Section: Checkpoint 1.1
Status: Old
AACSB: Reflective thinking
59) The question "Should economics majors or sociology majors earn more after they graduate?" is an example of a ________ question.
A) what
B) how
C) for whom
D) where
E) why
Answer: C
Topic: Economic questions, for whom
Skill: Level 2: Using definitions
Section: Checkpoint 1.1
Status: Old
AACSB: Reflective thinking
60) If a decision is made and it is the best choice for society, the decision is said to be
A) a valid economic choice.
B) made in self-interest.
C) made in social interest.
D) consistent with scarcity.
E) a want-maximizing choice.
Answer: C
Topic: Social interest
Skill: Level 2: Using definitions
Section: Checkpoint 1.1
Status: Old
AACSB: Reflective thinking
1.2 The Economic Way of Thinking
1) Rational choice
A) is a choice that uses the available resources to best achieve the objective of the person making the choice.
B) is always efficient.
C) is what you must give up to get what you want.
D) is made by comparing different incentives.
E) provides the answer to only the "how" question.
Answer: A
Topic: Rational choice
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
2) A rational choice is one that
A) always turns out for the best for the decision maker.
B) creates no costs for the decision maker.
C) must be made with perfect information.
D) uses the available resources to most effectively satisfy the wants of the person making the choice.
E) is made in the social interest rather than the self-interest.
Answer: D
Topic: Rational choice
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
3) What is NOT true about rational choice?
A) It can result in different decisions for different individuals.
B) It involves comparing costs and benefits.
C) It might turn out not to have been the best choice after the event.
D) It is a choice that uses the available resources to best achieve the objective of the person making the choice.
E) It is the same for all individuals.
Answer: E
Topic: Rational choice
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
4) In economics, cost is measured as ________, and benefit is measured as ________.
A) what you must give up to get something; what you are willing to give up to get it
B) what you are willing to give up to get it; what you must give up to get something
C) the amount of money that you pay for something; the amount of money that someone else is willing to pay you
D) what you are willing to pay on the margin; what the government pays you when you are unemployed or retired
E) the amount of money that you pay on the margin; the amount of money that you receive on the margin
Answer: A
Topic: Benefits and costs
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
5) An opportunity cost is
A) the dollar amount that is paid.
B) anything the decision maker believes costs to be.
C) the benefits of the highest-valued alternative forgone.
D) whatever is paid out and cannot be reduced or reversed.
E) another term for all the sunk costs.
Answer: C
Topic: Opportunity cost
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
6) Economists measure opportunity cost
A) only when it is on the margin.
B) as the best thing given up.
C) as the sum of all forgone opportunities.
D) as the same as marginal benefit.
E) as equal to the sum of all the sunk costs.
Answer: B
Topic: Opportunity cost
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
7) The opportunity cost of a decision is measured in terms of
A) time.
B) the price of the alternative we choose.
C) the next best thing given up.
D) the price of a new opportunity that arises.
E) sunk cost.
Answer: C
Topic: Opportunity cost
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
8) You have chosen to take a trip during spring break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is