exercise: Ch 1, 2 , 3 and 4 Note: Don’t forget to review HW1, HW2 and in-class exercises 5.Which of the following questions is not answered by the decisions that every society must make? a. What determines consumer preferences? b. What goods will be produced? c. Who will produce the goods? d. Who will consume the goods? ANS: A DIF: 2 REF: 1-0 TOP: Economies MSC: Interpretive 6. The overriding reason as to why households and societies face many decisions is that a. resources are scarce. b. goods and services are not scarce. c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree. ANS: A DIF: 2 REF: 1-0 TOP: Scarcity MSC: Interpretive 7. The phenomenon of scarcity stems from the fact that a. most economies’ production methods are not very good. b. in most economies, wealthy people consume disproportionate quantities of goods and services. c. governments restricts production of too many goods and services. d. resources are limited. ANS: D DIF: 2 REF: 1-0 TOP: Scarcity MSC: Interpretive 22.When society requires that firms reduce pollution, there is a. a tradeoff because of reduced incomes to the firms' owners and workers. b. a tradeoff only if some firms are forced to close. c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. d. no tradeoff, since everyone benefits from reduced pollution. ANS: A DIF: 3 REF: 1-1 TOP: Tradeoffs MSC: Applicative 26.Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources. ANS: D DIF: 1 REF: 1-1 TOP: Efficiency MSC: Definitional
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40.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. ANS: C DIF: 2 REF: 1-1 TOP: Marginal changes MSC: Applicative 53.A person’s willingness to pay for a good is based on a. the availability of the good. b. the marginal benefit that an extra unit of the good would provide for that person. c. the marginal cost of producing an extra unit of the good. d. esoteric factors, the study of which lies beyond the boundaries of economics.
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This note was uploaded on 09/15/2009 for the course ECON 201 taught by Professor Shoonlai during the Summer '09 term at Miami University.

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review exercise 1_sol - ECO 201 Review Exercise: Ch 1, 2 ,...

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