Question 1

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight.If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300,the airline should

Accepted Answer

The airline should sell the ticket because the marginal benefit of $300 exceeds the marginal cost of $200. This means that the airline will earn a profit of $100 from selling the ticket.

Question 2

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

The answer of Explain how an attempt by the government...

Question 3

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight.The airline should sell a ticket to a standby passenger only if the passenger is willing to pay

Accepted Answer

The answer of Suppose the cost of flying a 200-seat...

Question 4

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight.The marginal cost of flying a passenger is

Accepted Answer

The answer of Suppose the cost of flying a 100-seat...

Question 5

It costs a company $35,000 to produce 500 graphing calculators.The company's cost will be $35,050 if it produces an additional graphing calculator.If the company produces 500 graphing calculators then

Accepted Answer

The average cost per calculator for 500 units is $35,000/500 = $70. The marginal cost of producing one more calculator is $35,050 - $35,000 = $50. Therefore, the average cost is greater than the marginal cost.

Question 6

John is an athlete.He has $120 to spend and wants to buy either a heart rate monitor or new running shoes.Both the heart rate monitor and running shoes cost $120,so he can only buy one.This illustrates the principle that

Accepted Answer

This scenario demonstrates the economic principle of trade-offs. John has a limited budget of $120 and must choose between buying a heart rate monitor or new running shoes. He cannot have both because he does not have enough money to purchase both items. Therefore, he must weigh the benefits and costs of each item and make a rational decision based on his preferences and needs. The other principles listed do not directly apply to this scenario.

Question 7

Economics is the study of how society manages its

Accepted Answer

Economics is concerned with how society allocates its scarce resources to satisfy unlimited wants, highlighting the fundamental problem of scarcity.

Question 8

One tradeoff society faces is between efficiency and equality.Define each term.If the U.S.government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

The answer of One tradeoff society faces is between efficiency...

Question 9

Suppose that you have received $200 as a birthday gift.You can spend it today or you can put the money in a bank account for a year and earn 4 percent interest.The opportunity cost of spending the money today is

Accepted Answer

The answer of Suppose that you have received $200 as...

Question 10

When United States trades with China,

Accepted Answer

When the United States trades with China, both countries have the potential to benefit. The United States can gain access to cheaper goods and services, while China can increase its exports and economic growth. However, the extent of the benefits depends on factors such as trade policies, currency exchange rates, and the competitiveness of industries in each country. Overall, trade between the United States and China has the potential to be beneficial for both countries.

Question 11

Under what conditions might government intervention in a market economy improve the economy's performance?

Accepted Answer

The answer of Under what conditions might government intervention in...

Question 12

Something that induces a person to act is called

Accepted Answer

An incentive is something that motivates or encourages a person to take action. Options A, B, and D are not correct definitions for this term.

Question 13

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight.The average cost per seat is

Accepted Answer

The cost of flying a 100-seat plane for an airline is $50,000. Therefore, the cost per seat is $50,000 divided by 100 which is $500 per seat. Even though there are 10 empty seats on the flight, the average cost per seat is still $500 as the cost of those empty seats is already factored into the total cost of the flight.

Question 14

Consider Deborah's decision to go to college.If she goes to college,she will spend $20,000 on tuition,$10,000 on room and board,and $2,000 on books.If she does not go to college,she will earn $18,000 working in a store and spend $8,000 on room and board.Deborah's cost of going to college is

Accepted Answer

To find the cost of going to college, we add up the tuition, room and board, and book expenses: 
$20,000 + $10,000 + $2,000 = $32,000 
To find the cost of not going to college, we subtract the income earned from the expenses: 
$18,000 - $8,000 = $10,000 
Therefore, the cost of going to college is $32,000 - $10,000 = $22,000 more than not going to college. 
Therefore, the best choice is not clear-cut and depends on the potential benefits and drawbacks of attending college for Deborah.

Question 15

With the understanding that people respond to incentives,outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The answer of With the understanding that people respond to...

Question 16

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

The business cycle is a well-known concept in economics that describes the natural fluctuations of economic activity over time, such as growth, recession, boom, and bust. These fluctuations affect various economic indicators such as GDP, employment, and production levels.

Question 17

Rational people make decisions "at the margin" by comparing

Accepted Answer

Rational people make decisions "at the margin" by comparing the additional costs and benefits of a decision. This means that they consider the additional benefits of choosing one option over another, as well as the additional costs of choosing that option. By weighing these factors against each other, individuals can make rational decisions that maximize their overall wellbeing or satisfaction.

Question 18

Define opportunity cost.What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Accepted Answer

The answer of Define opportunity cost.What is the opportunity cost...

Question 19

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

The answer of How does the study of economics depend...

Question 20

The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

Accepted Answer

The broken window fallacy highlights how spending money to repair damages, like a broken window, creates economic activity (e.g., paying for repairs) but overlooks the opportunity cost of what could have been done with the money if the window had not been broken.

Quiz 1: Ten Principles of Economics