Rational people

A-undertake an action if it has positive economic surplus

B-might correct calculates marginal costs

C-ignore scarcity in decision making

D- might correctly calculates marginal benefits

Benefits from trade increase when

A-One party s PPC is as flat as possible whereas the others is as steep as possible

B- Each party acts in accordance with his or her absolute advantage

C-Trading partners have similar opportunity costs

D-Each party s PPC is very similar

Absolute advantage refers to

A-someone who has higher opportunity costs

B-lower opportunity costs

C-the fact that one has lower production costs

D-comparative advantage

An economic model

A- does not have restrictive assumptions

B- relies heavily on simplifying assumptions

C- lacks essential features of a situation

D- completely and perfecly descnbes the situation it considers

In a free market system, what coordinates the actions of millions of people with their varying abilities and desires?"

A.prices

B. consumers

C.price control authority

D. the government

Value of marginal product or labor refers to?

A. the fact that higher real prices increases employment

B.VMPN-P*MPN

C.the price of the worker 5 output

D.the productivity

or workers

Benefits from trade increase when?

A. Trading partners have different PPC S

B. Each party acts in accordance with his or her absolute advantage

C.*Each party s PPC coincide with each other

. I.e., corresponds to that of the other':

D. Trading partners have similar opportunity costs

Which of the following is an example of physical capital?

A. AUS builds a new school

B. You inherit a million dollar from a relative

C. You win in a lottery

D. You find $100 in the street

The Cost-Benefit Principle predicts that people will take an action when

A.marginal benefits exceed marginal costs

B. average costs exceed average benefits

C. average benefits exceed average costs

D. Costs exceed benefits

The demand and supply for a particular product are P=74-0.30 and P=4+0.6Q. What is the equilibrium quantity exchanged in that market?

A- 0.3

B- 77.76

C- 50.67

D- 0.01

Why does the PPC of two goods have a concave shape?

A- To represent the scarcty of two goods

B- Because only demand curves have a concave shape

C- Because only supply curves have a convex shape

D- because ony demand curves nave a convex shape

"What economic principle dictates specialization, and eventually trade?"

A-The principle of comparative advantage

B- The low hanging fruit principle

C- The principle of incentives

D- The principle of increasing opportunity cost

A supplier is willing to sell a good in the market it

A-marginal cost is larger than the price

B- marginal cost is larger than marginal revenue

C- marginal cost is no larger than marginal revenue

D- markets are not centrally controlled

"When the government sets a maximum rental price that equilibrium price, that represents an example of a __ and results in a __

A- price floor; shortage of rental housing

B- price ceiling: discrimination

C-price floor: unemployment

D- price ceiling: surplus of rental housing

Payments by the government for which receives no current goods or services in return are called?

A- public bonds

B- private savings

C-transfer payments

D- public stocks

*For a given good, while keeping everything else constant, the law of demand implies that

A-,"as the demand for the good increases, the price of the good will fall*

B- ' as the price of the good rises, the quantity demanded of the good will increase

C- ' as income rises, the quantity demanded of the good will increase if the good is a normal good

D- once the price of the good in question increases, the quantity demanded of that good decreases

Sunk costs can be defined as

A- controllable costs

B- NOT relevant for decision making

C- costs to be incurred in the future

D- paid after the fact

A model in the economic sense

A- never takes into consideration the rest of the world

B- is the same as the lab experiments

C- has a full and perfect description of an economic situation

D- whose essential elements allow researchers to better analyze a situation

When is it rational to hire outside help rather than do a task by oneself?

A- When one's own opportunity cost is equal to the opportunity cost of the hired

B- When one's own opportunity cost is less than the opportunity cost of the hired

C- One should never do any task by him/herself

D- When one's own opportunity cost is greater than the opportunity cost of the hired

Which of the following is NOT an input of production?

A- Entrepreneurial ability

B- Labor

C- Land

D-Shares

*Ceteris paribus, which of the following would cause the demand for labor curve to shift leftward?

A-An improvement in the training and education of potential workers

B- An increase in market demand

C- An increase

the productivity of the workers

D- A decrease in the productivity of the workers

"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because

A-a change in the price of personal computers shifts the demand curve

B- the statement is backwards: increased demand leads to lower prices

C- falling prices for personal computers raise quantity demanded, not demand

D- a change in the price of personal computers leads to an upward movement over the supply curve

*If, for some reason, average weather in a country becomes cooler, what happens to the ice-cream market in that country?

A- Both price and quantity exchanged in equilibrium decline

B- * Price declines, but quantity remains the same as the supply is not changed*

C- Supply declines as companies leave the market

D- ' Price increases,but quantity may increase or decrease

The scarcity principle implies that to have more of one thing usually means

A- increasing the need for another

B- behaving oneself

C- having less of another

D- fighting for it

Economists consider normative statements to be

A- ' economics of what ought to be**

B- statements which establish production goals for the economy

C- able to predict how people will behave

D-.' descriptive,making a claim about how the world is"

What economic principle dictates specialization, and eventually trade?

A-The principle of comparative advantage

B- The low hanging fruit principle

C- the principal of specialization

D- the principal of incentives

An example of a positive statement is

A- "''Minimum wages are too low"'''

B- The UAE should organize more tennis tournaments

C- The mean price of gasoline in 2005 was higher than in 1990

D- "'''Taxes are too high'