Econ Ch 1

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1.What do economists mean when they state that a good is scarce?
a.There is a shortage or insufficient supply of the good at the existing price.
b.It is impossible to expand the availability of the good beyond the current amount.
c.People will want to buy more of the good regardless of the price of the good.
d.The amount of the good that people would like exceeds the supply freely available from nature.

2.Which of the following is most clearly consistent with the basic guidepost of economics regarding the reaction of people to a change in incentives?
a.Farmers produce fewer bushels of wheat in response to an increase in the price of wheat.
b.People will buy more milk at a price of $2 per gallon than at $1 per gallon.
c.People will buy less gas if the price of gas increases by $.20 per gallon.
d.People will consume more beef if the price increases from $1 to $2 per pound.

3.Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3. They agree to split the lunch bill evenly. Ed chooses a hot dog. The marginal cost to Joe then of ordering a hamburger instead of a hot dog is

a.$1.
b.$2.
c.$2.50.
d.$3.

4.The expression, “There’s no such thing as a free lunch,” implies that
a.everyone has to pay for his own lunch.
b.the person consuming a good must always pay for it.
c. opportunity costs are incurred when resources are used to produce goods and services.
d.no one has time for a good lunch anymore.

5.Which one of the following is a positive economic statement?
a.An increase in the minimum wage will reduce employment.
b.The minimum wage should be increased.
c.Social justice will be served by increasing the minimum wage.
d.Thoughtful people oppose an increase in the minimum wage.

6.While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Jordan notices that the restaurant has a value meal containing...
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