Eco Final 2009
final
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 1. What is the difference between a scarcity and a shortage?
|a. |A scarcity occurs when producers will not or cannot offer goods or services at the current prices, and a shortage occurs|
| |when there are limited quantities to meet unlimited wants. |
|b. |Scarcity is the effort that people devote to a task that meets unlimited wants, and a shortage occurs when supplies of |
| |goods or services run low. |
|c. |A scarcity occurs when supplies of goods and services are suddenly attainable, and a shortage occurs when producers will|
| |not or cannot offer goods or services at the current prices. |
|d. |A scarcity occurs when there are limited quantities to meet unlimited wants, and a shortage occurs when a good or |
| |service is unavailable. |
____ 2. A legislative committee is weighing the pros and cons of a clean-air program. If it spends $1 million on the program, the air will be cleaner by 20 percent. If it spends $2 million, the air will be cleaner by 30 percent. If it spends $3 million, the air will be cleaner by 35 percent. After comparing opportunity costs and benefits at the margin, the committee agrees to fund the program with $2 million. Why did it not choose to appropriate $3 million?
|a. |At $3 million, the air is not improved as much as the committee would like. |
|b. |At $3 million, the costs are no longer worth the benefits. |
|c. |It was too much to spend without a guarantee.
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 1. What is the difference between a scarcity and a shortage?
|a. |A scarcity occurs when producers will not or cannot offer goods or services at the current prices, and a shortage occurs|
| |when there are limited quantities to meet unlimited wants. |
|b. |Scarcity is the effort that people devote to a task that meets unlimited wants, and a shortage occurs when supplies of |
| |goods or services run low. |
|c. |A scarcity occurs when supplies of goods and services are suddenly attainable, and a shortage occurs when producers will|
| |not or cannot offer goods or services at the current prices. |
|d. |A scarcity occurs when there are limited quantities to meet unlimited wants, and a shortage occurs when a good or |
| |service is unavailable. |
____ 2. A legislative committee is weighing the pros and cons of a clean-air program. If it spends $1 million on the program, the air will be cleaner by 20 percent. If it spends $2 million, the air will be cleaner by 30 percent. If it spends $3 million, the air will be cleaner by 35 percent. After comparing opportunity costs and benefits at the margin, the committee agrees to fund the program with $2 million. Why did it not choose to appropriate $3 million?
|a. |At $3 million, the air is not improved as much as the committee would like. |
|b. |At $3 million, the costs are no longer worth the benefits. |
|c. |It was too much to spend without a guarantee.