Principles of Macroeconomics Practice Test 1 I. Deiter er went hungry for a mont
ID: 1140326 • Letter: P
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Principles of Macroeconomics Practice Test 1 I. Deiter er went hungry for a month so that he could purchase a monkey. This decision is efficient if the monkey's price was less than the price of food b. efficient c. a. if Deiter values a monkey more than he values food for the month inefficient because food is more valuable than a monkey d. efficient because food has more value than a monkey If one owns a unit of something, we measure its value by the a. most one is willing to sacrifice to obtain a second unit b. 2. amount one had to sacrifice to obtain that unit most one is willing to accept in order to give up the unit c. d. least one is willing to accept in order to give up the unit 3. In making a policy decision, if we value life as being infinite, we would be justified in banning automobiles, since they kill people a. b. requiring automobiles, since they save people requiring automobiles be able to withstand a nuclear blast, raising their cost so that only e. five thousand people in the entire world would use them d. all of the above The cost of obtaining a college education includes a. 4. the enhanced earning power that college educated people have b. the increase in productivity from a college education c. wages that must be given up while one is in class d. the rent on one's apartment while they attend college At an all-you-can-eat pizza place, you should a. 5. eat until you cannot hold another bite b. eat until the marginal value of pizza is at a maximum eat until the marginal value of pizza is zero c. d. eat until the total cost of pizza is minimized Ramona's Pizza should produce the amount of pizzas such that a. b. 6. the price of a pizza is equal to the marginal cost to total amount of dollars coming in is equal to the total cost expended, including everyone's time and trouble the total amount of dollars coming in is at a maximum everyone in town who values a pizza at all, purchases one c. d. Which is true? a. b. 7. The number of "jobs" should be maximized, because jobs are benefits to society The number of "jobs" should be minimized, because jobs are costs to society The market creates a job if someone thinks the value of labor is at least as great as the cost of labor in a particular use Since the jobs that theaters create are beneficial, government should spend money to support theater employment d. 8. The supply curve is a. b. c. d. the marginal cost curve the marginal value curve downward sloping horizontalExplanation / Answer
Answer 1. (B) Clearly, if Deiter values the monkey more than he values the food for the month, then only his decision of staying hungry for a month just to buy a monkey can be justified. Hence, B is correct.
Answer 2. (D) If someone owns a unit of something, it would be definitely be very precious to him, so the amount offered by you will be the least value for him. He would definitely want way more than what you're offering. Hence, D is correct.
Answer 3. (D) if we value life as infinite while making policy decisions, all of the given situations would be justified. Since, life is limited, that's why we make policies to maximize the happiness of life, but if its value is taken in infinite terms, then the rationality kind of takes a hit and we can either ban the automobiles or we can allow them or something in between like partially allowing them, all are justified. Hence, D is correct.
Answer 4. (C) The cost of studying is definitely what you're not getting working somewhere out there. It's a simple opportunity cost concept. You are paying in terms of the second best alternative. If you were not sitting in the class, you could have been working somehwhere and must have been earning something, which you're not right now, sitting in a class. Hence, C is correct.
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