CHAPTER 01 - Chapter1 TenPrinciples ofEconomics 1 Choicesmust bemade inthe use ofresources a because they areinfinitesupply b because they

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Chapter 1 Ten Principles of Economics 1. Choices must  be made  in the use of resources a. because they are in finite supply. b. because they are in finite demand. c. only if the resources are nonrenewable. d. because they are in infinite supply. ANSWER: a because they are in finite supply. SECTION: 1 OBJECTIVE: 1 2. The cost to an airline of letting its employees fly at no charge a. is zero. b. will depend  on the value employees place upon  travel. c. is greater during  the Christmas holidays than  at most other times. d. depends  on the alternatives open to the employees. ANSWER: c is greater during  the Christmas holidays than  at most other times. SECTION: 1 OBJECTIVE: 2 3. Social security programs  are aimed  at making  the distribution  of resources in an economy  more a. efficient. b. inefficient. c. equitable. d. inequitable. ANSWER: c equitable. SECTION: 1 OBJECTIVE: 2 4. The opportunity  cost of building  an additional parking  lot at your school is a. the cost of concrete, labor, etc. used  to build  the lot. b. the value of the property  and  resources used  at their next-best alternative use. c. the value of the property  and  resources used  at all of their alternative uses. d. infinite; we cannot estimate it. ANSWER: b the value of the property  and  resources used  at their next-best alternative use. SECTION: 1 OBJECTIVE: 3 5. Suppose you are considering  going to the movies, and  you place a $12 value on your anticipated   enjoyment  of the movie. The ticket price is $6 and  you would  be giving up  two hours of work,  where you earn $5 per hour. You would  go to a. work; the opportunity  cost of the movies exceeds the expected  benefit. b. the movies; your incentive is the $6 excess expected  benefit. c. the movies; your enjoyment  will exceed the lost wages by $2. d. the movies; the benefit of $18 exceeds the lost wages. ANSWER: a work; the opportunity  cost of the movies exceeds the expected  benefit. SECTION: 1 OBJECTIVE: 3 1
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 Chapter 1/Ten Principles of Economics 6. Metro North  Railway is trying to decide whether  or not to run an additional train into New  York  City from New  Haven, Connecticut at 8:15 a.m. The total cost of running  trains between  8:00 a.m.  and  9:00 a.m. is $45,000 and  the expected  revenues on any given day are $100,000 during  this time  period. The cost of running  the additional train is $4,000 and  it is expected  that revenues will rise to  $103,500. Metro North  should a. run the train because the total revenues are greater than  the total costs. b.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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CHAPTER 01 - Chapter1 TenPrinciples ofEconomics 1 Choicesmust bemade inthe use ofresources a because they areinfinitesupply b because they

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