Intro To Macroeconomics Worksheet With Answer Key

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Eco 201: Homework 1
Covers Chap 1 & 2 & 3
MULTIPLE CHOICE (2 points each question):
Opportunity Cost (Principle 2, Chap 1)
1.
Henry decides to spend two hours playing golf rather than working at his job, which pays $8 per
hour. Henry’s tradeoff is
a. the $16 he could have earned working for two hours.
b. nothing, because he enjoys playing golf more than working.
c. the increase in skill he obtains from playing golf for those two hours.
d. nothing, because he spent $16 for green fees to play golf.
ANSWER: a.
the $16 he could have earned working for two hours.
2.
When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms’ owners, workers, and customers.
b. no tradeoff, since everyone benefits from reduced pollution.
c. no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms
affected by the requirements.
d. a tradeoff only if some firms are forced to close.
ANSWER: a.
a tradeoff because of reduced incomes to the firms’ owners, workers, and customers.
Economists Assumptions (Chap 2)
3.
Economists make assumptions
a. to diminish the chance of wrong answers.
b. to make the world easier to understand.
c. because all scientists make assumptions.
d. to make certain that all necessary variables are included.
ANSWER: b.
to make the world easier to understand.
Production Possibility Frontier (Chap 2)
4.
Any point on a country’s production possibilities frontier represents a combination of two goods that
an economy
a. will never be able to produce.
b. can produce using all available resources and technology.
c. can produce using some of its resources and technology.
d. may be able to produce sometime in the future with additional resources and technology.
ANSWER: b.
can produce using all available resources and technology.
Production Possibility Frontier (Chap 2)
5.
When a production possibilities frontier is linear it shows
a. a truer picture of real life than a bowed out production possibilities frontier.
b. that resources are perfectly shiftable from the production of one good to another.
c. an example of increasing opportunity cost.
d. All of the above are correct.
ANSWER: b.
that resources are perfectly shiftable from the production of one good to another.

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