2010Chapter1and2 problem set-1

2010Chapter1and2 problem set-1 - Chapter1&2 problem set...

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Student: ___________________________________________________________________________ 1. Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of: A.opportunity costs. B.marginal benefits that exceed marginal costs. C.imperfect information. D.normative economics. 2. A person should consume more of something when its marginal: A.benefit exceeds its marginal cost. B.cost exceeds its marginal benefit. C.cost equals its marginal benefit. D.benefit is still positive. 3. Economics involves marginal analysis because: A.most decisions involve changes from the present situation. B.marginal benefits always exceed marginal costs. C.marginal costs always exceed marginal benefits. D.much economic behavior is irrational. 4. The assertion that "There is no free lunch" means that: A.there are always tradeoffs between economic goals. B.all production involves the use of scarce resources and thus the sacrifice of alternative goods. C.marginal analysis is not used in economic reasoning. D.choices need not be made if behavior is rational. 1
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5. A well-tested economic theory is often called: A.a hypothesis. B.a prototype. C.a principle. D.an anomaly. 6. Which of the following is a correct statement? A.Economic concepts or laws that are valid during depression are necessarily valid during prosperity. B.Though not quantitatively exact, economic laws are useful because they allow us to predict and therefore control or adjust to events. C.Economics is as scientific as are physics and chemistry because economic laws are as quantitatively precise as the laws of physics or chemistry. D.Because economics is concerned with questions of "ought," it is a branch of applied ethics and not scientific. 7. Economic models: A.are of limited use because they cannot be tested empirically. B.are limited to variables that are directly related to one another. C.emphasize basic economic relationships by purposefully simplifying the complexities of the real world. D.are unrealistic and therefore of no practical consequence.
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2010Chapter1and2 problem set-1 - Chapter1&2 problem set...

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