Tutorial 01 for topic 1 excercise PDF

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Good luck. Do your best . Simple exercise ever...

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DEC5114

MICROECONOMICS

TUTORIAL 01: CHAPTER 1 Multiple-choice Questions 1. The word “economy” comes from the Greek word oikonomos, which means a. “environment.” b. “production.” c. “one who manages a household.” d. “one who makes decisions.” 2. Which of the following is the best definition of economics? a. the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided b. the study of how consumers spend their income c. the study of how business firms decide what inputs to hire and what outputs to produce d. the study of how the federal government allocates tax dollars 3. The adage, "There is no such thing as a free lunch," means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. people face tradeoffs. d. all costs are included in the price of a product. 4. You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second time a. is zero. b. is one-half the cost of the game, as this is the second time you have played it. c. is the value of the alternative use of the time you spend playing the game. d. cannot be calculated. 5. The concept of opportunity cost a. is relevant only to economics. b. can be applied to the analysis of any decision-making process. c. applies to consumers but not to firms. d. refers only to actual payments and incomes. 6.

If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then the marginal cost of your 10th piece of sushi is a. zero. b. $2. c. $200. d. $2,000.

7. Economists are particularly adept at understanding that people respond to a. laws. b. incentives. c. punishments more than rewards. d. rewards more than punishments.

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DEC5114

MICROECONOMICS

8. Trade a. allows specialization, which increases costs. b. allows specialization, which reduces costs. c. reduces specialization, which increases costs. d. reduces specialization, which reduces costs. 9. Central planning refers to a. markets guiding economic activity. Today many countries that had this system have abandoned it. b. markets guiding economic activity. Today many countries that did not have this system have implemented it. c. government guiding economic activity. Today many countries that had this system have abandoned it. d. government guiding economic activity. Today many countries that did not have this system have implemented it. 10. The term "invisible hand" was coined by a. Adam Smith. b. David Ricardo. c. Karl Marx. d. Benjamin Franklin.

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DEC5114

MICROECONOMICS

Structured Questions 1. What is the main difference between a centrally planned economy and a market economy? 2. Explain the concept of market failure. 3. Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

Refer to the information provided in Figure 1 below to answer the question(s) that follow.

Figure 1 a.

Refer to Figure 1. The slope of the line is ____________.

b.

Refer to Figure 1. The slope of the line between Points D and B is ____________.

c.

Refer to Figure 1. The slope of the line between Points A and B is ____________.

d.

Refer to Figure 1. If a 45-degree line were also graphed, it would ________ the line shown on the graph.

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