2024 ECON/ PERSONAL FINANCE EXAM #1

Front

Using cost-benefit analysis, a local government would decide to build a new bridge if the total costs of building the bridge are less than the total benefits from building the bridge.

Back

The total costs of building the bridge are less than the total benefits from building the bridge.

Front

When a worker chooses to wash the windows of four houses in a neighborhood, what is the opportunity cost of this decision?

Back

The pay the worker would have received from cutting the grass at two houses.

Answer explanation

The opportunity cost of washing windows is the next-best alternative the worker has given up to wash windows. If it takes 5 hours to mow the one-acre lawn and 2.5 hours to wash the windows, the opportunity cost of mowing one lawn is washing the windows of two houses; the opportunity cost of washing the windows of one house is mowing .5 lawns. Thus, in washing the windows of four houses the worker is expending 10 hours, the time in which he could cut two lawns; or 4 houses multiplied by .5 lawns equals two lawns and the pay that he would have earned.

Front

According to rational economic decision making, we should accept an option when the benefits outweigh the costs.

Back

the benefits outweigh the costs.

Front

Which of the following represents a marginal cost? mortgage payments, the sum of fixed costs and variable costs, wages and raw materials, the cost of producing one additional unit

Back

the cost of producing one additional unit

Front

Compare the costs of an action with the benefits of that action; if benefits exceed costs, then the action is worth it. This comparison is known as:

Back

cost-benefit analysis

Front

People’s wants are unlimited. This fact means that which of the following is always present? Shortages, Scarcity, Marginal utility, Future Consequences Count

Back

Scarcity

Front

Which statement describes the law of demand? Options: As prices rise, quantity demanded decreases, As prices rise, demand decreases., As prices fall, quantity demanded decreases., As prices fall, demand decreases.

Back

As prices rise, quantity demanded decreases

Front

The amount of a good or service that producers are willing and able to sell at all possible prices during a given period of time.

Back

Supply

Front

Capital refers to...

Back

the tools, equipment, and factories used in production of goods and services

Front

Labor refers to...

Back

people with all their physical and mental efforts and abilities