Econ 2110 Section 002 Summer 2020 Guncha Babajanova Answers are identified with asterisks Answer sheet to Practice Questions for Exam 1 1 1 If you ve purchased an all you can eat ticket to a clam roast for 25 good economic thinking would tell you to take one last plateful if a the value of that plateful to you is greater than 25 b the value of that plateful to you is greater than or equal to 1 and you ve already taken 24 platefuls that you value at 1 each c the value of that plateful to you is greater than zero d none of the above 2 If you decide to go to a movie this evening rather than study economics you thereby demonstrate that a you don t care about getting good grades b you hate economics c you would rather have fun than fulfill your responsibilities d at the margin you value two hours of movie watching more than two hours of studying economics e none of the above 3 The costs that influence decisions are always a average costs b marginal costs c sunk costs d total costs 4 If you pay 400 for a season pool pass at a private club the marginal cost to you of swimming on any given weekday will be a 400 b 10 if you swim 40 times c 20 if the swim season lasts twenty weeks d 3 if the swim season lasts twenty one weeks and there are seven days in a week e zero 5 You want to purchase two pizzas The price is 8 per pizza 2 for 15 3 for 20 What will be the marginal cost to you of buying a third pizza a 20 b 12 c 7 d 5 e zero if you don t plan to eat the third pizza it becomes a sunk cost 6 I am considering joining a shopper s club where I pay 100 membership fee and then get a twenty five percent discount on all my purchases In making my decision I should a only join if I plan to make at least 100 of purchases b ignore the membership fee since it is a sunk cost c only join if I expect to get at least 100 worth of discounts d only join if they promise to refund my membership fee if I m not satisfied 2 7 If Clemson raises the price of on campus parking you would expect to see a a decrease in the demand for on campus parking b an decrease in the supply of on campus parking c an increase in the demand for off campus parking d all of the above 8 Which of the following is true of the statement All pollution must be stopped a It ignores the importance of comparing marginal benefits and marginal costs b It does not consider that we may have too much pollution control c It ignores the fact that to get more of anything we must give up something else d all of the above 9 If you buy a motorcycle for 1000 and then discover that you hate riding it and will never ride it again the best thing to do is a keep the motorcycle because you ve paid so much for it b keep the motorcycle unless you can find someone who will pay you at least 1000 for it c sell the motorcycle for the best offer you can get d sell the motorcycle for the best offer you can get as long as it covers most of what you paid for it 10 Which of the following is not an assumption of the economic model a People respond to incentives b Goods are scarce c People make decisions by comparing marginal benefits and marginal costs d The only costs that matter are opportunity costs e All are assumptions of the economic model 11 If you are searching for a new pair of skis it makes sense to keep looking as long as a you haven t found the lowest price available b the shopping time matters less to you than the lower price you expect to get c there are stores left that you haven t checked d you face no opportunity costs at all e All of the above 12 If Switzerland can make 35 pounds of chocolate or 5 watches while Albania can make 6 pounds of chocolate or 1 watch a no trade will be profitable for Switzerland b no trade will be profitable for Albania c Albania has higher opportunity costs than Switzerland d Switzerland has higher opportunity costs than Albania e None of the above 3 13 If Switzerland can make 35 pounds of chocolate or 5 watches while Albania can make 6 pounds of chocolate or 1 watch who has the comparative advantage a Switzerland has the comparative advantage in both chocolate and watches b Albania has the comparative advantage in both chocolate and watches c Switzerland has the comparative advantage in chocolate Albania in watches d Albania has the comparative advantage in chocolate Switzerland in watches e There is not enough information to say 14 A trade that can make both countries better off would be a one watch for 7 pounds of chocolate b one watch for 6 5 pounds of chocolate c one watch for 6 pounds of chocolate d one watch for 7 5 pounds of chocolate e No such trade exists 15 Anyone who claims that cheaper labor in one country enables that country to produce everything at lower costs than another country so that no trade is possible is a exaggerating the importance of labor costs b referring only to comparative not to absolute cost c not referring to monetary costs because they are measured in differing currencies d not considering opportunity cost 16 We know that trade makes people better off because a it is a voluntary activity b people wouldn t engage in it otherwise c it only occurs when there is the potential for mutual gains d All of the above 17 If it costs a theater 180 000 to put on four shows and the cost would rise to 200 000 if the theater adds a fifth show a the marginal cost of the fifth show is 20 000 b the marginal cost of the fifth show is 40 000 c the marginal cost of the fifth show is 200 000 d the marginal cost of the fifth show is 50 000 18 Which of the following costs will you consider when deciding whether it is efficient to take a hike one afternoon a The gas it takes to get to the hiking trail b The studying you won t be able to do c The wear and tear on your hiking boots d All of the above e Just a and c 4 19 If you pay 2 for each ride you take on a roller coaster and you are about to take your tenth and last ride for the day the marginal cost of that ride is a 0 b 2 c It depends on the benefits …