Test Questions without Answers
Chapter 1. The Paradigm of Economics
Chapter 1– Question 1
The opportunity costs of attending college are highest for a student
- who could work in his father's factory for a high salary
- who chooses an expensive college
- who comes from a poor family
- who must find himself a job to finance his studies
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Chapter 1– Question 2
Installing a traffic light at a dangerous cross-roads costs $10,000. The opportunity costs of this action are
- $10,000
- the value of the lives saved
- the benefits of other investments that could be made with $10,000
- the costs of other investments that could be made instead
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Chapter 1– Question 3
Define marginal utility and explain why it tends to diminish.
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Chapter 1– Question 4
Are there commodities whose marginal utility does not diminish?
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Chapter 1– Question 5
Can you give an example of a free lunch?
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Chapter 1– Question 6
Explain why trade-offs are due to scarcity.
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Chapter 1– Question 7
An economist plans to go on a vacation. He knows the costs like airfares, hotel, etc. He also knows the benefits as he made the same trip last year. How can he make a cost-benefit analysis, when the costs are expressed in money and the benefits in pleasure?
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