Multiple Choice Questions:
1. Which of the following is part of the economic way of thinking?
a. When an option becomes less costly, individuals will become more likely to choose it.
b. Costs are incurred whenever scarce resources are used to produce goods or services.
c. The value of a good is determined by its cost of production.
d. Both a and b are part of the economic way of thinking.
2. Ted has decided to buy a burger and fries at a restaurant but is considering whether to buy a drink as well. If the price of a burger is $2.00, fries are $1.00 drinks are $1.00, and a value meal with all three costs $3.40, the marginal cost to Ted of the drink is
a. $1.00.
b. $0.40.
c. $1.40.
d. $3.40.
e. Impossible to determine from the information given.
3. If a country wants to maximize the value of its output, each job should be carried out by the person who
a. Has the highest opportunity cost.
b. Has a comparative advantage in that activity.
c. Can complete the particular job most rapidly.
d. enjoys that job the least.
4. Who would be most likely to drop out of college before graduation?
a. An economics major who wishes to go to graduate school
b. A math major with a B+ average
c. A chemistry major who has just been reading about the terrific jobs available for those with chemistry degrees
d. A star baseball player who has just received a multimillion-dollar major league contract offer after his junior year
5. "If I hadn't been set up on this blind date tonight, I would have saved $50 and spent the evening watching TV." The opportunity cost of the date is
a. $50.
b. $50, plus the cost to you of giving up a night of TV.
c. Smaller, the more you enjoy the date.
d. Higher, the more you like that night's TV shows.
e. Described by both b and d.
6. Say you had an 8 a.m. economics class, but you would still come to campus at the same time even if you skipped your economics class. The cost of coming to the economics class would include
a. The value of the time it took to drive to campus.
b. The cost of the gasoline it took to get to campus.
c. The cost of insuring the car for that day.
d. Both a and b.
e. None of the above.
7. Which of the following would be likely to raise your opportunity cost of attending a big basketball game this Sunday night?
a. A friend calls you up and offers you free tickets to a concert by one of your favorite bands on Sunday night.
b. Your employer offers you double your usual wage to work this Sunday night.
c. Late Friday afternoon, your physics professor makes a surprise announcement that there will be a major exam on Monday morning.
d. All of the above.
8. Which of the following demonstrates marginal thinking?
a. Deciding to never eat meat
b. Deciding to spend one more hour studying economics tonight because you think the improvement on your next test will be large enough to make it worthwhile to you
c. Working out an extra hour per week
d. Both b and c
9. If resources and goods are free to move across states, and if Florida producers choose to specialize in growing grapefruit and Georgia producers choose to specialize in growing peaches, then we could reasonably conclude that
a. Georgia has a comparative advantage in producing peaches.
b. Florida has a comparative advantage in producing peaches.
c. The opportunity cost of growing peaches is lower in Georgia than in Florida.
d. The opportunity cost of growing grapefruit is lower in Florida than in Georgia.
e. All of the above except b are true.
10. If a driver who had no change and whose cell phone battery was dead got stranded near a pay phone and chose to buy a quarter and a dime from a passerby for a dollar bill.
a. The passerby was made better off and the driver was made worse off by the transaction.
b. Both the passerby and the driver were made better off by the transaction.
c. The transaction made the driver worse off by 65 cents.
d. Both a and c are true.