Econ NOtes

Topics: Supply and demand, Economics, Microeconomics Pages: 52 (12296 words) Published: October 18, 2013
First Midterm Study
Dr. Reza FazeliEcon.20A
1. The phenomenon of scarcity stems from the fact that
a.most economies’ production methods are not very good.
b.in most economies, wealthy people consume disproportionate quantities of goods and services. c.governments restrict production of too many goods and services. d.resources are limited.
2. Approximately what percentage of the world's economies experience scarcity? a.10%
b.40%
c.85%
d.100%
3. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a.goods are scarce.
b.income must be earned.
c.households face many decisions.
d.people face tradeoffs.

4. Efficiency
a.and equality both refer to how much a society can produce with its resources. b.and equality both refer to how fairly the benefits from using resources are distributed between members of a society. c.refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources d.refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.

5. Which of the following phrases best captures the notion of efficiency? a.absolute fairness
b.equal distribution
c.equitable outcome
d.minimum waste

6. Government policies designed to equalize the distribution of economic well-being include (i)the welfare system
(ii)unemployment insurance
(iii)progressive income tax
a.(i) only
b.(ii) only
c.(i) and (ii) only
d.(i), (ii), and (iii)
7. The opportunity cost of an item is
a.the number of hours needed to earn money to buy the item. b.usually less than the dollar value of the item.
c.the dollar value of the item.
d.what you give up to get that item.
8. When computing the opportunity cost of attending a concert you should include athe price you pay for the ticket, but not the value of your time. b.the value of your time, but not the price you pay for the ticket. c.neither the price of the ticket nor the value of your time. d.the price you pay for the ticket and the value of your time. 9. Ellie 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 $24 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 valued sleep more than attendance at class. 10. For which of the following individuals would the opportunity cost of going to college be highest? a.a promising young mathematician who will command a high salary once she earns her college degree b.a student with average grades who has never held a job

c.a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball d.a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree 11. Maureen’s college raises the cost of room and board per semester. This increase raises Maureen’s opportunity cost of attending college a.even if the amount she would have to pay for room and board if she didn’t attend college rose by the same amount. An increase in opportunity cost reduces Maureen’s incentive to attend college. b.even if the amount she would have to pay for room and board if she didn’t attend college rose by the same amount. An increase in opportunity cost increases Maureen’s incentive to attend college. c.only if the amount she would have to pay for room and board if she didn’t attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen’s incentive to attend college. d.only if the amount she would have to pay for room and board if she didn’t attend...
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