ProblemSet1-5 - EC201: Spring 2010 Professor Steven Haider...

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EC201: Spring 2010 Professor Steven Haider Problem Sets for Chaps 1-5 NOTE: An answer key follows each of the chapters. In the answer key, each question is assigned a “Topic”, which generally refers to a subtitle of the text. Thus, if you would like additional information about any of the questions, these topics will point you to where to look in the text. Version: 29-Dec-09
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Chapter 1 1. If resources are “scarce” it means that they: A) cannot provide enough goods or services to satisfy all human material wants and needs. B) have no opportunity cost. C) are probably not valued by consumers. D) have an unlimited supply. 2. Opportunity cost is: A) about half of the monetary cost of a product. B) the dollar payment for a product. C) the benefit derived from a product. D) the value of the best alternative forgone in making any choice. 3. A choice made ________ is a choice whether to do a little more or a little less of something. A) at the front end B) in the beginning C) at the margin D) ceteris paribus 4. Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is: A) $10,000. B) whatever she would have purchased with the $10,000 instead. C) whatever she would have earned had she not been in college. D) whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college. 5. A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost of you attending the game? A) The cost is zero—the ticket is free. B) $65 C) $40 D) $55 Page 1
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Chapter 1 6. Increases in total output realized when individuals specialize in particular tasks and trade are known as: A) the gains from trade. B) the profits obtained from sales of a good or service. C) marginal analysis. D) a trade-off. Page 2
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Chapter 1 Page 3 Answer Key 1. A Topic: Individual Choice: The Core of Economics 2. D Topic: Individual Choice: The Core of Economics 3. C Topic: Individual Choice: The Core of Economics 4. D Topic: The Real Cost of Something Is What You Must Give Up to Get It 5. D Topic: The Real Cost of Something Is What You Must Give Up to Get It 6. A Topic: There Are Gains from Trade
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Chapter 2 1. A simplified representation that is used to study a real situation is called: A) a model. B) a production possibility frontier. C) an assumption. D) a trade-off. Use the following to answer questions 2-4: 2. (Table: Production Possibilities Schedule I) If the economy produces 2 units of consumer goods per period, it also can produce at most ________ units of capital goods per period. A) 30
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This note was uploaded on 02/01/2010 for the course EC EC 201 taught by Professor Ec201 during the Spring '09 term at Michigan State University.

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ProblemSet1-5 - EC201: Spring 2010 Professor Steven Haider...

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