Exam_1-_Practice_Test_1

Exam_1-_Practice_Test_1 - 1. For society, a good is not...

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1. For society, a good is not scarce if a. at least one individual in society can obtain all he or she wants of the good. b. firms are producing at full capacity. c. all members of society can have all they want of it. d. those who have enough income can buy all they want of the good. 2. Henry decides to spend two hours playing golf rather than working at his job which  pays $8 per hour. Henry’s tradeoff 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. 3. Suppose your management professor has been offered a corporate job with a 30%  pay increase. He has decided to take the job. For him, the marginal a. cost of leaving was greater than the marginal benefit. b. benefit of leaving was greater than the marginal cost. c. benefit of teaching was greater than the marginal cost. d. All of the above are correct.
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4. When policymakers make policies that change the costs and benefits that people  face, they can a. alter behaviors. b. make people ignore incentives. c. create inflation. d. reduce government revenue. 5. Mike has spent $500 purchasing and repairing an old fishing boat (including  opportunity costs), which he expects to sell for $800 once the repairs are complete.  He discovers that he needs an additional repair, which will cost $400 (including  opportunity costs), in order to complete the repairs. He can sell the boat as it is now  for $300. What should he do? (hint: think about  marginal  benefits and costs) a. He should cut his losses and take the $300. b. He should never sell something for less than it cost. c. He should complete the repairs and sell the boat. d. It doesn’t matter which action he takes; the outcome is the same either way. 6. Mallory decides to spend 3 hours working overtime rather than watching a video  with her friends. She earns $8 an hour. Her opportunity cost of working is a. the $24 she earns working. b. the $24 minus the enjoyment she would have received from watching the video. c. the enjoyment she would have received had she watched the video. d. nothing, since she would have received less than $24 of enjoyment from the  video.
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7. The law of demand says that when price a. rises, quantity demanded falls. b. rises, quantity demanded rises also.
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Exam_1-_Practice_Test_1 - 1. For society, a good is not...

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