MITBch01

MITBch01 - CHAPTER 1 WHAT IS ECONOMICS TRUE-FALSE QUESTIONS...

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C HAPTER 1 W HAT IS E CONOMICS ? TRUE-FALSE QUESTIONS IDEAS FOR BEYOND THE FINAL EXAM 1. Both parties gain in a voluntary  exchange. ANSWER T, E, R 2. Even though  international trade in undertaken  voluntarily, a country  that engages in trade  may not benefit from it. ANSWER F, E, R 3. In international trade, one country’s gain is another country’s loss. ANSWER F, E, R 4. It is impossible for both nations to gain when  trading  with one other. ANSWER F, E, R 5. In economics the true cost of making a choice is the value of what must be given up. ANSWER T, E, R 1
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2 Chapter 1/What is Economics? 6. Opportunity  cost is the value of the next best alternative to a given choice. ANSWER T, E, R 7. Opportunity  cost is the highest possible price you can receive when  you sell an object. ANSWER F, M, R 8. As a student, one of the costs of sleeping  in rather than  going to class is likely to be a lower  grade in the class. ANSWER T, M, A 9. In her calculation of the cost of going to college, an economist would  include  the amount   of forgone earnings over the years spent at college. ANSWER T, M, R 10. Government  controls over market prices frequently “backfire.” ANSWER T, E, R 11. There are never any adverse consequences of government  attempts  to modify the laws of  supply  and  demand. ANSWER F, E, R 12. Comparative advantage explains how  two nations can benefit from trade. ANSWER T, M, R 13. If Japan is twice as good at producing  cameras and  three times as good  at producing  TV  sets as the United  States, Japan is said to have a comparative advantage  in TV sets and  the  United  States has a comparative advantage in cameras. ANSWER T, D, A
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Chapter 1/What is Economics? 3 14. The marginal cost of an airline ticket is the total cost of flying the plane divided  by the  number  of passengers. ANSWER F, D, A 15. Marginal analysis involves looking at the extra costs involved  in a decision. ANSWER T, E, R 16. There are frequently market solutions that the government  can use to deal with  externalities. ANSWER T, M, R 17. Externalities are social costs that affect parties external to a particular economic  transaction. ANSWER T, M, A 18. Externalities will not be present in exchanges that involve only the buyer and  the seller,  and  no one else. ANSWER T, M, R 19. Externalities are created  when  parties not involved  in an economic transaction are affected   by it. ANSWER T, M, R
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This note was uploaded on 01/26/2011 for the course ECON 160 taught by Professor Baim during the Spring '98 term at UCLA.

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MITBch01 - CHAPTER 1 WHAT IS ECONOMICS TRUE-FALSE QUESTIONS...

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