ECON 151: Understanding the Global Economy (Topic 1 Quiz + Stuff)

Opportunity cost

The value of an activity/good/service that you give up in order to get something else

Sunk cost

A cost that has already been committed and can't be recovered. Ignored by economists when making decisions

Ceteris Paribus

Occam's Razor

Simpler explanations are more likely to be true than complex ones.

Stuart is flying to Queenstown on Friday evening for a holiday. His flight will cost him $400, his hotel will cost him $100 per day, and the price of eating meals at the hotel is $25 per day. Stuart has the option of returning Sunday evening or Monday evening. If he stays for the extra day, the marginal cost is:

a) $125

b) $525

c) $25

d) $400

e) $100

a) $125

A person, or country, has an absolute advantage in producing a good when they can do so with the lowest ______ cost; they have a comparative advantage in producing a good when they can do so with the lowest ________ cost.

a) Input; opportunity

b) Opportunity; input

c) Total; marginal

d) Opportunity; marginal

e) Input; marginal

a) Input; opportunity

Which of the following statements is NOT true about the function: y = 30-5x ?

a) It has a negative slope

b) The graph of this function will be downward sloping

c) There is an inverse relationship between the y variable and the x variable

d) As x increases by 1 unit, y falls by 5 units

e) As the numerical value of x rises, the numerical value of y rises.

e) As the numerical value of x rises, the numerical value of y rises

A lawyer finds that when she takes on an additional case, her costs rise by $1,500 but her benefits rise by only $1,400. The marginal cost for this lawyer of taking on that additional case:

a) Is equal to the value of any previous cases taken on, plus $1,500

b) Is equal to the value of any previous cases taken on, plus $1,400

c) Is equal to the value of any previous cases taken on, minus $1,400

d) Is equal to $1,400

e) Is equal to $1,500

e) Is equal to $1,500

There are two producers in an economy, Susan and Tom who each work 6 hours per day. Susan can pick 5 pounds of coffee per hour, or 1 pound of nuts per hour.

If Susan and Tom each wants to consume equal quantities of coffee and nuts, specialisation and trade will enable Susan and Tom to EACH consume ________ of each good.

a) 25 pounds

b) 15 pounds

c) 9 pounds

d) 30 pounds

e) 24 pounds

b) 15 pounds

In deciding whether or not to continue searching for a lost item, the time already spent searching should be thought of as:

a) An opportunity cost

b) A marginal cost

c) A sunk cost

d) A fixed cost

e)An unknown cost

c) A sunk cost

Which of the following statements is TRUE about the functions: y = 30 - 5x and y = 30 + 5x ?

a) The two functions have the same horizontal intercept

b) The two functions will intersect each other at some positive value of x

c) The two functions have the same vertical intercept

d) The second function has a larger slope, in absolute value, than the first function

e) Both functions are upward-sloping

c) The two functions have the same vertical intercept