exam1120 - Spring 2002 ECON 120 Sankaran EXAM # 1...

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Spring 2002 EXAM # 1 ECON 120 Sankaran <$o:p> Multiple Choice 1. Efficiency means that a. society is getting the most it can from its scarce resources. b. society is conserving resources in order to save them for the future. c. society's goods and services are distributed fairly among society's members. d. society has lessened its dependence on foreign energy sources. 2. The term which means whatever must be given up to obtain an item is a. efficiency. b. externality. c. opportunity cost. d. market failure. 3. Ryan spends an hour studying instead of going for a bike ride. The opportunity cost to him of studying is a. the improvement in his grades from studying for the hour. b. the difference between the improvement in his grades from studying minus the enjoyment of a bike ride. c. the enjoyment and exercise he would have received had he gone for a bike ride.
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d. zero. Since Ryan chose to study rather than to ride his bike, the value of studying must have been greater than the value of the bike ride. 4. A rational decisionmaker takes an action only if a. the marginal benefit is greater than the marginal cost. b. the marginal benefit is less than the marginal cost. c. the average benefit is greater than the average cost. d. the marginal benefit is greater than both the average cost and the marginal cost. 5. The invisible hand works to promote general well-being in the economy primarily through a. government intervention. b. the political process. c. self interest. d. altruism. 6. The primary determinant of a country's standard of living is a. the government. b. labor unions. c. productivity. d. minimum wage laws. 7. Economic models are usually composed of
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a. plastic. b. beautiful people. c. assumptions only. d. diagrams and equations. 8. Factors of production are a. inputs into the production process. b. weather, social, and political conditions that affect production. c. the physical relationships between economic inputs and outputs. d. the mathematical calculations firms make to determine production.
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9. In the circular-flow diagram, a. firms are sellers in the resource market and the product market. b. households are sellers in the resource market. c. firms are buyers in the product market. d. spending on goods and services flow from firms to households. 10. In the circular-flow diagram shown, which arrow shows the flow of the factors of production? a. A b. B c. C d. D
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11. On the production possibilities frontier shown, which point or points are possible for this economy to produce? a. A, B, C, D b. A, B, C, F c. A, B, C, D, E, F d. D
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12. On the production possibilities frontier shown above, the opportunity cost to the economy of getting 10 additional roller blades by moving from point A to point B is a. 15 bikes. b. 10 bikes.
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exam1120 - Spring 2002 ECON 120 Sankaran EXAM # 1...

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