__172.20.40.61_Materials_l2xie-0010_Chapter_1

__172.20.40.61_Materials_l2xie-0010_Chapter_1 - Chapter 1...

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Chapter 1 Student: ___________________________________________________________________________ 1. Economic questions always deal with A. financial matters. B. political matters. C. insufficient resources. D. choice in the face of limited resources. 2. The central concern of economics is A. poverty. B. scarcity. C. wealth accumulation. D. overconsumption. 3. The scarcity principle indicates that A. no matter how much one has, it is never enough. B. compared to 100 years ago, individuals have less time today. C. with limited resources, having more of "this" means having less of "that." D. because tradeoffs must be made, resources are therefore scarce. 4. The principle of scarcity applies to A. the poor exclusively. B. all consumers. C. all firms. D. everyone; consumers, firms, governments, and nations. 5. The cost-benefit principle indicates that an action should be taken A. if the total benefits exceed the total costs. B. if the average benefits exceed the average costs. C. if the net benefit (benefit minus cost) is zero. D. if the extra benefit is greater than or equal to the extra costs.
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6. The scarcity principle indicates that __________ and the cost-benefit principle indicates __________. A. choices must be made; how to make the choices B. choices must be made; the costs can never outweigh the benefits of the choices C. rare goods are expensive; the costs should outweigh the benefits of the choices D. rare goods are expensive; the costs can never outweigh the benefits of the choices 7. A rational person is one who A. is reasonable. B. makes choices that are easily understood. C. possesses well-defined goals and seeks to achieve them. D. is highly cynical. Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry
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This note was uploaded on 04/19/2011 for the course ECON 1 taught by Professor Tang during the Spring '08 term at UCSD.

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__172.20.40.61_Materials_l2xie-0010_Chapter_1 - Chapter 1...

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