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Pretest1 - Pre-Test 1 Multiple Choice Identify the letter...

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Pre-Test 1 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter? a. There is no opportunity cost, assuming that future earnings actually increase as expected. b. The opportunity cost is much less than it would appear, assuming that earnings increase. c. Opportunity cost is a meaningless concept in this situation. d. The college students are completely correct in all respects. e. There is still an opportunity cost, even if it is justified by higher future earnings. ____ 2. The principle of comparative advantage explains how ____ 3. An externality is defined as ____ 4. A large factory pours its toxic wastewater into a nearby river, and as a result, the residents of a downstream community experience high rates of illness and birth defects. The economic problem illustrated by this ex- ample is ____ 5. Tools used by economists include a. historical study. b. mathematical reasoning. c. statistical inference. d. All of the above are correct. ____ 6. During one winter quarter at Frozen U., snow falls every Friday night. Students assume that, on their campus, Fridays cause snow. This hypothesis ____
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