Supply and Demand and Price
Economics 202 Fall 2013 Exam 1 1. A resource is something that
a. is used to produce goods and services b. is provided by nature, not made by society c. exists in unlimited quantities d. must be produced by a firm
2. Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because
a. water is necessary for humans ' physical survival
b. pollution will eventually destroy all life in the Great Lakes c. water is limited relative to people 's unlimited wants d. water commands a very high price
3. The difference between a good and a service is
a. that goods help satisfy unlimited wants; services do not b. that services are available in unlimited quantities; goods are not c. that goods are available in unlimited quantities; services are not d. none of the above
4. A rational decision maker will not take an action if the expected marginal benefit
a. is positive b. is at its maximum level c. is greater than the expected marginal cost d. is less than the expected marginal cost 5. Which of the following is an example of a positive statement?
a. Workers with families should be paid at least minimum wages. b. If crime rates were reduced, the world would be a better place in which to live. c. Marginal tax rates should be reduced for individuals in the highest tax brackets.
d. An increase in the price of gasoline will cause a reduction in the amount purchased.
6. Behavioral assumptions describe how economic units are expected to behave pertain only to consumers are ways to test a hypothesis do not exist in economic models
7. Opportunity cost exists because
a. the level of technology is fixed at any one time b. the law of comparative advantage is working c. resources are scarce but wants are unlimited d. efficiency is measured by the monetary cost of an activity 8. The opportunity cost of going to college is best measured by the
a. cost of tuition b. cost of other college related items c.
a. is used to produce goods and services b. is provided by nature, not made by society c. exists in unlimited quantities d. must be produced by a firm
2. Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because
a. water is necessary for humans ' physical survival
b. pollution will eventually destroy all life in the Great Lakes c. water is limited relative to people 's unlimited wants d. water commands a very high price
3. The difference between a good and a service is
a. that goods help satisfy unlimited wants; services do not b. that services are available in unlimited quantities; goods are not c. that goods are available in unlimited quantities; services are not d. none of the above
4. A rational decision maker will not take an action if the expected marginal benefit
a. is positive b. is at its maximum level c. is greater than the expected marginal cost d. is less than the expected marginal cost 5. Which of the following is an example of a positive statement?
a. Workers with families should be paid at least minimum wages. b. If crime rates were reduced, the world would be a better place in which to live. c. Marginal tax rates should be reduced for individuals in the highest tax brackets.
d. An increase in the price of gasoline will cause a reduction in the amount purchased.
6. Behavioral assumptions describe how economic units are expected to behave pertain only to consumers are ways to test a hypothesis do not exist in economic models
7. Opportunity cost exists because
a. the level of technology is fixed at any one time b. the law of comparative advantage is working c. resources are scarce but wants are unlimited d. efficiency is measured by the monetary cost of an activity 8. The opportunity cost of going to college is best measured by the
a. cost of tuition b. cost of other college related items c.