Pennsylvania State University - ECON 102 Quiz 01. All Correct answers Reviewed and indicated. 100% Score.

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ECON 102 Quiz 1 Submitted Jan 9 at 10:57am This attempt took 18 minutes. Question 1 1 / 1 pts Economics is a __________ science. physical ... resource profit-driven Correct! social Economics is the study of how people make choices. Question 2 0 / 1 pts Studying the output level of an industry would be a concern of _______________. Correct Answer a microeconomist neither a microeconomist nor a macroeconomist both a microeconomist and a macroeconomist You Answered a macroeconomist The level of output of an industry is a Microeconomics issue. Question 3 1 / 1 pts Which of the following is a normative statement? College graduates typically have higher earnings than non-graduates. Correct! The government should subsidize college education. The number of college graduates is decreasing. A college education increases productivity. Normative statements are value driven. Question 4 1 / 1 pts Which of the following statements about economic models is FALSE? Correct! Economic models are based on facts and not assumptions about the relationship between variables. Economic models eliminate details that are irrelevant to expose the aspects of the relationship that are important to the problem posed. Economic models provide a simplified abstraction of reality useful for examining specific aspects of behavior. Economic models are not useful if they oversimplify important aspects of the relationship that is being considered. Economic models are used to simplify reality and to focus on the important relationship. Question 5 1 / 1 pts A cost that has already been incurred is a(n) incurred cost. avoidable cost. Correct! sunk cost. marginal cost. Definition of sunk cost Question 6 1 / 1 pts Your opportunity cost of attending college is the value that you attach to not working. Correct! the value of what you would be doing if you weren’t in school. only the cost of your tuition, books and fees. your living expenses – food, rent, car insurance. Opportunity cost is the value of the next best alternative. Question 7 1 / 1 pts Your opportunity cost of cutting hair at your barbershop is $20 per hour. Electricity costs $6 per hour, and your weekly rent is $250. You normally stay open nine hours per day. Each haircut costs $10. If you stay open a tenth hour, you can give three haircuts. Should you stay open for the 10th hour? No. The marginal benefit is lower than the marginal cost. No. You cannot cover all of your expenses. Correct! Yes. The marginal benefit is greater than the marginal cost. Yes. The marginal cost of staying open for another hour is zero because all of the costs are sunk. The marginal benefit of staying open another hour is $30 – 3 haircuts times $10 per haircut. The marginal cost is $26 -- $20 is the opportunity cost of your time plus $6 to pay for your electricity. The weekly rent of $250 is a sunk cost. Question 8 0 / 1 pts Economics Airlines currently spends $20,000 per month in airport fees and $10,000 per flight for fuel, crew, and airplane maintenance. An economist would call the $20,000 per month in airport fees a(n) _____________ because no matter the number of flights offered, this fee must be paid. You Answered inescapable cost. Correct Answer sunk cost. None of these. marginal cost. Definition of sunk cost. Question 9 1 / 1 pts Each donut that you consume for breakfast costs $.75. The first donut gives you $2.00 worth of pleasure, with each subsequent donut providing $.50 less pleasure than the previous one. How many donuts should you eat? The marginal cost of each donut is $.75. The marginal benefit of the first donut is $2.00; you should eat the first donut because the marginal benefit is greater than the marginal cost. The marginal benefit of the second donut is $1.50; you should eat the second donut because the marginal benefit is greater than the marginal cost. The marginal benefit of the third donut is $1.00; you should eat the third donut because the marginal benefit is greater than the marginal cost. The marginal benefit of the fourth donut is $.50; you should not eat the fourth donut because the marginal cost is greater than the marginal benefit. Question 10 1 / 1 pts In a typical year, the U.S. national output increases. Economists call this Correct! economic growth. technological development. productivity expansion. national progression. Question 2 1 / 1 pts The effects of an increase in minimum wage on the unemployment level in the U.S. would be studied by _______________. Correct! a macroeconomist a microeconomist both a microeconomist and a macroeconomist neither a microeconomist nor a macroeconomist The distribution of income and wealth is a macroeconomics issue. Question 4 1 / 1 pts When economists say ceteris paribus, they mean allowing all variables to change to reflect the reality of the situation being considered. Correct! holding all other variables fixed in order to focus on the two variables in question. assuming that the original statement is correct. considering all aspects of a relationship between two variables. Definition of ceteris paribus Question 5 1 / 1 pts Opportunity cost is the lowest cost possible of producing a unit of output. the value of a sunk cost. a cost that cannot be escaped because it has already been incurred. Correct! the next-best alternative that we forgo when we make a choice. Definition of opportunity cost Question 6 1 / 1 pts Your opportunity cost of attending college is the value that you attach to not working. Correct! the value of what you would be doing if you weren’t in school. only the cost of your tuition, books and fees. your living expenses – food, rent, car insurance. Opportunity cost is the value of the next best alternative. Question 8 1 / 1 pts Economics Airlines currently spends $20,000 per month in airport fees and $10,000 per flight for fuel, crew, and airplane maintenance. Economics Airlines currently offers 5 flights from State College to Detroit and is considering offering a 6th. If each seat ticket costs $500, how many customers must fly on the 6th flight in order for Economics Airlines to be willing to run it? The marginal cost of operating a 6th flight is $10,000, so since each seat costs $500, 20 customers must fly. Question 9 1 / 1 pts Each donut that you consume for breakfast costs $.75. The first donut gives you $2.00 worth of pleasure, with each subsequent donut providing $.50 less pleasure than the previous one. What is the marginal cost of the 3rd donut? Correct! The marginal cost of each donut, including the third, is $.75. Question 10 1 / 1 pts Economic stability refers to a state in which an economy is maintaining its output level and its price level. an economy is equitable, promoting more equal distribution of income and wealth. an economy is operating efficiently, with technological progress and low inflation. Correct! an economy is experiencing sustained growth, with low inflation and high employment. Definition of economic stability. Quiz Score: 10 out of 10 [Show More]

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