Chapter 1 (3
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Chapter 1 Ten Principles of Economics
1. Choices must be made in the use of resources ( a )
a.
because they are in finite supply.
b.
because they are in finite demand.
c.
only if the resources are nonrenewable.
d.
because they are in infinite supply.
2. Social security programs are aimed at making the distribution of resources in an
economy more ( c )
a.
efficient. c. equitable.
b.
inefficient. d. inequitable.
3. The opportunity cost of building an additional parking lot at your school is ( b )
a.
the cost of concrete, labor, etc. used to build the lot.
b.
the value of the property and resources used at their next best alternative use.
c.
the value of the property and resources used at all of their alternative uses.
d.
infinite, and so we cannot estimate it.
4. Suppose you are considering going to the movies, and you place a $12 value on your
anticipated enjoyment of the movie. 鈥淭he ticket price is $6 and you would be giving up
two hours of work, where you earn $5 per hour. You would go to ( a )
a.
work; the opportunity cost of the movies exceeds the expected benefit.
b.
the movies; your incentive is the $6 excess expected benefit.
c.
the movies; your enjoyment will exceed the lost wages by $2.
d.
the movies; the benefit of $18 exceeds the lost wages.
5. Metro North Railway is trying to decide whether or not to run an additional train into
New York City from New Haven, Connecticut at 8:15 a.m. The total cost of running trains
between 8:00 a.m. and 9:00 a.m. is $45,000 and the expected revenues on any given day
are $100,000 during this time period. The cost of running the additional train is $4,000 and
it is expected that revenues will rise to $103,500. Metro North should ( d )
a.
run the train because the total revenues are greater than the total costs.
b.
run the train because the firm鈥檚 revenues will rise.
c.
not run the train because the total costs are already too high.
d.
not run the train because the marginal cost of $4000 is greater than the
marginal revenue of $3,500.