Test Bank for Principles of Microeconomics , 13th Edition

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1Principles of Microeconomics, 13e(Case/Fair/Oster)Chapter 1The Scope and Method of Economics1.1Why Study Economics?1) Which of the following isnotlisted in the book as a reason to study economics?A) to learn a way of thinkingB) to understand societyC) to be an informed citizenD) to learn how to make lots of moneyAnswer: DDiff: 1Topic: Why Study Economics?Skill: FactLearning Outcome: Micro-12) Among the fundamental concepts in economics isA) opportunity cost.B) marginalism.C)efficient markets.D) all of the aboveAnswer: DDiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-13) Which of the following is the best definition of economics?A)the study of how individualsandsocieties choose to use the scarce resources that nature andprevious generations have providedB) the study of how consumers spend their incomeC) the study of how business firms decide what inputs to hire and what outputsto produceD) the study ofhow the federal government allocates tax dollarsAnswer: ADiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-1

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24) The rise of the modern factory system in England during the late eighteenth and earlynineteenth centuries is known as theA) Great Migration.B) Industrial Revolution.C) Wealth of Nations.D) Dark Ages.Answer: BDiff: 1Topic: Why Study Economics?Skill: FactLearning Outcome: Micro-15) Which of the following statements isnotcorrect?A) Economics is abehavioral science.B) In large measure, economics is the study of how people make choices.C) If poverty were eliminated, there would be no reason to study economics.D) Economic analysis can be used to explain how both individuals and societies make decisions.Answer: CDiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-16) The study of economicsA) is a very narrow endeavor.B)is a way of analyzing decision-making processes caused by scarcity.C)is concerned with proving that capitalism is better than socialism.D) focuses on how a business should function.Answer: BDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-17) Which of the following isnotone of the three fundamental concepts of economics?A) profit maximizationB) marginalismC) opportunity costD) the working of efficient marketsAnswer: ADiff: 1Topic: Why Study Economics?Skill: ConceptualLearning Outcome: Micro-1

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38) Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker.Once you arrived at the festival, you discovered that parking costs you an additional $15. In thissituation, the additional $15 you pay for parking is an example ofA) an economic loss.B) opportunity cost.C) marginal cost.D) an inefficient cost.Answer: CDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-19) You have decided that you want to attend a costume party as Black Panther. You estimate thatit will cost $40 to assemble your costume. After spending $40 on the costume, you realize thatthe additional pieces you need will cost you $25 more. The marginal cost of completing thecostume isA) $15.B) $25.C) $40.D) $65.Answer: BDiff: 2Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-110) The concept of opportunity costA) is relevant only to economics.B) can be applied to the analysis of any decision-making process.C) applies to consumers but not to firms.D) refers only to actual payments and incomes.Answer: BDiff: 1Topic: Why Study Economics?Skill:ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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411) Opportunity cost isA) that which weforgo, or give up, when we make a choice or a decision.B) a cost that cannot be avoided, regardless of what is done in the future.C) the additional cost of producing an additional unit of output.D) the additional cost of buying an additional unit of a product.Answer: ADiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-112) The reason that opportunity costs arise is thatA) an economy relies on money to facilitate exchange of goods and services.B) resources are scarce.C) there are no alternative decisions that could be made.D) people have limited wants.Answer: BDiff: 1Topic: Why Study Economics?Skill: FactLearning Outcome: Micro-113) Which of the following isnotan opportunity cost of attending college?A)the tuition you payB) the income you could have earned if you didn't attend collegeC)the alternative uses of the time you spend studyingD) the cost of the food that you consume while you are attending collegeAnswer: DDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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514) If your tuition is $5,000 this semester, your books cost $600, you can only work 20 ratherthan 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour,and your room and board is $3,000 this semester (same as if not attending college), then youropportunity cost of attending college this semester isA) $5,600.B) $5,900.C) $10,100.D) $11,600.Answer: CDiff: 3Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-115) If your tuition is $25,000 this semester, your books cost $1,500, you can only work 20 ratherthan 40 hours per week during the 15 weeks you are taking classes and you make$15per hour,and your room and board is $7,500 this semester (same as if not attending college), then youropportunity cost of attending college this semester isA) $26,500.B) $26,800.C) $31,000.D) $38,500.Answer: CDiff: 3Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-116)If you own a building and you decide to use that building to open a book store,A) there is no opportunity cost of using this building for a book store because you own it.B) there is an opportunity cost of using this building for a book store because it could have beenused in other ways.C) the opportunity costs equal the cost of inventory.D) the only cost relevant to this decision is the price you paid for the building.Answer: BDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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617) You own the video gameGrand Theft Auto V. The opportunity cost of playing this game forthe second timeA) is zero.B) is one-half the cost of the game, as this is the second time you have played it.C) is the value of the alternative use of the time you spend playing the game.D) cannot be calculated.Answer: CDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: ReflectiveThinkingLearning Outcome: Micro-118) That which we forgo, or give up, whenwe make a choice or decision is calledA) out-of-pocket cost.B) marginal cost.C) real cost.D) opportunity cost.Answer: DDiff: 1Topic: Why Study Economics?Skill:DefinitionLearning Outcome: Micro-119)Economists often refer to risk-free ventures asA) efficient market outcomes.B) profit opportunities.C) those with no opportunity costs.D) break-even propositions.Answer: BDiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-120) If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal costof the tenth DVD isA) $4.B) $13.C) $14.D) $130.Answer: ADiff: 2Topic: Why Study Economics?Skill: AnalyticalLearning Outcome: Micro-1

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721) If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then themarginal cost of your 10th piece of sushi isA) zero.B) $2.C) $200.D) $2,000.Answer: ADiff:2Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-122) A market in which profit opportunities are eliminated almost instantaneously isA) a laissez-faire market.B) a capitalist market.C) a socialistmarket.D) an efficient market.Answer: DDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-123) If information is less costly and more easily available, then usually thisA) makes markets more efficient.B)makes markets less efficient.C) increases profit opportunities.D) increases the opportunity cost of acquiring more information.Answer: ADiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-124)An efficient market is a market in whichA) everyone always gets what they want.B) profit opportunities are eliminated almost instantaneously.C) profits are always very high and persistent.D) opportunity costs are zero.Answer: BDiff: 2Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-1

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825) Related to theEconomics in Practiceon page 3: According to theEconomics in Practice,when rains in rural India are plentiful, the opportunity cost of having someone out of the laborforce, andtherefore unable to work in agricultural production,A) increases.B) decreases.C) remains unchanged.D) is zero, because the person is out of the labor force.Answer: ADiff: 2Topic: Why Study Economics?: Economics in PracticeSkill:ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-126) Related to theEconomics in Practiceon page 3: According to theEconomics in Practice,when rural India is suffering from a drought where agricultural output is low, the opportunitycost of having someoneout of the labor force, and therefore unable to work in agriculturalproduction, isA) highB) low.C) infinite.D) zero, because the person is out of the labor force.Answer: BDiff: 2Topic: Why Study Economics?: Economics in PracticeSkill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-127) Related to theEconomics in Practiceon page 4: According to theEconomics in Practice, interms of wages and job availability, those students graduating during a recessionwith a degree ineconomics are ________ those graduating with a degree in sociology.A) better off thanB) worse off thanC) affected equally toD) There seems to be no correlation between a student's major and wages or employment duringa recession.Answer: ADiff: 1Topic:Why Study Economics?: Economics in PracticeSkill: FactLearning Outcome: Micro-1

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928) Related to theEconomics in Practiceon page 6: According to theEconomics in Practice, amajority of the $10 retail value of the Barbie dollA) is needed to pay forthe cost of the Taiwanese plastic used to make the dolls.B) pays for the Chinese labor used to assemble the doll.C)is captured in the United States.D) goes to the Japanese manufacturer of the hair which is used for the dolls.Answer: CDiff: 2Topic:Why Study Economics?: Economics in PracticeSkill: FactLearning Outcome: Micro-129) Related to theEconomics inPracticeon page 6: The opportunity cost to Mattel of having itsBarbie doll assembled in China isA) the low wages paid to Chineseworkers.B) the $2 export value the doll carries when it leaves Hong Kong.C) the $8 of its $10 retail value which is captured in the United States.D) having the Barbie doll assembled in the next best available location.Answer: DDiff: 2Topic: Why Study Economics?: Economics in PracticeSkill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-130) The reasons to study economics include which of the following?A) to be an informed citizenB) to understand societyC) to learn a way of thinkingD) all of the aboveAnswer: DDiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB:Reflective ThinkingLearning Outcome: Micro-131) Marginalism isA) the best alternative that we forgo when making a decision.B) the study of how societieschoose to use scarce resources.C) a market situation in which profit opportunities are eliminated almost instantaneously.D) the process of analyzing the additional costs or benefits arising from a decision.Answer: DDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-1

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1032) Economics is best defined as the study ofA)financial decision making.B) how consumers make purchasing decisions.C) choices made by people faced with scarcity.D) inflation, unemployment, and economicgrowth.Answer: CDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-133) The Industrial Revolution refers to the rise of the modern factory system in ________ duringthe late eighteenth and early nineteenth centuries.A) the United StatesB) EnglandC) FranceD) GermanyAnswer: BDiff: 1Topic:Why Study Economics?Skill: FactLearning Outcome: Micro-134) Which of the following statements is correct?A) Economics is a natural science.B) In large measure, economics isthe study of how people make choices.C) If poverty was eliminated there would be no reason to study economics.D) Economic analysis can be used to explain how societies, but not individuals, make decisions.Answer: BDiff: 1Topic: Why Study Economics?Skill: FactLearning Outcome: Micro-135) Economics is the study ofA) how to invest in the stock market.B) how society uses limited resources.C) the role of money in markets.D) how government officials decide which goods and services are produced.Answer: BDiff: 1Topic: Why Study Economics?Skill: DefinitionLearningOutcome: Micro-1

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1136)You decide to go to LEGOLAND after you visit Disneyworld in Orlando. The cost of goingto LEGOLAND after you visit Disneyworld is the ________ cost ofgetting from Disneyworld toLEGOLAND.A) efficiencyB) marginal time and moneyC) opportunityD) profitmaximizingAnswer: BDiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-137) Suppose thatyou sign up for a one-day cooking class at the local culinary school for $75.Once you arrive at the class, you discover that you must purchase an apron for an additional $5.In this situation, the additional $5 you pay for the apron is an example ofA) aninefficient cost.B) marginal cost.C) opportunity cost.D) an economic loss.Answer: BDiff: 2Topic:Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-138) You have decided that you want to attend a renaissancefair as King Henry VIII. Youestimate that it will cost $80 to assemble your costume. After spending$80 on the costume, yourealize that the additional pieces you need will cost you $20 more. The marginal cost ofcompleting the costume isA) $20.B)$60.C) $80.D) $100.Answer: ADiff: 2Topic: Why Study Economics?Skill: AnalyticalAACSB:Analytical ThinkingLearning Outcome: Micro-1

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1239) You have narrowed down your Friday night plans to either going bowling or playingbilliards. If you chooseto go bowling, then for you playing billiards is the ________ of goingbowling.A) opportunity costB) marginal costC) empirical costD) variable costAnswer: ADiff: 1Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearningOutcome: Micro-140) That which we forgo, or give up, when we make a choice or a decision is known asA) equity.B) causation.C) correlation.D) opportunity cost.Answer: DDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-141) Scarce resources give rise to the concept ofA) efficient markets.B)opportunity costs.C) laissez-faire.D) positive economics.Answer: BDiff: 1Topic: Why Study Economics?Skill: FactLearning Outcome: Micro-142) Which of the followingis anopportunity cost of attending college?A) the cost of your apartment or dormB) the income you could have earned if you didn't attend collegeC) the cost of the food that you consume while you are attending collegeD) the education you gain from attendingcollegeAnswer: BDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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1343) If your tuition is $2,000 this semester, your books cost $400, you can only work 10 ratherthan 40 hours per week duringthe 15 weeks you are taking classes and you make $12 per hour,and your room and board is $4,000 this semester (same as if not attending college), then youropportunity cost of attending college this semester isA) $2,400.B) $2,760.C) $7,800.D) $11,800.Answer: CDiff: 3Topic: Why Study Economics?Skill:AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-144) If your tuition is $20,000 this semester, your books cost $2,000, you can only work 10 ratherthan 40 hours per week during the15 weeks you are taking classes and you make $15 per hour,and your room and board is $8,000 this semester (same as if not attending college), then youropportunity cost of attending college this semester isA) $22,000.B) $22,150.C) $28,750.D) $36,750.Answer: CDiff: 3Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-145) If you own a condo and you decide to lease it to your cousin,A) there is no opportunity cost of leasing the condo becauseyou own it.B) there is an opportunity cost of leasing the condo because you could have chosen to live in it.C) there is no opportunity cost of leasing the condo because you collect rent from your cousin.D) the only cost relevant to this decision is thepriceyou paid for the condo.Answer: BDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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1446) You ownStar Wars-The Last Jedion DVD. The opportunity cost of watching this DVD forthe fourthtimeA) is zero, since you own it.B) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.C) is the value of the alternative use of the time you spend watchingthe DVD.D) must be the same as the opportunity cost of watchingit the first time.Answer: CDiff: 2Topic: Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-147) Opportunity cost isA) what we give up to get something else.B) marginal cost divided by total cost.C) thesameas real cost.D) all of the above.Answer: ADiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-148) Economists often refer to "good deals" asA) profitopportunities.B) break-even propositions.C) efficient market outcomes.D) those with no opportunity cost.Answer: ADiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-149)If you can download 10 ring tones for your cell phone for $10 or you can download 11 ringtones for your cell phone for $10.50, then the marginal cost of the eleventh ring tone isA) $0.50.B) $10.00.C) $10.50.D) $20.50.Answer: ADiff: 2Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-1

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1550) If you eat at a LasVegas casino that charges $12 for its all you can eat buffet, then themarginal cost of your third trip to the buffet line isA) zero.B) $4.C) $12.D) $36.Answer: ADiff: 2Topic: Why Study Economics?Skill: AnalyticalAACSB: Analytical ThinkingLearning Outcome: Micro-151) An efficient market is a marketA) that deals in unlimited resources.B) in which long-term profits are guaranteed.C) in which profit opportunities are eliminated almost instantaneously.D) in which there are no opportunity costs.Answer: CDiff: 1Topic: Why Study Economics?Skill: DefinitionLearning Outcome: Micro-152) If information is more costly and less easily available, then usually thisA) makes markets more efficient.B) makes markets less efficient.C) decreases profit opportunities.D) decreases the opportunity cost of acquiring more information.Answer: BDiff: 2Topic:Why Study Economics?Skill: ConceptualAACSB: Reflective ThinkingLearning Outcome: Micro-1

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