Econ 201 Exam questions with
answers A+
The overriding reason households and societies face many decisions is that
A. People, by nature, tend to disagree
B. Incomes fluctuate (change) over time
C. Goods and services are not scarce
D. Resources are scarce - ANS✅✅D. Resources are scarce
Sophia is planning her activities for a hot summer day. She would like to go to the local swimming
pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the
same time that the pool is open she can only choose one activity. This illustrates the basic principle
that
A. People face trade offs
B. People respond to incentives
C. Improvements in efficiency sometimes come at the expense of equality
D. Traditional people think at the margin - ANS✅✅A. People face trade offs
A tradeoff exists between a clean environment and a higher level of income in that
A. Employing individuals to clean up pollution causes increases in employment and income
B. Laws that reduce pollution raise cost of production and reduce incomes
C. Efforts to reduce pollution typically are not completely successful
D. Studies show that individuals with higher levels of income pollute less than low income individuals
- ANS✅✅B. Laws that reduce pollution raise cost of production and reduce incomes
The government just passed a law requiring that all residents earn the sane annual income
regardless of work effort. This law is likely to
A. Decrease efficiency and decrease equality
B. Increase efficiency and increase equality
C. Increase efficiency but decrease equality
D. Decrease efficiency but increase equality - ANS✅✅D. Decrease efficiency but increase equality
, When computing the opportunity cost of attending a concert you should include
A. The price you pay for the ticket, but not the value of your time
B. Neither the price if the ticket or the value of your time
C. The price you pay for the ticket and the value of your time
D. The value of your time but not the price of the ticket - ANS✅✅C. the price you pay for the ticket
and the value of your time
A rational decision maker
A. Takes an action only if the combined benefits of that action and previous actions exceed the
combined cost of that action and previous actions
B. Ignores marginal changes and focuses instead on "the big picture"
C. Takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
D. Ignores the likely effects of government policies when he or she makes choices - ANS✅✅C.
takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
People are willing to pay more for a diamond than for a bottle of water because
A. The marginal cost of producing an extra diamond far exceeds the marginal cost of producing an
extra bottle of water
B. The marginal benefit for an extra diamond far exceeds the marginal benefit for an extra bottle of
water
C. Producers of diamonds have a much greater ability to manipulate diamond prices than producers
of water have to manipulate prices
D. Water prices are held artificially low by governments, since water is necessary for life -
ANS✅✅D. Water prices are held artificially low by governments, since water is necessary for life
You are considering staying in college for another semester so that you can complete a major in
economics. In deciding whether or not to stay you should
A. Compare the total cost of your education to the total benefits of your education
B. Compare the total benefits of your education to the cost of staying one more semester
C. Compare your total cost of your education to the total benefits of staying one more semester
D. Compare the total cost of staying one semester to the total benefits of staying one semester -
ANS✅✅D. Compare the total cost of staying one semester to the total benefits of staying one
semester
answers A+
The overriding reason households and societies face many decisions is that
A. People, by nature, tend to disagree
B. Incomes fluctuate (change) over time
C. Goods and services are not scarce
D. Resources are scarce - ANS✅✅D. Resources are scarce
Sophia is planning her activities for a hot summer day. She would like to go to the local swimming
pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the
same time that the pool is open she can only choose one activity. This illustrates the basic principle
that
A. People face trade offs
B. People respond to incentives
C. Improvements in efficiency sometimes come at the expense of equality
D. Traditional people think at the margin - ANS✅✅A. People face trade offs
A tradeoff exists between a clean environment and a higher level of income in that
A. Employing individuals to clean up pollution causes increases in employment and income
B. Laws that reduce pollution raise cost of production and reduce incomes
C. Efforts to reduce pollution typically are not completely successful
D. Studies show that individuals with higher levels of income pollute less than low income individuals
- ANS✅✅B. Laws that reduce pollution raise cost of production and reduce incomes
The government just passed a law requiring that all residents earn the sane annual income
regardless of work effort. This law is likely to
A. Decrease efficiency and decrease equality
B. Increase efficiency and increase equality
C. Increase efficiency but decrease equality
D. Decrease efficiency but increase equality - ANS✅✅D. Decrease efficiency but increase equality
, When computing the opportunity cost of attending a concert you should include
A. The price you pay for the ticket, but not the value of your time
B. Neither the price if the ticket or the value of your time
C. The price you pay for the ticket and the value of your time
D. The value of your time but not the price of the ticket - ANS✅✅C. the price you pay for the ticket
and the value of your time
A rational decision maker
A. Takes an action only if the combined benefits of that action and previous actions exceed the
combined cost of that action and previous actions
B. Ignores marginal changes and focuses instead on "the big picture"
C. Takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
D. Ignores the likely effects of government policies when he or she makes choices - ANS✅✅C.
takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
People are willing to pay more for a diamond than for a bottle of water because
A. The marginal cost of producing an extra diamond far exceeds the marginal cost of producing an
extra bottle of water
B. The marginal benefit for an extra diamond far exceeds the marginal benefit for an extra bottle of
water
C. Producers of diamonds have a much greater ability to manipulate diamond prices than producers
of water have to manipulate prices
D. Water prices are held artificially low by governments, since water is necessary for life -
ANS✅✅D. Water prices are held artificially low by governments, since water is necessary for life
You are considering staying in college for another semester so that you can complete a major in
economics. In deciding whether or not to stay you should
A. Compare the total cost of your education to the total benefits of your education
B. Compare the total benefits of your education to the cost of staying one more semester
C. Compare your total cost of your education to the total benefits of staying one more semester
D. Compare the total cost of staying one semester to the total benefits of staying one semester -
ANS✅✅D. Compare the total cost of staying one semester to the total benefits of staying one
semester
