经济学原理对应练习题及答案（英文版）

1. ThewordthatcomesfromtheGreekwordfor"onewhomanagesahousehold"is

a. market.

b. consumer.

c. producer.

d. economy.

2. Theword“economy”comesfromtheGreekwordoikonomos,whichmeans

a. “environment.”

b. “production.”

c. “onewhomanagesahousehold.”

d. “onewhomakesdecisions.”

3. Resourcesare

a. scarceforhouseholdsbutplentifulforeconomies.

b. plentifulforhouseholdsbutscarceforeconomies.

c. scarceforhouseholdsandscarceforeconomies.

d. plentifulforhouseholdsandplentifulforeconomies.

4. Economicsdealsprimarilywiththeconceptof

a. scarcity.

b. poverty.

c. change.

d. power.

5. Whichofthefollowingquestionsisnotansweredbythedecisionsthateverysocietymustmake?

a. Whatdeterminesconsumerpreferences?

b. Whatgoodswillbeproduced?

c. Whowillproducethegoods?

d. Whowillconsumethegoods?

6. Theoverridingreasonastowhyhouseholdsandsocietiesfacemanydecisionsisthat

a. resourcesarescarce.

b. goodsandservicesarenotscarce.

c. incomesfluctuatewithbusinesscycles.

d. people,bynature,tendtodisagree.

7. Thephenomenonofscarcitystemsfromthefactthat

a. mosteconomies’productionmethodsarenotverygood.

b. inmosteconomies,wealthypeopleconsumedisproportionatequantitiesofgoodsandservices.

c. governmentsrestrictsproductionoftoomanygoodsandservices.

d. resourcesarelimited.

8. Approximatelywhatpercentageoftheworld'seconomiesexperiencescarcity?

a. 25%

b. 50%

c. 75%

d. 100%

9. Whenasocietycannotproduceallthegoodsandservicespeoplewishtohave,itissaidthattheeconomyisexperiencing

a. scarcity.

b. shortages.

c. inefficiencies.

d. inequities.

10. Forsociety,agoodisnotscarceif

a. atleastoneindividualinsocietycanobtainallheorshewantsofthegood.

b. firmsareproducingthegoodatfullcapacity.

c. allmembersofsocietycanhavealltheywantofthegood.

d. thosewhohaveenoughincomecanbuyalltheywantofthegood.

11. Whichofthefollowingproductswouldbeconsideredscarce?

a. golfclubs

b. Picassopaintings

c. apples

d. Alloftheabovearecorrect.

12. Economicsisthestudyof

a. productionmethods.

b. howsocietymanagesitsscarceresources.

c. howhouseholdsdecidewhoperformswhichtasks.

d. theinteractionofbusinessandgovernment.

14. Inmostsocieties,resourcesareallocatedby

a. asinglecentralplanner.

b. asmallnumberofcentralplanners.

c. thosefirmsthatuseresourcestoprovidegoodsandservices.

d. thecombinedactionsofmillionsofhouseholdsandfirms.

15. Theadage,"Thereisnosuchthingasafreelunch,"isusedtoillustratetheprinciplethat

a. goodsarescarce.

b. peoplefacetradeoffs.(togetsomethingwelike,weusuallyhavetogiveupanotherthingwelike)

c. incomemustbeearned.

d. householdsfacemanydecisions.

18. Whichofthefollowingstatementsbestrepresentstheprinciplerepresentedbytheadage,"Thereisnosuchthingasafreelunch"?

a. Melissacanattendtheconcertonlyifshetakeshersisterwithher.

b. Gregishungryandhomeless.

c. Brianmustrepairthetireonhisbikebeforehecanrideittoclass.

d. KendramustdecidebetweengoingtoColoradoorCancunforspringbreak.

19. Theprinciplethat"peoplefacetradeoffs"appliesto

a. individuals.

b. families.

c. societies.

d. Alloftheabovearecorrect.

20. Atypicalsocietystrivestogetthemostitcanfromitsscarceresources.Atthesametime,thesocietyattemptstodistributethebenefitsofthoseresourcestothemembersofthesocietyinafairmanner.Inotherwords,thesocietyfacesatradeoffbetween

a. gunsandbutter.

b. efficiencyandequity.

c. inflationandunemployment.

d. workandleisure.

21. Gunsandbutterareusedtorepresenttheclassicsocietaltradeoffbetweenspendingon

a. durableandnondurablegoods.

b. importsandexports.

c. nationaldefenseandconsumergoods.

d. lawenforcementandagriculture.

22. Whensocietyrequiresthatfirmsreducepollution,thereis

a. atradeoffbecauseofreducedincomestothefirms'ownersandworkers.

b. atradeoffonlyifsomefirmsareforcedtoclose.

c. notradeoff,sincethecostofreducingpollutionfallsonlyonthefirmsaffectedbytherequirements.

d. notradeoff,sinceeveryonebenefitsfromreducedpollution.

23. Atradeoffexistsbetweenacleanenvironmentandahigherlevelofincomeinthat

a. studiesshowthatindividualswithhigherlevelsofincomeactuallypollutelessthanlow-incomeindividuals.

b. effortstoreducepollutiontypicallyarenotcompletelysuccessful.

c. lawsthatreducepollutionraisecostsofproductionandreduceincomes.

d. byemployingindividualstocleanuppollution,employmentandincomebothrise.

24. Whichofthefollowingphrasesbestcapturesthenotionofefficiency?

a. absolutefairness

b. equaldistribution

c. minimumwaste

d. equitableoutcome

25. Whichofthefollowingistrue?

a. Efficiencyreferstothesizeoftheeconomicpie;equityreferstohowthepieisdivided.

b. Governmentpoliciesusuallyimproveuponbothequityandefficiency.

c. Aslongastheeconomicpiecontinuallygetslarger,noonewillhavetogohungry.

d. Efficiencyandequitycanbothbeachievediftheeconomicpieiscutintoequalpieces.

26. Efficiencymeansthat

a. societyisconservingresourcesinordertosavethemforthefuture.

b. society'sgoodsandservicesaredistributedequallyamongsociety'smembers.

c. society'sgoodsandservicesaredistributedfairly,thoughnotnecessarilyequally,amongsociety'smembers.

d. societyisgettingthemaximumbenefitsfromitsscarceresources.

27. Economistsusethewordequitytodescribeasituationinwhich

a. eachmemberofsocietyhasthesameincome.

b. eachmemberofsocietyhasaccesstoabundantquantitiesofgoodsandservices,regardlessofhisorherincome.

c. societyisgettingthemaximumbenefitsfromitsscarceresources.

d. thebenefitsofsociety'sresourcesaredistributedfairlyamongsociety'smembers.

28. SenatorSmithwantstoincreasetaxesonpeoplewithhighincomesandusethemoneytohelpthepoor.SenatorJonesarguesthatsuchataxwilldiscouragesuccessfulpeoplefromworkingandwillthereforemakesocietyworseoff.Aneconomistwouldsaythat

a. weshouldagreewithSenatorSmith.

b. weshouldagreewithSenatorJones.

c. agooddecisionrequiresthatwerecognizebothviewpoints.

d. therearenotradeoffsbetweenequityandefficiency.

29. Whichofthefollowingwordsandphrasesbestcapturesthenotionofequity?

a. minimumwaste

b. maximumbenefit

c. sameness

d. fairness

ANS:D DIF:1 REF:1-1

TOP:Equity MSC:Definitional

30. Whengovernmentpoliciesareenacted,

a. equitycanusuallybeenhancedwithoutanefficiencyloss,butefficiencycanneverbeenhancedwithoutanequityloss.

b. efficiencycanusuallybeenhancedwithoutanequityloss,butequitycanneverbeenhancedwithoutanefficiencyloss.

c. itisalwaysthecasethateitherefficiencyandfairnessarebothenhanced,orefficiencyandequityarebothdiminished.

d. Noneoftheabovearecorrect.

ANS:D DIF:2 REF:1-1

TOP:Government,Efficiency,Equity MSC:Applicative

31. Alikelyeffectofgovernmentpoliciesthatredistributeincomeandwealthfromthewealthytothepooristhatthosepolicies

a. enhanceequity.

b. reduceefficiency.

c. reducetherewardforworkinghard.

d. Alloftheabovearecorrect.

ANS:D DIF:2 REF:1-1

TOP:Government,Efficiency,Equity MSC:Interpretive

32. Whenthegovernmentimplementsprogramssuchasprogressiveincometaxrates,whichofthefollowingislikelytooccur?

a. Equityisincreasedandefficiencyisincreased.

b. Equityisincreasedandefficiencyisdecreased.

c. Equityisdecreasedandefficiencyisincreased.

d. Equityisdecreasedandefficiencyisdecreased.

ANS:B DIF:2 REF:1-1

TOP:Government,Efficiency,Equity MSC:Interpretive

33. Asaresultofasuccessfulattemptbygovernmenttocuttheeconomicpieintomoreequalslices,

a. itiseasiertocutthepie,andthereforetheeconomycanproducealargerpie.

b. thegovernmentcanmoreeasilyallocatethepietothosemostinneed.

c. thepiegetssmaller,andtherewillbelesspieoverall.

d. governmentwillspendtoomuchtimecuttinganditcausestheeconomytolosetheabilitytoproduceenoughpieforeveryone.

ANS:C DIF:3 REF:1-1

TOP:Government,Efficiency,Equity MSC:Analytical

34. Whenthegovernmentattemptstoimproveequityinaneconomytheresultisoften

a. anincreaseinoveralloutputintheeconomy.

b. additionalgovernmentrevenuesinceoverallincomewillincrease.

c. areductioninequity.

d. areductioninefficiency.

ANS:D DIF:2 REF:1-1

TOP:Government,Efficiency,Equity MSC:Interpretive

35. Whenthegovernmentredistributesincomefromthewealthytothepoor,

a. efficiencyisimproved,butequityisnot.

b. bothwealthypeopleandpoorpeoplebenefitdirectly.

c. peopleworklessandproducefewergoodsandservices.

d. wealthypeopleconsumefewergoods,butpoorpeopleconsumemoregoods,resultinginnorealchange.

ANS:C DIF:2 REF:1-1

TOP:Government,Efficiency,Equity MSC:Interpretive

36. Ineconomics,thecostofsomethingis

a. thedollaramountofobtainingit.

b. alwaysmeasuredinunitsoftimegivenuptogetit.

c. whatyougiveuptogetit.

d. oftenimpossibletoquantify,eveninprinciple.

ANS:C DIF:1 REF:1-1

TOP:Opportunitycost MSC:Definitional

37. Whatyougiveuptoobtainanitemiscalledyour

a. opportunitycost.

b. explicitcost.

c. truecost.

d. directcost.

ANS:A DIF:1 REF:1-1

TOP:Opportunitycost MSC:Definitional

38. Theopportunitycostofgoingtocollegeis

a. thetotalspentonfood,clothing,books,transportation,tuition,lodging,andotherexpenses.

b. thevalueofthebestopportunityastudentgivesuptoattendcollege.

c. zeroforstudentswhoarefortunateenoughtohavealloftheircollegeexpensespaidbysomeoneelse.

d. zero,sinceacollegeeducationwillallowastudenttoearnalargerincomeaftergraduation.

ANS:B DIF:2 REF:1-1

TOP:Opportunitycost MSC:Interpretive

39. Mauricereceives$100asabirthdaygift.Indecidinghowtospendthemoney,henarrowshisoptionsdowntofourchoices:OptionA,OptionB,OptionC,andOptionD.Eachoptioncosts$100.FinallyhedecidesonOptionB.Theopportunitycostofthisdecisionis

a. thevaluetoMauriceoftheoptionhewouldhavechosenhadOptionBnotbeenavailable.

b. thevaluetoMauriceofOptionsA,CandDcombined.

c. $100.

d. $300.

ANS:A DIF:2 REF:1-1

TOP:Opportunitycost MSC:Applicative

40. Afurnituremakercurrentlyproduces100tablesperweekandsellsthemforaprofit.Sheisconsideringexpandingheroperationinordertomakemoretables.Shouldsheexpand?

a. Yes,becausemakingtablesisprofitable.

b. No,becauseshemaynotbeabletoselltheadditionaltables.

c. Itdependsonthemarginalcostofproducingmoretablesandthemarginalrevenueshewillearnfromsellingmoretables.

d. Itdependsontheaveragecostofproducingmoretablesandtheaveragerevenueshewillearnfromsellingmoretables.

ANS:C DIF:2 REF:1-1

TOP:Marginalchanges MSC:Applicative

41. Formoststudents,thelargestsinglecostofacollegeeducationis

a. thewagesgivenuptoattendschool.

b. tuition,fees,andbooks.

c. roomandboard.

d. transportation,parking,andentertainment.

ANS:A DIF:2 REF:1-1

TOP:Opportunitycost MSC:Interpretive

42. Foracollegestudentwhowishestocalculatethetruecostsofgoingtocollege,thecostsofroomandboard

a. shouldbecountedinfull,regardlessofthecostsofeatingandsleepingelsewhere.

b. shouldbecountedonlytotheextentthattheyaremoreexpensiveatcollegethanelsewhere.

c. usuallyexceedtheopportunitycostofgoingtocollege.

d. plusthecostoftuition,equalstheopportunitycostofgoingtocollege.

ANS:B DIF:2 REF:1-1

TOP:Opportunitycost MSC:Applicative

43. Forwhichofthefollowingindividualswouldtheopportunitycostofgoingtocollegebehighest?

a. apromisingyoungmathematicianwhowillcommandahighsalaryoncesheearnshercollegedegree

b. astudentwithaveragegradeswhohasneverheldajob

c. afamous,highly-paidactorwhowantstotaketimeawayfromshowbusinesstofinishcollegeandearnadegree

d. astudentwhoisthebestplayeronhiscollegebasketballteam,butwholackstheskillsnecessarytoplayprofessionalbasketball

ANS:C DIF:2 REF:1-1

TOP:Opportunitycost MSC:Applicative

44. Whenyoucalculateyourtruecostsofgoingtocollege,whatportionofyourroom-and-boardexpensesshouldbeincluded?

a. Yourfullroom-and-boardexpensesshouldalwaysbeincluded.

b. Noneofyourroom-and-boardexpensesshouldeverbeincluded.

c. Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheincomeyouearnwhileattendingcollege.

d. Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheexpensesforrentandfoodifyouwerenotincollege.

ANS:D DIF:2 REF:1-1

TOP:Opportunitycost MSC:Applicative

45. Theopportunitycostofanitemis

a. thenumberofhoursneededtoearnmoneytobuytheitem.

b. whatyougiveuptogetthatitem.

c. usuallylessthanthedollarvalueoftheitem.

d. thedollarvalueoftheitem.

ANS:B DIF:1 REF:1-1

TOP:Opportunitycost MSC:Definitional

46. Mallorydecidestospendthreehoursworkingovertimeratherthanwatchingavideowithherfriends.Sheearns$8anhour.Heropportunitycostofworkingis

a. the$24sheearnsworking.

b. the$24minustheenjoymentshewouldhavereceivedfromwatchingthevideo.

c. theenjoymentshewouldhavereceivedhadshewatchedthevideo.

d. nothing,sinceshewouldhavereceivedlessthan$24ofenjoymentfromthevideo.

ANS:C DIF:3 REF:1-1

TOP:Opportunitycost MSC:Applicative

47. Russellspendsanhourstudyinginsteadofplayingtennis.Theopportunitycosttohimofstudyingis

a. theimprovementinhisgradesfromstudyingforthehour.

b. theimprovementinhisgradesfromstudyingminustheenjoymentofplayingtennis.

c. theenjoymentandexercisehewouldhavereceivedhadheplayedtennis.

d. zero.SinceRussellchosetostudyratherthantoplaytennis,thevalueofstudyingmusthavebeengreaterthanthevalueofplayingtennis.

ANS:C DIF:3 REF:1-1

TOP:Opportunitycost MSC:Applicative

48. College-ageathleteswhodropoutofcollegetoplayprofessionalsports

a. arenotrationaldecisionmakers.

b. arewellawarethattheiropportunitycostofattendingcollegeisveryhigh.

c. areconcernedmoreaboutpresentcircumstancesthantheirfuture.

d. underestimatethevalueofacollegeeducation.

ANS:B DIF:2 REF:1-1

TOP:Opportunitycost MSC:Interpretive

49. Arationaldecisionmaker

a. ignoresmarginalchangesandfocusesinsteadon“thebigpicture.”

b. ignoresthelikelyeffectsofgovernmentpolicieswhenheorshemakeschoices.

c. takesanactiononlyifthemarginalbenefitofthatactionexceedsthemarginalcostofthataction.

d. takesanactiononlyifthecombinedbenefitsofthatactionandpreviousactionsexceedthecombinedcostsofthatactionandpreviousactions.

ANS:C DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

50. Rationalpeoplemakedecisionsatthemarginby

a. followingmarginaltraditions.

b. behavinginarandomfashion.

c. thinkinginblack-and-whiteterms.

d. comparingmarginalcostsandmarginalbenefits.

ANS:D DIF:1 REF:1-1

TOP:Marginalchanges MSC:Interpretive

51. Theword"margin"means

a. edge.

b. distance.

c. space.

d. measure.

ANS:A DIF:1 REF:1-1

TOP:Marginalchanges MSC:Definitional

52. Makingrationaldecisions"atthemargin"meansthatpeople

a. makethosedecisionsthatdonotimposeamarginalcost.

b. evaluatehoweasilyadecisioncanbereversedifproblemsarise.

c. comparethemarginalcostsandmarginalbenefitsofeachdecision.

d. alwayscalculatethemarginaldollarcostsforeachdecision.

ANS:C DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

53. Aperson’swillingnesstopayforagoodisbasedon

a. theavailabilityofthegood.

b. themarginalbenefitthatanextraunitofthegoodwouldprovideforthatperson.

c. themarginalcostofproducinganextraunitofthegood.

d. esotericfactors,thestudyofwhichliesbeyondtheboundariesofeconomics.

ANS:B DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

54. Tosaythat"peoplerespondtoincentives"istosaythat

a. changesincosts(butnotchangesinbenefits)influencepeople'sdecisionsandtheirbehavior.

b. changesinbenefits(butnotchangesincosts)influencepeople'sdecisionsandtheirbehavior.

c. changesinbenefitsorchangesincostsinfluencepeople'sdecisionsandtheirbehavior.

d. tradeoffscanbeeliminatedbyrationalpeoplewhothinkatthemargin.

ANS:C DIF:1 REF:1-1

TOP:Incentives MSC:Definitional

55. Amarginalchangeisa

a. changethatinvolveslittle,ifanything,thatisimportant.

b. large,significantadjustment.

c. changefortheworse,andsoitisusuallyashort-termchange.

d. small,incrementaladjustment.

ANS:D DIF:1 REF:1-1

TOP:Marginalchanges MSC:Definitional

56. Whichofthefollowingisthebestexampleofamarginalchange?

a. Aftergraduatingcollege,Audrey'sincomeincreasesfrom$500permonthto$3,000permonth.

b. Morgangetsaraiseatherpart-timejobandisnowpaid$7.25perhourinsteadof$7.00.

c. Housingpricesinanareaincreaseby40percentwhenanewinterstateisbuiltthatpassesnearby.

d. AhardfreezewipesouthalfoftheorangecropinFloridaandthepriceoforangejuicedoubles.

ANS:B DIF:2 REF:1-1

TOP:Marginalchanges MSC:Applicative

57. Whichofthefollowingisthebestexampleofamarginalchange?

a. ThepriceofhousinginDenverincreasedby6percentlastyear.

b. Kimgetsabigpromotionatwork.Shealsogetsaraisefrom$35,000peryearto$55,000peryear.

c. Markgraduatesfromcollegeandtakesajob.Hisincomeincreasesfrom$10,000peryearto$35,000peryear.

d. AdroughthitstheupperMidwestandthepriceofwheatincreasesfrom$4.00perbushelto$6.50perbushel.

ANS:A DIF:2 REF:1-1

TOP:Marginalchanges MSC:Applicative

58. Amarginalchangeisbestillustratedbywhichofthefollowing?

a. Nancyretiresandtakesapart-timejob.Shewasworking40hoursperweekandnowworks15hoursperweek.

b. Alarge,state-supporteduniversityhasannouncedthatduetostatebudgetdeficits,tuitionmustriseby20percentnextyear.

c. Ryanmovedtoanewapartmentandnowpays40percentmorerentthanbefore.

d. Arizona,whichusuallyreceives10inchesofrainperyear,received11incheslastyear.

ANS:D DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

59. Teresaeatsthreeorangesduringaparticularday.Themarginalbenefitsheenjoysfromeatingthethirdorange

a. canbethoughtofasthetotalbenefitTeresaenjoysbyeatingthreeorangesminusthetotalbenefitshewouldhaveenjoyedbyeatingjustthefirsttwooranges.

b. determinesTeresa’swillingnesstopayforthefirst,second,andthirdoranges.

c. doesnotdependonhowmanyorangesTeresahasalreadyeaten.

d. Alloftheabovearecorrect.

ANS:A DIF:3 REF:1-1

TOP:Marginalchanges MSC:Applicative

60. Arationaldecisionmakertakesanactionifandonlyif

a. themarginalbenefitoftheactionexceedsthemarginalcostoftheaction.

b. themarginalcostoftheactionexceedsthemarginalbenefitoftheaction.

c. themarginalcostoftheactioniszero.

d. theopportunitycostoftheactioniszero.

ANS:A DIF:1 REF:1-1

TOP:Marginalchanges MSC:Interpretive

61. Aftermuchconsideration,youhavechosenCancunoverFt.LauderdaleasyourSpringBreakdestinationthisyear.However,SpringBreakisstillmonthsaway,andyoumayreversethisdecision.Whichofthefollowingeventswouldpromptyoutoreversethisdecision?

a. ThemarginalbenefitofgoingtoCancunincreases.

b. ThemarginalcostofgoingtoCancundecreases.

c. ThemarginalbenefitofgoingtoFt.Lauderdaledecreases.

d. ThemarginalcostofgoingtoFt.Lauderdaledecreases.

ANS:D DIF:3 REF:1-1

TOP:Marginalchanges MSC:Applicative

62. Theaveragecostperseatonthe50-passengerFloating-On-AirBuscompany'stripfromKansasCitytoSt.Louis,onwhichnorefreshmentsareserved,is$45.Inadvanceofaparticulartrip,threeseatsremainunsold.Thebuscompanycouldincreaseitsprofitonlyifit

a. chargedanyticketpriceabove$0forthethreeremainingseats.

b. chargedatleast$15foreachofthethreeremainingseats.

c. chargedatleast$45foreachofthethreeremainingseats.

d. paidthreepeopletooccupythethreeremainingseats.

ANS:A DIF:2 REF:1-1

TOP:Marginalcost MSC:Applicative

63. Warrendrinksfourcupsofcoffeeduringaparticularday.Themarginalbenefitheenjoysfromdrinkingthefourthcup

a. canbethoughtofasthetotalbenefitWarrenenjoysbydrinkingfourcupsminusthetotalbenefithewouldhaveenjoyedbydrinkingjustthreecups.

b. determinesWarren’swillingnesstopayforthefourthcup.

c. islikelydifferentfromthemarginalbenefitprovidedtoWarrenbythethirdcup.

d. Alloftheabovearecorrect.

ANS:D DIF:3 REF:1-1

TOP:Marginalchanges MSC:Applicative

64. Arationaldecisionmakertakesanactiononlyifthe

a. marginalbenefitislessthanthemarginalcost.

b. marginalbenefitisgreaterthanthemarginalcost.

c. averagebenefitisgreaterthantheaveragecost.

d. marginalbenefitisgreaterthanboththeaveragecostandthemarginalcost.

ANS:B DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

65. Aconstructioncompanyhasbuilt50housessofarthisyearatatotalcosttothecompanyof$8million.Ifthecompanybuildsa51sthouse,itstotalcostwillincreaseto$8.18million.Whichofthefollowingstatementsiscorrect?

a. Forthefirst50houses,theaveragecostperhousewas$160,000.

b. Themarginalcostofthe51sthouse,ifitisbuilt,willbe$180,000.

c. Ifthecompanycanexperienceamarginalbenefitof$190,000bybuildingthe51sthouse,thenthecompanyshouldbuildit.

d. Alloftheabovearecorrect.

ANS:D DIF:3 REF:1-1

TOP:Marginalcost,Marginalbenefit MSC:Applicative

66. Mikehasspent$500purchasingandrepairinganoldfishingboat,whichheexpectstosellfor$800oncetherepairsarecomplete.Mikediscoversthat,inadditiontothe$500hehasalreadyspent,heneedstomakeanadditionalrepair,whichwillcostanother$400,inordertomaketheboatworth$800topotentialbuyers.Hecanselltheboatasitisnowfor$300.Whatshouldhedo?

a. Heshouldselltheboatasitisnowfor$300.

b. Heshouldkeeptheboatsinceitwouldnotberationaltospend$900onrepairsandthenselltheboatfor$800.

c. Heshouldcompletetherepairsandselltheboatfor$800.

d. Itdoesnotmatterwhichactionhetakes;theoutcomeisthesameeitherway.

ANS:C DIF:3 REF:1-1

TOP:Marginalcost MSC:Analytical

67. Adonutshopsellsfreshbakeddonutsfrom5a.m.until3p.m.everyday.Theshopdoesnotsellday-olddonuts,soallunsolddonutsarethrownawayat3p.m.eachday.Thecostofmakingandsellingadozendonutsis$1.50;therearenocostsassociatedwiththrowingdonutsaway.Ifthemanagerhas10dozendonutsleftat2:30p.m.onaparticularday,whichofthefollowingalternativesismostattractive?

a. Lowerthepriceoftheremainingdonuts,evenifthepricefallsbelow$1.50perdozen.

b. Lowerthepriceoftheremainingdonuts,butundernocircumstancesshouldthepricefallbelow$1.50perdozen.

c. Throwthedonutsawayandproduce10fewerdozendonutstomorrow.

d. Startingtomorrow,lowerthepriceonalldonutssotheywillallbesoldearlierintheday.

ANS:A DIF:3 REF:1-1

TOP:Marginalchanges MSC:Analytical

68. Stanbuysa1966Mustangfor$2,000,planningtorestoreandsellthecar.Hegoesontospend$8,000restoringthecar.Atthispointhecansellthecarfor$9,000.Asanalternative,hecanspendanadditional$3,000replacingtheengine.Withanewenginethecarwouldsellfor$12,000.Stanshould

a. completetherepairsandsellthecarfor$12,000.

b. sellthecarnowfor$9,000.

c. nevertrysuchanexpensiveprojectagain.

d. beindifferentbetween(i)sellingthecarnowand(ii)replacingtheengineandthensellingit.

ANS:D DIF:3 REF:1-1

TOP:Marginalcost MSC:Analytical

69. Sarahbuysandsellsrealestate.Twoweeksago,shepaid$140,000forahouseonOakStreet,intendingtospend$20,000onrepairssellthehousefor$175,000.Lastweek,thecitygovernmentannouncedaplantobuilda“halfwayhouse”forconvictedcriminalsonOakStreet.Asaresultofthecity’sannouncedplan,Sarahisweighingtwoalternatives:Shecangoaheadwiththe$20,000inrepairsandthensellthehousefor$135,000,orshecanforgotherepairsandsellthehouseasitisfor$120,000.Sarahshould

a. keepthehouseandliveinit.

b. goaheadwiththe$20,000inrepairsandsellthehousefor$135,000.

c. forgotherepairsandsellthehouseasitisfor$120,000.

d. movethehousefromOakStreettoamoredesirablelocation,irrespectiveofthecostofdoingso.

ANS:C DIF:3 REF:1-1

TOP:Marginalcost MSC:Analytical

70. Peoplearewillingtopaymoreforadiamondthanforabottleofwaterbecause

a. themarginalcostofproducinganextradiamondfarexceedsthemarginalcostofproducinganextrabottleofwater.

b. themarginalbenefitofanextradiamondfarexceedsthemarginalbenefitofanextrabottleofwater.

c. producersofdiamondshaveamuchgreaterabilitytomanipulatediamondpricesthanproducersofwaterhavetomanipulatewaterprices.

d. waterpricesareheldartificiallylowbygovernments,sincewaterisnecessaryforlife.

ANS:B DIF:2 REF:1-1

TOP:Marginalchanges MSC:Interpretive

71. Economistsareparticularlyadeptatunderstandingthatpeoplerespondto

a. laws.

b. incentives.

c. punishmentsmorethanrewards.

d. rewardsmorethanpunishments.

ANS:B DIF:1 REF:1-1

TOP:Incentives MSC:Interpretive

72. Governmentpoliciescanchangethecostsandbenefitsthatpeopleface.Thosepolicieshavethepotentialto

a. alterpeople’sbehavior.

b. alterpeople’sdecisionsatthemargin.

c. produceresultsthatpolicymakersdidnotintend.

d. Alloftheabovearecorrect.

ANS:D DIF:2 REF:1-1

TOP:Incentives MSC:Interpretive

73. RalphNader'sbookUnsafeatAnySpeedcausedCongresstorequire

a. safetyglassinallnewcars.

b. seatbeltsinallnewcars.

c. airbagsinallnewcars.

d. stricterdrunkdrivinglaws