### Quiz 1 In Tutorial Library

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### TITLE: Quiz 1

#### CLASS / COURSE: ECO201

QUESTION DESCRIPTION:

Quiz 1:

1. Question : Opportunity cost is the same as marginal cost.

False

2. Question : Productive efficiency is not achieved at any point inside the production possibility curve.

True

False

3. Question : Brooke and Sandy both attend the same college and have the same expenses for tuition, books, and supplies. However, Brooke is a famous actress who could earn \$2 million per year if she were not attending college while Sandy could earn \$10,000 a year serving hamburgers if he were not attending college. It follows that the opportunity cost of attending college:

Student Answer: is the same for both Brooke and Sandy.

is greater for Brooke than for Sandy.

is greater for Sandy than for Brooke.

for Brooke and Sandy cannot be compared.

4. Question : The marginal benefit from consuming another unit of a good:

Student Answer: must equal the marginal cost or the unit will not be consumed.

must be less than the marginal cost or the unit will not be consumed.

equals the increase in total benefits from consuming the unit.
equals the total benefit obtained from the consumption of all prior units.

5. Question : Suppose you paid \$300 to take this economics course, which meets 30 times, for one hour a class, during the course of the semester. Instead of attending class you could have either flipped hamburgers for \$8 an hour or waited tables for \$5 an hour. Given this information, the opportunity cost of attending each class session is:

\$8.

\$300.

\$240.

6. Question : The opportunity cost for a student of attending college for a year is best measured by the:

tuition paid for the year.

value of the next-best activity forgone by attending college.
total money outlays associated with attending college.

7. Question : The principle of increasing marginal opportunity costs states that the initial opportunity costs are:

Student Answer: high but they decrease the more you concentrate on the activity.

low but they increase the more you concentrate on the activity.
high but they increase the more you concentrate on the activity.
low but they decrease the more you concentrate on the activity.

8. Question : Which of the following topics is best categorized as a macroeconomic issue?

Student Answer: The choices a student makes in selecting college courses.

The decision by Apple computers to produce fewer Macintosh computers.
The effect of a drought on the price of corn.

The effect of an increase in federal spending on the unemployment rate.

9. Question : An important international lending institution is the:

IMF.

The Group of Eight.

EU.

WTO.

10. Question : Which of the following countries is not a member of The Group of Eight?

Japan.

U.S.

China.

11. Question : One advantage of a corporation over a sole proprietorship is:

avoidance of double taxation.

ease of formation.

greater ability to obtain funds.

12. Question : The tax revenues of federal, state, and local governments have different sources, in that the federal government relies primarily on:

income taxes; state and local governments rely to a greater extent on sales and property taxes.
sales and property taxes; state and local governments rely to a greater extent on income taxes.
excise and property taxes; state and local governments rely on sales taxes.
sales taxes; state and local governments rely on excise and property taxes.

13. Question : Which of the following is a characteristic of a market economy?

Private property.

Government ownership of the means of production.

Distribution according to need.

Tradition determines the what, how, and for whom decisions.

14. Question : A defining difference between sole proprietorships, partnerships, and corporations is the:

number of each type of business.

nature of ownership and accountability for each type of business.

profitability of each type of business.

15. Question : Debt that is owed to foreigners is called:

external debt.

national debt..

international debt.

16. Question : Retirement of the baby boomers:

Student Answer: does not pose a threat to the Social Security system.

might have posed a threat to the Social Security system if the baby boomers had had fewer children.

threatens the Social Security system because the number of retirees will be relatively large compared to the number of workers remaining by 2020.

will cause the Social Security system to collapse in 2020.

17. Question : Which of the following would make the impending Social Security problem worse?

Student Answer: Raising income taxes when the baby boomers begin to retire.

Reducing the age at which one is eligible to receive payments.
Reducing Social Security retirement benefits.

Introducing means testing.

18. Question : A passive deficit is the portion of the deficit that exists when:

Student Answer: the economy is at potential income.

the economy is beneath potential income.

inflation is not fully anticipated.

inflation is fully anticipated.

19. Question : If taxes and government outlays were constant and did not vary with income, then:

Student Answer: passive deficits would increase.

passive deficits would not exist.

structural deficits would increase.

structural deficits would not exist.

20. Question : After World War II, the U.S. budget:

ran small deficits and surpluses up to the 1970s, much larger deficits in the 1980s, and was in surplus at the end of the 1990s.

ran small deficits and surpluses until the 1970s and then much larger deficits in the 1980s and 1990s.
ran small deficits up to the 1970s and then large surpluses in the 1980s and 1990s.
moved from a large deficit in the 1950s to a large surplus in the 1990s.

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