Problem%20Set%20Chp.1 - Problem Set Chp.1 The Scope and...

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Problem Set Chp.1: The Scope and Method of Economics MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question. 1. The study of economics A. is a very narrow endeavor. B. is concerned with proving that capitalism is better than socialism. C. is a way of analyzing decision-making processes caused by scarcity. D. focuses on how a business should function. 2. Scarcity exists when i. there is an infinite amount of a resource or good but people don’t use them. ii. society can meet the wants of every individual. iii. there is less of a good or resource available than people wish to have. iv. the government fails to produce goods. A. only i B. only ii C. only iii D. only iv E. i and iv F. iii and iv G. i and iii 3. Opportunity cost is A. associated with the next best alternative that we forgo, or give up, when we make a choice or a decision. B. a cost that cannot be avoided, regardless of what is done in the future. C. the additional cost of buying an additional unit of a product. D. the additional cost of producing an additional unit of output. 4. The ________ CANNOT qualify as an opportunity cost of attending college. A. alternative uses of the time you spend studying B. cost of the food that you consume while you are attending college C. income you could have earned if you didn’t attend college 1
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5. Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry’s tradeoff or opportunity cost is A. the $16 he could have earned working for two hours. B. nothing, because he enjoys playing golf more than working. C. the increase in skill he obtains from playing golf for those two hours. D. nothing, because he spent $16 for green fees to play golf. 6. For most students, the largest single opportunity cost of a college education is A. the salary in a possible job given up to attend school. B. tuition, fees, and books. C. room and board. D. transportation, parking. 7. Russell spends an hour studying instead of playing tennis. 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 playing tennis. C. the enjoyment and exercise he would have received had he played tennis. D. zero. Since Russell chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis. 8.
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This note was uploaded on 04/06/2008 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

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Problem%20Set%20Chp.1 - Problem Set Chp.1 The Scope and...

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