1-Economics involves marginal analysis because: A. most decisions involve change
ID: 1191008 • Letter: 1
Question
1-Economics involves marginal analysis because:
A. most decisions involve changes from the present situation.
B. marginal benefits always exceed marginal costs.
C. marginal costs always exceed marginal benefits.
D. much economic behavior is irrational.
2-In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:
A. scarcity and opportunity costs.
B. complementary economic goals.
C. money and real capital.
D. full production.
3-Macroeconomics approaches the study of economics from the viewpoint of:
A. the entire economy.
B. governmental units.
C. the operation of specific product and resource markets.
D. individual firms.
4-The problems of aggregate inflation and unemployment are:
A. major topics of macroeconomics.
B. major topics of microeconomics.
C. not relevant to the U.S. economy.
D. peculiar to command economies.
5-Which of the following is a microeconomic statement?
A. The real domestic output increased by 2.5 percent last year.
B. Unemployment was 6.8 percent of the labor force last year.
C. The price of personal computers declined last year.
D. The general price level increased by 4 percent last year.
6-Which of the following is a land resource?
A. a farmer
B. an oil drilling rig
C. a machine for detecting earthquakes.
D. natural gas
7-The unemployment rate that many economists believe represents full employment is
A. 0 percent.
B. 0-4 percent.
C. 4-6 percent.
D. 6-8 percent.
E. 8-10 percent
8-The difference between GDP and NDP is the
A. rate of inflation.
B. statistical discrepancy encountered in calculating GDP.
C. difference between real versus nominal GDP.
D. depreciation of the economy's capital stock.
Explanation / Answer
Q.1 Ans- C ( marginal costs always exceeds marginal marginal benefits). Economists like to conduct their analysis on the margin, so past choices that are made don’t influence their current decision making process (remember the idea of a sunk cost?). So when looking at the costs and benefits on the margin, we get our marginal costs and marginal benefits.Marginal benefits and cost should be equal to each other.The reason we want marginal benefit to be equal to marginal cost is because of the observed fact that marginal costs and benefits don’t stay constant as more of a good is produced or consumed.After a certain level MC always exceed MB.
Q.2. Ans-A.(one is confronted by the idea of scarcity and opportunity cost). By opportunity cost we mean next best alternative. and in the questions we have two choices one is economic quiz and the other is movie.
Q.3.Ans -A (the entire economy). Beacause Macroeconomics (from the Greek prefix makro- meaning "large" and economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets.
Q.4.Ans-A (Major topics of Macroeconomics). Beacause in the question we are talking about 'aggregates' inflation and unemployment it means that we are talking about the economy as a whole . And Macroeconomic delas with the economy as a whole.
Q.5.Ans-C ( Price of the personal computers declined last year). Beacuse microeconomics deals with individual firm or industry.Option A,B,D are related to macroeconomics . In option C we are talking about individual firm or a industry.
Q.6.Ans-D .beacuse it is a natural resource and it is actually obtaining from earth or a ground, and the rest of the options are man made things or man himself.
Q.7.Ans-C.(4-6%).Most economists place the rate in the range of 5 to 5.5 percent, though some estimates go as high as 6 percent. The Congressional Budget Office‘s latest projections have it at 5.5 percent.And some suggests that 4 percent is reasonable
Q.8.Ans.D. depreciation is the only difference between the gross and net.
gross-depreciation = net
net + depreciation= gross
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