1. Which of the following is not a function of prices in a market economy? a. b. c. d. To allocate goods to the consumers who value them the most. To give producers an incentive to increase production of scarce goods. To give consumers an incentive to conserve scarce resources. None of the above. 2. The central problem of economics is to allocate resources to best satisfy wants in the face of resources. a. b. c. d. Unlimited; unlimited. Scarce; scarce. Unlimited; scarce. Scarce; unlimited. 3. Bob has to choose between attending his 8:00-9:00 a.m. class and two mutually exclusive, alternative uses of that hour (meaning if he doesn't go to class he can either do one or the other alternative, but not both): (1) playing Doom, which he values at $0.25 per minute or (2) discussing Greek Revival architecture in a chat room, which he values at $20 per hour. Bob's opportunity cost for attending class is An hour playing Doom. b. An hour in the chat room. Both a. and b. d. None of the above. a. c. 4. If a season ticket to UWG baseball games cost $300/seat and a season ticket to Kennesaw State (KSU) baseball costs $200/seat, what is the relative price of a UWG season ticket in terms of KSU season tickets? a. b. c. d. 1.5 UWG season tickets per KSU ticket. $100 per UWG ticket 2/3 of a KSU ticket per UWG ticket None of the above.
5. a. Assuming the Laws of Demand and Supply hold, a surplus occurs when: The amount of a good that all potential consumers are both able and willing to purchase exceeds that which all potential suppliers are both able and willing to offer for sale. b. When the market price is above the equilibrium price. When the market price is below the equilibrium price. d. Both a, and c. None of the above. c. e.
1. Option D is the right answer. All the
choices present in the options are the function of prices in a
2. Option C is the right answer. The central
problem of economics is to allocate scarce resources to unlimited
3. Option B is the right answer. The
opportunity cost is the cost to choose one alternative over the
cost of the next highest-paid available alternative. The 1st
alternative which is an hour playing doom gives you $15 per hour
and the 2nd alternative which is an hour in a chat room gives you
$20 per hour. So, the 2nd alternative is more expensive than the
first one. Therefore, Bob has forgone the cost of spending an hour
in a chat room by attending the class.
4. option D is the right answer. KSU basketball
ticket price is 1.5 times the UWG ticket price that means
1 UWG ticket = 1.5 times the KSU ticket
or 1 KSU ticket = 2/3 of UWG ticket which is not present in any
of the given options.
5. Option B is the right answer. Surplus means
excess supply that occurs when:
(1) the supply is more than the demand in the market
(2) the market price is above the equilibrium price.