Chapters 1-3 Drill with Solutions

Chapters 1-3 Drill with Solutions - Chapters 1-3 Drill w...

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Unformatted text preview: Chapters 1-3 Drill w solution Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Which of the following is true? a. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. b. Government policies usually improve upon both equality and efficiency. c. As long as the economic pie continually gets larger, no one will have to go hungry. d. Efficiency and equality can both be achieved if the economic pie is cut into equal pieces. ____ 2. Moira decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is a. the value of the knowledge she would have received had she attended class. b. the $30 she could have earned if she had worked at her job for those two hours. c. the value of her nap less the value of attending class. d. nothing, since she would valued sleep more than attendance at class. ____ 3. Pete receives $50 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $50. Finally he decides on Option B. The opportunity cost of this decision is a. the value to Pete of the option he would have chosen had Option B not been available. b. the value to Pete of Options A, C and D combined. c. $50. d. $100. ____ 4. A construction company has built 50 houses so far this year at a total cost to the company of $8 million. If the company builds a 51 st house, its total cost will increase to $8.18 million. Which of the following statements is correct? a. For the first 50 houses, the average cost per house was $160,000. b. The marginal cost of the 51 st house, if it is built, will be $180,000. c. If the company can experience a marginal benefit of $190,000 by building the 51 st house, then the company should build it. d. All of the above are correct. ____ 5. Senator Smart, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Smart should argue that trade can be beneficial a. only if it allows us to obtain things that we couldn't make for ourselves. b. because it allows specialization, which increases total output. c. to us if we can gain and the others involved in the trade lose. d. in only a limited number of circumstances because others are typically self-interested. ____ 6. The basic principles of economics suggest that a. markets are seldom, if ever, a good way to organize economic activity. b. government should become involved in markets when trade between countries is involved. c. government should become involved in markets when those markets fail to produce efficient or fair outcomes....
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This note was uploaded on 03/18/2012 for the course ITEC 3290 taught by Professor Dunn during the Spring '12 term at East Carolina University .

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Chapters 1-3 Drill with Solutions - Chapters 1-3 Drill w...

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