Deck 1: The Scope and Method of Economics

Question 1

That which we forgo, or give up, when we make a choice or decision is called

A) out-of-pocket cost.
B) marginal cost.
C) real cost.
D) opportunity cost.

Answer 1

D

Question 2

Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the additional $15 you pay for parking is an example of

A) an economic loss.
B) opportunity cost.
C) marginal cost.
D) an inefficient cost.

Answer 2

C

Question 3

Opportunity cost is

A) that which we forgo, or give up, when we make a choice or a decision.
B) a cost that cannot be avoided, regardless of what is done in the future.
C) the additional cost of producing an additional unit of output.
D) the additional cost of buying an additional unit of a product.

Answer 3

A

Question 4

Economists often refer to risk-free ventures as

A) efficient market outcomes.
B) profit opportunities.
C) those with no opportunity costs.
D) break-even propositions.

Question 5

Which of the following is not one of the three fundamental concepts of economics?

A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets

Question 6

The reason that opportunity costs arise is that

A) an economy relies on money to facilitate exchange of goods and services.
B) resources are scarce.
C) there are no alternative decisions that could be made.
D) people have limited wants.

Question 7

The concept of opportunity cost

A) is relevant only to economics.
B) can be applied to the analysis of any decision-making process.
C) applies to consumers but not to firms.
D) refers only to actual payments and incomes.

Question 8

The study of economics

A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.

Question 9

Which of the following is not an opportunity cost of attending college?

A) the tuition you pay
B) the income you could have earned if you didn't attend college
C) the alternative uses of the time you spend studying
D) the cost of the food that you consume while you are attending college

Question 10

Which of the following is the best definition of economics?

A) the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars

Question 11

You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second time

A) is zero.
B) is one-half the cost of the game, as this is the second time you have played it.
C) is the value of the alternative use of the time you spend playing the game.
D) cannot be calculated.

Question 12

Which of the following statements is not correct?

A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.

Question 13

You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost $40 to assemble your costume. After spending $40 on the costume, you realize that the additional pieces you need will cost you $25 more. The marginal cost of completing the costume is

A) $15.
B) $25.
C) $40.
D) $65.

Question 14

If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal cost of the tenth DVD is

A) $4.
B) $13.
C) $14.
D) $130.

Question 15

Which of the following is not listed in the book as a reason to study economics?

A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money

Question 16

If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $3,000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is

A) $5,600.
B) $5,900.
C) $10,100.
D) $11,600.

Question 17

If your tuition is $25,000 this semester, your books cost $1,500, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $7,500 this semester (same as if not attending college), then your opportunity cost of attending college this semester is

A) $26,500.
B) $26,800.
C) $31,000.
D) $38,500.

Question 18

If you own a building and you decide to use that building to open a book store,

A) there is no opportunity cost of using this building for a book store because you own it.
B) there is an opportunity cost of using this building for a book store because it could have been used in other ways.
C) the opportunity costs equal the cost of inventory.
D) the only cost relevant to this decision is the price you paid for the building.

Question 19

The rise of the modern factory system in England during the late eighteenth and early nineteenth centuries is known as the

A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.

Question 20

Among the fundamental concepts in economics are

A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above

Question 21

Marginalism is

A) the best alternative that we forgo when making a decision.
B) the study of how societies choose to use scarce resources.
C) a market situation in which profit opportunities are eliminated almost instantaneously.
D) the process of analyzing the additional costs or benefits arising from a decision.

Question 22

A market in which profit opportunities are eliminated almost instantaneously is

A) a laissez-faire market.
B) a capitalist market.
C) a socialist market.
D) an efficient market.

Question 23

That which we forgo, or give up, when we make a choice or a decision is known as

A) equity.
B) causation.
C) correlation.
D) opportunity cost.

Question 24

You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the additional pieces you need will cost you $20 more. The marginal cost of completing the costume is

A) $20.
B) $60.
C) $80.
D) $100.

Question 25

Economics is best defined as the study of

A) financial decision making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.

Question 26

You decide to go to LEGOLAND after you visit Disneyworld in Orlando. The cost of going to LEGOLAND after you visit Disneyworld is the ________ cost of getting from Disneyworld to LEGOLAND.

A) efficiency
B) marginal time and money
C) opportunity
D) profit-maximizing

Question 27

An efficient market is a market in which

A) everyone always gets what they want.
B) profit opportunities are eliminated almost instantaneously.
C) profits are always very high and persistent.
D) opportunity costs are zero.

Question 28

The Industrial Revolution refers to the rise of the modern factory system in ________ during the late eighteenth and early nineteenth centuries.

A) the United States
B) England
C) France
D) Germany

Question 29

Related to the Economics in Practice on page 5: According to the Economics in Practice, a majority of the $10 retail value of the Barbie doll

A) is needed to pay for the cost of the Taiwanese plastic used to make the dolls.
B) pays for the Chinese labor used to assemble the doll.
C) is captured in the United States.
D) goes to the Japanese manufacturer of the hair which is used for the dolls.

Question 30

You have narrowed down your Friday night plans to either going bowling or playing billiards. If you choose to go bowling, then for you playing billiards is the ________ of going bowling.

A) opportunity cost
B) marginal cost
C) empirical cost
D) variable cost

Question 31

Which of the following statements is correct?

A) Economics is a natural science.
B) In large measure, economics is the study of how people make choices.
C) If poverty was eliminated there would be no reason to study economics.
D) Economic analysis can be used to explain how societies, but not individuals, make decisions.

Question 32

Economics is the study of

A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.

Question 33

The reasons to study economics include which of the following?

A) to be an informed citizen
B) to understand society
C) to learn a way of thinking
D) all of the above

Question 34

If information is less costly and more easily available, then usually this

A) makes markets more efficient.
B) makes markets less efficient.
C) increases profit opportunities.
D) increases the opportunity cost of acquiring more information.

Question 35

Scarce resources give rise to the concept of

A) efficient markets.
B) opportunity costs.
C) laissez-faire.
D) positive economics.

Question 36

If your tuition is $2,000 this semester, your books cost $400, you can only work 10 rather than 40 hours per week during the 15 weeks you are taking classes and you make $12 per hour, and your room and board is $4,000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is

A) $2,400.
B) $2,760.
C) $7,800.
D) $11,800.

Question 37

Suppose that you sign up for a one-day cooking class at the local culinary school for $75. Once you arrive at the class, you discover that you must purchase an apron for an additional $5. In this situation, the additional $5 you pay for the apron is an example of

A) an inefficient cost.
B) marginal cost.
C) opportunity cost.
D) an economic loss.

Question 38

If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then the marginal cost of your 10th piece of sushi is

A) zero.
B) $2.
C) $200.
D) $2,000.

Question 39

Which of the following is an opportunity cost of attending college?

A) the cost of your apartment or dorm
B) the income you could have earned if you didn't attend college
C) the cost of the food that you consume while you are attending college
D) the education you gain from attending college

Question 40

Related to the Economics in Practice on page 5: The opportunity cost to Mattel of having its Barbie doll assembled in China is

A) the low wages paid to Chinese workers.
B) the $2 export value the doll carries when it leaves Hong Kong.
C) the $8 of its $10 retail value which is captured in the United States.
D) having the Barbie doll assembled in the next best available location.

Question 41

Opportunity cost is

A) the additional cost incurred from the consumption of one more unit of output.
B) the cost involved when choosing between alternatives.
C) the cost of production which cannot be recaptured.
D) the total cost incurred from the consumption of additional output.

Question 42

If you can download 10 ring tones for your cell phone for $10 or you could download 11 ring tones for your cell phone for $10.50, then the marginal cost of the eleventh ring tone is

A) $0.50.
B) $10.00.
C) $10.50.
D) $20.50.

Question 43

The value of the best alternative foregone is the opportunity cost of making a decision.

Question 44

An efficient market is a market

A) that deals in unlimited resources.
B) in which long-term profits are guaranteed.
C) in which profit opportunities are eliminated almost instantaneously.
D) in which there are no opportunity costs.

Question 45

If your tuition is $20,000 this semester, your books cost $2,000, you can only work 10 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $8,000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is

A) $22,000.
B) $22,150.
C) $28,750.
D) $36,750.

Question 46

You own American Sniper on DVD. The opportunity cost of watching this DVD for the fourth time

A) is zero, since you own it.
B) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.
C) is the value of the alternative use of the time you spend watching the DVD.
D) must be the same as the opportunity cost of watching it the first time.

Question 47

Opportunity costs arise due to scarce resources.

Question 48

Related to the Economics in Practice on p. 5: The opportunity cost to Apple of having the hard drive produced in Japan by Toshiba is

A) the wages paid to Japanese workers.
B) the components of the hard drive which are not produced by Toshiba.
C) having the hard drive produced by the next best available company.
D) the value-added captured by Apple in the United States.

Question 49

Opportunity cost is

A) what we give up to get something else.
B) marginal cost divided by total cost.
C) the same as real cost.
D) all of the above

Question 50

The cost involved when choosing between alternatives is known as the

A) marginal cost.
B) sunk cost.
C) opportunity cost.
D) normative cost.

Question 51

If information is more costly and less easily available, then usually this

A) makes markets more efficient.
B) makes markets less efficient.
C) decreases profit opportunities.
D) decreases the opportunity cost of acquiring more information.

Question 52

Resources are unlimited in a wealthy society.

Question 53

A market is considered efficient if profit opportunities remain continually available.

Question 54

Marginal cost refers to the incremental cost arising from a decision.

Question 55

Resources are limited in both wealthy and poor societies.

Question 56

Related to the Economics in Practice on p. 5: According to the Economics in Practice, ________ of the $10 retail value of a Barbie doll is captured in the United States.

A) none
B) 35 cents
C) $2
D) $8

Question 57

If you own a condo and you decide to lease it to your cousin,

A) there is no opportunity cost of leasing the condo because you own it.
B) there is an opportunity cost of leasing the condo because you could have chosen to live in it.
C) there is no opportunity cost of leasing the condo because you collect rent from your cousin.
D) the only cost relevant to this decision is the price you paid for the condo.

Question 58

If you eat at a Las Vegas casino that charges $12 for its all you can eat buffet, then the marginal cost of your third trip to the buffet is

A) zero.
B) $4.
C) $12.
D) $36.

Question 59

The common way of expressing the efficient market concept is

A) "the only true market is a profitable market."
B) "there's no such thing as a free lunch."
C) "only without government interference can a market survive."
D) "once an efficient market, always an efficient market."

Question 60

Economists often refer to "good deals" as

A) profit opportunities.
B) break-even propositions.
C) efficient market outcomes.
D) those with no opportunity cost.

Question 61

Studying economics helps us to better understand society.

Question 62

We can use macroeconomic analysis to

A) learn how to balance a checkbook.
B) study the choices made by households.
C) understand marginal changes in the macroeconomy.
D) understand why economies grow.

Question 63

Inflation and unemployment

A) are the focus of normative economics.
B) are a focus of microeconomics.
C) are a focus of positive economics.
D) are a focus of macroeconomics.

Question 64

The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as

A) an example of marginalism.
B) an example of the fallacy of composition.
C) a normative statement.
D) a positive statement.

Question 65

The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is

A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.

Question 66

The rate of unemployment is a topic of microeconomics.

Question 67

Which of the following is a macroeconomics question?

A) Should we have a constitutional amendment to balance the federal budget?
B) Why does a firm decide to enter a particular market?
C) Should the government prevent the merger of two large firms?
D) Should the government put a tax on alcohol in an attempt to reduce highway fatalities?

Question 68

Better insurance benefits increase the incentive of some individuals to work. This statement is best described as

A) a positive statement.
B) an example of the ceteris paribus assumption.
C) a normative statement.
D) a comparative economics statement.

Question 69

Macroeconomics is best described as the study of

A) very large issues.
B) the choices made by individual households, firms, and governments.
C) the nation's economy as a whole.
D) the relationship between inflation and wage inequality.

Question 70

Which of the following is a microeconomics question?

A) Is it sensible for a government to subsidize tobacco production?
B) Why do some countries grow faster than others?
C) Should Congress and the president take action to reduce global warming?
D) Should the government attempt to influence the interest rate to lower inflation?

Question 71

The study of how benefits are determined for city employees would be considered

A) microeconomics.
B) macroeconomics.
C) descriptive economics.
D) institutional economics.

Question 72

Studying how the management of Hewlett Packard decides how many computers to produce and the price to charge for its computers would be considered

A) descriptive economics.
B) empirical economics.
C) microeconomics.
D) macroeconomics.

Question 73

The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.

Question 74

Studying how Joshua allocates his time between school and video games is an example of

A) macroeconomics.
B) microeconomics.
C) industrial organization.
D) descriptive economics.

Question 75

Opportunity costs are another name for marginal costs.

Question 76

The rate of economic growth is a topic of microeconomics.

Question 77

Microeconomics is best described as the study of

A) the choices made by individual households, firms, and governments.
B) inflation, unemployment, gross national product, and the nation's economy as a whole.
C) how markets interact in the aggregate economy.
D) marginal changes in the economy.

Question 78

The aggregate price level is a topic of macroeconomics.

Question 79

The rate of inflation is a topic of macroeconomics.

Question 80

A basic understanding of economics is needed to be an informed citizen.