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Exam 1: Economics and Life

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Question 61

Multiple Choice

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Yasmin has an idea, but she cannot implement it because a monopoly producer has placed a barrier to entry. What makes this an abnormal circumstance?

A) Innovation
B) Market failure
C) Intervention
D) Goals other than profit

E) None of the above
F) All of the above

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Question 62

Multiple Choice

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When making a decision, it is often more difficult to identify the ______ associated with the decision because ______.

A) costs; an individual must weigh monetary costs and opportunity costs differently
B) costs; an individual should consider opportunity costs but ignore sunk costs
C) benefits; it is impossible to put a dollar value on benefits
D) benefits; individual people identify benefits while firms identify costs

E) C) and D)
F) A) and B)

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Question 63

Multiple Choice

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When attempting to understand why a model may not be accurate, which of the following is not an action you should take?

Suppose researchers are interested in the health effects of diet soda. It has been observed that individuals who consume diet soda are more likely to be overweight. Which of the following describes how reverse causation could explain this correlation?

The purpose of an economic model is to:

Suppose you have an idea that you believe offers substantial opportunity, but no one has ever implemented this idea before. What conclusion should you draw?I. People are irrational.II. You have come up with a new innovative idea.III. Your may have misevaluated how people will respond to new incentives.IV. You are being irrational.

The classic conundrum, "Which came first, the chicken or the egg?" seeks to address the common fallacy of _________ in the context of correlation and causation.

The problems created by scarcity:

Many theaters sell empty seats at a deep discount just before show time. What economic concept is displayed by this behavior?

A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the second movie?

Which broad field of economics would most likely study how consumers respond to a hike in alcohol taxes?

Which of the following is an example of a disincentive?

When the government alters normal market activity, this is known as:

A gas station that does not offer pay at the pump service decides to require drivers to prepay for gas to decrease the amount of drive-offs. Which of the following could be an opportunity cost of this decision?

For which reason might you incorrectly conclude that an idea no other person has implemented is highly profitable?

The assumption of rational behavior:

A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the first movie?

Which of the following statements about rationality is true?Economists wish to prove that all individuals are rational.Engaging in a behavior for which the marginal costs exceed the marginal benefits is irrational.As long as the marginal benefit of an action is positive, the action is rational.Individuals are hardly ever rational.

Which of the following is considered a macroeconomic issue?

Which of the following is considered a microeconomic issue?