Third Homework Assignment
ECON 262-4 (1:55)
Due at the beginning of class on Monday, Sept. 14
25 pts.
Directions: Copy and paste this into a word document and then type your answers. Make sure you leave space for you graphs as indicated!! Use at least 10 pt. font.
1. Deb's vehicle breaks down as she is driving to work. She spends several hours that day dealing with the issue. She has to spend thousands of dollars to get the car fixed.
Discuss three possible opportunity costs that are involved in this scenario. Make any assumptions you need to make but be clear about them. (9 pts.)
For all multiple choice questions - you must type your answer or it will not count. For example, at the end of the question, type: answer: a or b or c, etc. Again, all answers not typed in your homework will not count. (2 pts. each)
1. Every worker is better off making more money and having better benefits. If you concluded from that fact that all workers would be better off if a law were passed requiring a 25% increase in wages and benefits then you would be:
a. Right
b. Wrong because causation and correlation are not the same
c. Wrong and have fallen victim to the fallacy of composition
d. Wrong because workers operate on jealousy
e. None of the above are correct
ANSWER:
2. You obtain some statistics showing that when the temperature rises snow cone sales rise too. This data shows us:
a. A direct correlation
b. An inverse correlation
c. That snow cone sales always cause temperatures to rise.
d. That temperatures rising causes snow cones sales to go up.
e. None of the above are correct
ANSWER:
3. Maria wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $2.50 per gallon, the car wash costs $2, but if she buys 10 gallons of gasoline, the car wash is free. For Maria, the marginal cost of the tenth gallon of gasoline and car wash is:
a. zero.
b. $22.50
c. $2.00.
d. $2.50.
e. None of the above are correct
ANSWER:
4. The expression, "There's no such thing as a free lunch," implies that:
a. Everyone has to pay for his own lunch.
b. The person consuming a good must always pay for it.
c. Opportunity costs are incurred whenever people choose to do something
d. No one has time for a good lunch anymore.
e. None of the above are correct.
ANSWER:
5. The statement that "since farmer Bob will make more money if he has a bumper crop means that all farmers would make more money if they all had bumper crops" would be an example of which of the following?
a. The post hoc fallacy
b. The fallacy of composition
c. Truth in an obvious form
d. The broken window fallacy
e. None of the above are correct
ANSWER:
6. The opportunity cost of any action is:
a. all the possible alternatives forgone.
b. the highest valued alternative forgone.
c. the time required but never a monetary cost.
d. the monetary cost but not the time required.
e. More than one answer is correct.
ANSWER:
7. Which of the following is an example of a normative economic statement?
a. Household consumption is the largest component of spending in the economy.
b. The U.S. Federal government's debt is over $18 Trillion.
c. The private business sector is the primary source of jobs in the economy.
d. Households should save more money.
e. More than one answer is correct.
ANSWER:
8. As we discussed in class, a good economist will look at three different criteria in order to determine the efficiency of someone's action. Which of the following is NOT one of the criteria we discussed?
a. What are the person's internal costs from his/her action?
b. What are the person's external costs from his/her action?
c. What is the person's skill level?
d. Is what the person doing valuable?
e. All of the above are criteria we discussed regarding efficiency.
ANSWER: