ECO110_StudyGuide_Exam1

ECO110_StudyGuide_Exam1 - ECO 110 Spring 2011 Study Guide...

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ECO 110 - Spring 2011 Study Guide Student: _______________________________________________________________________________________ 1. The average benefit of an activity is the A. total benefit of the activity divided by the number of units. B. number of units divided by the total benefit of the activity. C. number of units times the total benefit of the activity. D. extra benefit for one additional unit of the activity. 2. Refer to the figure above. The President of What'sAMatterU decides to hire fundraisers as long as the average benefit exceeds the average cost, resulting in __________ employees being hired and a net benefit (total donations minus total labor costs) of __________. A. 5; \$17,080 B. 5; \$67,080 C. 4; \$60,000 D. 4; \$22,000 3. Refer to the figure above. The Chairman of the Economics Department at What'sAMatterU says that fundraisers should be hired as long as their marginal donations exceed their marginal labor costs. Following this criterion, ____ ______ employees are hired and net benefits are __________. A. 1; \$22,000 B. 2; \$25,426 C. 3; \$25,426 D. 2; \$3,476

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4. Refer to the figure above. The average cost of 4 units of activity is A. \$20 B. \$25 C. \$30 D. \$40 5. Refer to the figure above. According to the cost-benefit principle, the level of activity that provides the largest net benefit is A. 1 B. 3 C. 4 D. 6 6. Microeconomics is distinguished from macroeconomics in that microeconomics focuses on A. the performance of the national economy. B. the overall price level. C. choices made by individuals or groups in the context of individual markets. D. how to improve the performance of the national economy. 7. Which of the following questions would not be part of macroeconomics? A. What caused the great depression? B. At what rate does the US economy typically grow? C. Did the sharp increase in gasoline prices alter SUV sales? D. How does government spending affect the economy? You own a pizza shop called "Pizza'R' Us". Currently you are paying your cooks an hourly wage of \$20. You sell a medium pizza for \$10 a pie. By hiring more cooks, you can increase your pizza production as shown in the following table. 8. What is the average benefit per pizza if you hire 2 cooks? A. \$4 B. \$6 C. \$8 D. \$10
9. An economic naturalist is described as someone who A. uses economic arguments to protect forests and wetlands from development. B. has a natural talent for drawing graphs. C. applies economic insights to everyday life. D. studies the process of natural selection in a marginal cost and marginal benefit framework. 10. Sally earned \$25,000 per year before she became a mother. After she became a mother, she told her employer that she would not be willing to work for anything less than \$50,000. Her decision is based on A. the high cost of raising a child.

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ECO110_StudyGuide_Exam1 - ECO 110 Spring 2011 Study Guide...

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