micro economic 1-71

government policies designed to promote efficiency:

• usually do so at the expense of equity

• tend to cause the economy to grow more slowly

• always fail

• require very high taxes

all of the following can be considered a student's costs of going to college, except:

• textbooks

• tuition and fees

• room and board (that costs her about the same as she was paying before entering college)

• the student's time, which can no longer be devoted to earning a salary

an airline's plane from los angeles to new york is about to take off, but it still has a few seats empty. if the average cost per seat is $500, what price should the airline charge passengers on standby to fill those remaining seats? (consider that quantitative decisions are made at the margin):

• at least $500

• exactly $500

• any price above zero that will entice standby passengers to take the flight

• slightly less than $500

the federal government enacted regulation in the 1960s requiring people to wear seatbelts in their cars. all of the following resulted from this regulation, except:

• overall deaths due to car accidents changed very little in the united states

• fewer deaths occurred per accident

• fewer pedestrians were killed in car accidents

• the frequency of accidents increased

when two persons trade goods:

• one person always gains at the expense of the other

• both persons usually gain from the exchange

• one person usually gains at the expense of the other

• the overall well-being of the two persons remains unchanged

in a market economy, the decisions of what and how much to produce are made by:

• voters in elections

• all producers and consumers

• the government only

• non-governmental agencies

even though markets do a great job in organizing economic activity, governments are needed to do all of the following except:

• establish and enforce property rights

• intervene when markets fail due to externalities

• intervene when markets fail due to market power

• decide what and how much should be produced

which of the following is false, regarding economics as a science?

• economic knowledge is obtained through the scientific method, just as in any other science

• it is difficult to conduct experiments in economic matters

• economists pay close attention to natural experiments resulting from historical events

• economic theories represent irrefutable facts

economists use assumptions in order to:

• recreate real situations accurately, with all their complexity

• avoid dealing with issues they would rather not talk about

• simplify economic theories, so as to make it possible to answer economic questions

• make their theories more realistic

economic models are:

• simplified versions of economic theories

• created by making assumptions

• usually composed of diagrams and equations

• all of the other options are true