Question

(3)Which of the following is an implicit cost of going to college full time?

(a)Books

(b)Future income

(c)Lost income

(d)Registration of car

(4)The most important characteristic of the equilibrium price is that it:

(a)Guarantees that producers earn profit

(b)Increases the quantity demanded

(c)Clears the market

(d)Decreases the quantity supplied

(5)Which of the following statements is false?

Marketplaces are:

(a)Physical spaces

(b)Markets

(c)Online markets

(d)All of the above

(6)The fallacy of composition is:

(a)A flawed statement

(b)The confusion of the whole and the parts of the whole

(c)A very common analytical error

(d)All of the above

(7)The average price of regular unleaded gasoline in Arlington County should be about $1.10. This statement is an example of:

(a)A normative statement

(b)A positive statement

(c)A statement of the fallacy of composition

(d)A deductive statement

(8)If there is an inverse relationship between inflation and unemployment in the economy of a city, it would be correct to conclude that:

(a)There is a positive relationship between inflation and unemployment in the city’s economy

(b)There is a horizontal relationship between inflation and unemployment in the city’s economy

(c)A decrease in inflation leads to an increase in unemployment and vice versa in the city’s economy       

(d)A decrease in inflation leads to a decrease in unemployment and vice versa in the city’s economy       

(9)The shortage of resources in markets is another way to describe the scarcity of resources in the world is:

(a)A true statement

(b)A false statement

(c)(a) or (b) above

(d)None of the above

(10)The decision of cattle ranchers to supply 1,000,000 lbs. of steak to local markets on a monthly basis in order to satisfy their clients’ consumption needs is in keeping with which of the following questions:

(a)How to produce steak?

(b)Where to produce steak?

(c)When to produce steak?

(d)None of the above

Answer 1

Q3) The answer is (c) lost income as this represents the opportunity cost of attending college. Books and registration of a car is explicit costs. Future income is not a cost but a benefit.

Q4) The answer is (c) clears the market. The equilibrium price does not guarantee profits for producers, or and increase or decrease in quantity supplied.

Q5) The answer is (d) all of the above. A marketplace is simply a platform where transactions can occur. They can happen in markets, physical spaces or online. All of them are market places.

Q6) The answer is (b) The confusion of the whole and the parts of the whole as it means the error of assuming that what is true of a member of a group is true for the group as a whole. It is not a flawed statement and there is no reason to believe that it is a very common analytical error.