ECN 151 Exam 1 SP 23

Economics is primarily the study of

• how to make money in the stock market

• how to operate a business successfully

• the allocation of scare resources in an effort to satisfy wants that are virtually unlimited.

• the methods business firms use to reduce their costs of production.

The economic way of thinking is

• a body of statistical data that indicates how an economy should be organized.

• a set of complex, highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make.

• a set of basic concepts that helps one understand human choices.

• a set of historical generalizations that indicates what goods should be produced.

The opportunity cost of going to college is

• zero, since a college education will allow a student to earn a larger income after graduation.

• the value of the best opportunity a student gives up to attend college.

• zero for students who are fortunate enough to have all of their college expenses paid by someone else.

• the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.

Which of the following is a normative economic statement?

• If social security were to be privatized, workers would earn a higher rate of return on their retirement contributions.

• An increase in spending on airport security will reduce the number of hijackings.

• Companies should be concerned with more than just their profits.

• If we doubled the size of welfare payments, we would reduce the number of homeless persons.

The fallacy of composition is the fallacious view that

• association does not necessarily indicate causation.

• what is true for the individual will also be true for the group.

• economic activity will benefit everyone.

• it is possible for the whole to be greater than the sum of the individual parts.

Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

• $50 per hour.

• $5 per hour.

• $1 per hour.

• $3 per hour.

In voluntary exchange, if the seller of a product gains,

• the buyer must lose an amount equal to what the seller gains.

• the buyer will generally lose an amount greater than the gain to the seller.

• the buyer must also gain; mutual gain provides the foundation for exchange.

• someone else must lose an equal amount.

When private ownership rights are well-defined and enforced, owners

• have little incentive to take care of things.

• can ignore the wishes of others, without bearing the cost.

• can do anything they want with their property.

• can be held accountable for damage to others through misuse of their property.

A point inside the production possibilities curve represents a combination of goods that is

• attainable.

• unattainable.

• inefficient.

• efficient.

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as

• an inward shift of the curve.

• an outward shift of the curve.

• a movement from one point to another point along the curve.

• a movement from a point on the curve to a point inside the curve.