sample_quiz_1 - Sample Quiz#1 Ec 201 Michigan State...

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Sample Quiz #1 Ec 201 Spring, 2009 Michigan State University L. Martin I. Multiple Choice. Please enter the best answer on the “bubble sheet.” 1. Scarcity means a. there is poverty; b. there is income inequality; c. people want more than is freely available;* d. opportunity costs exceed sunk costs; e. sunk costs should be ignored. 2. Suppose that a company has signed a lease for $20,000 for office space. If it decides to move to another location, it can sublet the space for $15,000. What is the opportunity cost of staying in the leased space? For questions 3 and 4 use the following information. An economist trying to find out if higher beer taxes in a state reduce traffic accidents runs a regression with beer taxes on one axis and traffic accidents per person on the other. He also includes variables such as average household income and population density.
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