Quiz 550

Quiz 550
Related: Economics, Microeconomics
56 Questions
Instructor Verified Answers Included
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Quiz 550
Subjective Short Answer
1. Economics is the study of ______ .
2. The term ______ refers to the size of the economic pie, and the term ______ refers to how the
pie is divided.
3. Explain how government policies that redistribute income from the rich to the poor might
reduce efficiency.
Scenario 1-1
You have the afternoon free. You have a choice between going to the movies with a friend or
studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and
$4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam
grade by 10 points.
4. Refer to Scenario 1-1. What is your opportunity cost of going to the movies?
5. Refer to Scenario 1-1. What is your opportunity cost of studying economics?
Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or
working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If
you choose to work, you will earn $10 an hour.
7. Refer to Scenario 1-2. What is your opportunity cost of working?

8. Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual
college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her
opportunity cost of attending college for the year?
9. Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year
graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and
$600 for food. What is his opportunity cost of attending the two-year graduate program?
10. Give an example of a trade-off faced by society.
Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company’s cost will be
$35,070 if it produces an additional graphing calculator. The company is currently producing
700 graphing calculators.
11. Refer to Scenario 1-3. What is the company’s average cost?
12. Refer to Scenario 1-3. What is the company’s marginal cost?
13. Refer to Scenario 1-3. A customer is willing to pay $60 for the 701th calculator. Should the
company produce and sell it? Explain.
14. Refer to Scenario 1-3. What is the minimum price the company will charge for the 701th
calculator?
Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a
friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a
ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise
your exam grade by 15 points.
16. Refer to Scenario 1-4. What is your opportunity cost of studying economics?
17. What is another word for “marginal”?
18. The term ______ refers to a small incremental adjustment to an existing plan of action.
Scenario 1-5
Suppose that you have a choice between going to the movies with a friend for three hours or
working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn.
If you choose to work, you will earn $10 an hour.
20. Refer to Scenario 1-5. What is your opportunity cost of working?

Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company’s cost will be
$30,070 if it produces an additional heart rate monitor. The company is currently producing 600
heart rate monitors.
21. Refer to Scenario 1-6. What is the company’s average cost?
22. Refer to Scenario 1-6. What is the company’s marginal cost?
23. Refer to Scenario 1-6. A customer is willing to pay $60 for the 601st heart rate monitor.
Should the company produce and sell it? Explain.
24. Refer to Scenario 1-6. What is the minimum price that would induce this company to
produce the 601st heart rate monitor?
25. Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual
college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity
cost of attending college for the year?
26. Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate
program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books.
What is her opportunity cost of attending the two-year graduate program?
27. What does the term “marginal change” mean?
28. Rational people make decisions “at the margin” by comparing ______.
29. In a centrally-planned economy, economic activity is guided by ______.
30. Explain how trade with other countries is beneficial.
31. What are the two basic types of economies?
32. What is the main difference between a centrally planned economy and a market economy?
33. Invisible hand is a term used by the economist ______ to describe how the decisions of
households and firms lead to desirable market outcomes.
34. Economists use the term ______ to refer to a situation in which the market on its own fails to
produce an efficient allocation of resources.
35. What are the two possible causes of market failure?
36. Explain the concept of externality and give an example.
37. What are the two reasons for the government to intervene in a market?
38. What does the “invisible hand” refers to?
39. Invisible hand is a term used by the economist ______ in his 1776 book An Inquiry into the
Nature and Causes of the Wealth of Nations.
40. What do prices reflect in a market economy?
41. Explain the concept of market failure.
42. Economists use the term ______ to refer to the ability of a single person (or a small group) to
have a substantial influence on market prices.
43. Give an example of government intervention that is intended to reduce an externality.
44. Give an example of government intervention that is intended to improve equality.
45. Economists use the term ______ to refer to an increase in the overall level of prices in the
economy.
46. In the short run, an increase in the money supply is likely to lead to ______ inflation and
______ unemployment.
47. Economists use the term ______ to refer to fluctuations in economic activity, such as
employment and production.
48. Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million
and people work 40 million hours. In Zenya total annual output is worth $900 million and people
work 50 million hours. In which country is productivity higher?
49. Suppose that in Germany total annual output is worth $600 million and people work 40
million hours. In France total annual output is worth $700 million and people work 50 million
hours. In which country do people enjoy a higher standard of living?
50. What are the two short-run effects of increasing the quantity of nation’s money?
51. How does the study of economics depend upon the phenomenon of scarcity?
52. One tradeoff society faces is between efficiency and equality. Define each term. If the U.S.
government redistributes income from the rich to the poor, explain how this action affects
equality as well as efficiency in the economy.
53. Define opportunity cost. What is the opportunity cost to you of attending college? What was
your opportunity cost of coming to class today?
54. With the understanding that people respond to incentives, outline the possible outcome for
teachers if the K-12 school year is extended to 11 months per year instead of the existing 9
months per year.
55. Under what conditions might government intervention in a market economy improve the
economy’s performance?
56. Explain how an attempt by the government to lower inflation could cause unemployment to
increase in the short-run.

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Quiz 550

Related: Economics, Microeconomics

Instructor Verified Answers Included

WarOfGrades Guaranteed A+ Graded Tutorial

Subjective Short Answer

1. Economics is the study of ______ .

5. Refer to Scenario 1-1. What is your opportunity cost of studying economics?

7. Refer to Scenario 1-2. What is your opportunity cost of working?

10. Give an example of a trade-off faced by society.

11. Refer to Scenario 1-3. What is the company’s average cost?

12. Refer to Scenario 1-3. What is the company’s marginal cost?

17. What is another word for “marginal”?

20. Refer to Scenario 1-5. What is your opportunity cost of working?

21. Refer to Scenario 1-6. What is the company’s average cost?

22. Refer to Scenario 1-6. What is the company’s marginal cost?

27. What does the term “marginal change” mean?

29. In a centrally-planned economy, economic activity is guided by ______.

30. Explain how trade with other countries is beneficial.

31. What are the two basic types of economies?

35. What are the two possible causes of market failure?

36. Explain the concept of externality and give an example.

40. What do prices reflect in a market economy?

41. Explain the concept of market failure.

43. Give an example of government intervention that is intended to reduce an externality.

44. Give an example of government intervention that is intended to improve equality.

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