Economics > EXAM > unit 1 quiz master key: economy basic level 100 (All)

unit 1 quiz master key: economy basic level 100

Document Content and Description Below

Quiz 1: Chapters 1 & 3 To engage in economic reasoning, one must compare: A. total cost and total benefit. B. marginal cost, sunk cost, and total benefit. C. sunk cost and marginal cost. D. margi ... nal cost and marginal benefit. Feedback: Such a comparison makes it possible to determine whether the marginal benefit of an action exceeds the marginal cost. Sunk costs: A. are essential parts of economic decisions. B. are irrelevant to economic decisions. C. should be considered, but only when marginal cost is less than marginal benefit. D. should be considered only when there is no information about marginal cost and marginal benefit. Feedback: Sunk costs are costs that already have been incurred and cannot be recaptured. They are in essence "water under the bridge," and as such, they do not influence economic decisions. Opportunity cost: A. includes only monetary outlays. B. is the net benefit forgone by not undertaking the next best alternative. C. is nonexistent for some choices. D. is the same as sunk cost. Feedback: Opportunity costs are the benefits forgone when an activity is undertaken, not the money paid to undertake an activity. All decisions involve opportunity costs because all decisions involve choices. A cultural norm is: A. an economic force. B. a social force. C. a political force. D. a market force. Feedback: A cultural norm defines what is socially acceptable and is thus a social force. Social forces: A. affect the price mechanism through cultural norms. B. affect the price mechanism but not the legal system. C. affect the price mechanism through scarcity. D. do not affect the price mechanism. Feedback: Social forces determine cultural norms, and these norms constrain the workings of [Show More]

Last updated: 3 years ago

Preview 1 out of 14 pages

Buy Now

Instant download

We Accept: