a. Both senators' arguments are primarily about equality.
b. Both senators' arguments are primarily about efficiency.
c. Senator Fujita's argument is primarily about equality, while Senator Watson's argument is primarily about efficiency.
d. Senator Fujita's argument is primarily about efficiency, while Senator Watson's argument is primarily about equality.
ANSWER: d
24. Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth
a. is more efficient and more equal for society.
b. is more efficient but less equal for society.
c. is more equal but less efficient for society.
d. is less equal and less efficient for society.
ANSWER: c
25. The opportunity cost of an item is
a. the number of hours needed to earn money to buy the item.
b. what you give up to get that item.
c. usually less than the dollar value of the item.
d. the dollar value of the item.
ANSWER: b
26. Suppose that you have received $650 as a birthday gift. You can spend it today or you can put the money in a savings account for a year and earn 2 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is
a. $0.
b. $13.00.
c. $652.00.
d. $663.00.
ANSWER: d
27. When computing the opportunity cost of attending a professional football game as a spectator, you should include
a. the price you pay for the ticket and the value of your time.
b. the price you pay for the ticket, but not the value of your time.
c. the value of your time, but not the price you pay for the ticket.
d. neither the price of the ticket nor the value of your time.
ANSWER: a
28. Alana decides to spend 2 hours working overtime rather than going shopping with her friends. She earns $11 per hour for overtime work. Her opportunity cost of working is
a. the $22 she earns working.
b. the $22 minus the enjoyment she would have received from going shopping.
c. the enjoyment she would have received had she gone shopping.
d. nothing, since she would have received less than $22 worth of enjoyment from going shopping.
ANSWER: c
29. Consider Miray's decision to go to college. If she goes to college, she will spend $24,000 on tuition, $12,000 on room and board, and $1,900 on books. If she does not go to college, she will earn $16,000 working in a store and spend $8,000 on room and board. Miray's cost of going to college is
a. $37,900.
b. $45,900.
c. $53,900.
d. $61,900.
ANSWER: b
30. For which of the following individuals would the opportunity cost of going to college be highest?
a. A promising young mathematician who will command a high salary once she earns her college degree
b. A student with average grades who has never held a job
c. A famous, highly paid actor who wants to take time away from show business to finish college and earn a degree
d. A student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball
ANSWER: c
31. Chloe's college raises the cost of room and board per semester. This increase raises Chloe's opportunity cost of attending college
a. even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost reduces Chloe's incentive to attend college.
b. even if the amount she would have to pay for room and board if she didn't attend college rose by the same amount. An increase in opportunity cost increases Chloe's incentive to attend college.
c. only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Chloe's incentive to attend college.
d. only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Chloe's incentive to attend college.