1 The answers to an economys three central economic problems are determined by the

Version 1 1

1) The answers to an economy's three central economic problems are determined by the interaction of three forces: economic forces, political forces, and social forces.⊚ true ⊚ false

2) Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals.⊚ true ⊚ false

3) Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.⊚ true ⊚ false

4) The economic decision rule is to undertake an action only when the marginal benefits of that action are greater than its total costs.⊚ true ⊚ false

5) The opportunity cost of undertaking an activity includes any sunk cost.⊚ true ⊚ false

6) The "invisible hand" is the price mechanism that guides people’s actions in the market.⊚ true ⊚ false

(MicroEconomics, 12e David Colander) (Test Bank Latest Edition 2023-24, Grade A+, 100% Verified) (Answer at the end of each Chapter) 1 / 4

Version 1 2 7) Social and political forces affect the way in which the invisible hand works.⊚ true ⊚ false

8) Macroeconomics is the study of how individual choices are affected by economic forces.⊚ true ⊚ false

9) Deciding what the distribution of income should be is an example of normative economics.⊚ true ⊚ false

10) Say a pill existed that made people selfless. After taking it they were only interested in

others, not themselves. Under the coordination definition of economics:

• no economic problem would exist.
• there still would be an economic problem.
• there would be a political problem but not an economic problem.
• there would be a social problem but not an economic problem.

11) According to the text, economics is the study of how:

• governments allocate resources in the face of constraints.
• government policies can be used to meet individuals' wants and desires.
• human beings coordinate their wants and desires.
• scarce resources are allocated between capitalists and workers.

12) Dorm rooms usually are not allocated by markets. Allocating dorm rooms is:

• not an economic problem.
• an economic problem.
• not affected by economic forces.
• determined by prices.

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Version 1 3 13) If allocating dorm rooms changes from allocation by lottery to allocation by the market:

• it becomes an economic problem.
• it becomes a political problem but not an economic problem.
• it becomes a social problem but not an economic problem.
• the allocation problem is still an economic problem.

14) Which of the following is not one of the three central coordination problems of the economy given in the book?

• What
• Whether
• For whom
• How

15) The quantity of goods and services available to society:

• is fixed.
• depends on human action.
• is not of economic importance.
• will always grow to meet individuals' wants and desires.

16) Economic systems:

• can eliminate scarcity.
• address the questions what is produced, how it is produced, and for whom it is

produced.

• provide all the goods people want and desire.
• provide equal distribution of well-being among its participants.

17) Scarcity exists because:

• individuals cannot solve the three central coordination problems.
• governments cannot solve the three central coordination problems.
• the supply of goods is always less than the demand.
• new wants continue to develop and willingness to meet them is limited.

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Version 1 4 18) People can reasonably expect that an economic system will decide all of the following

except:

• what goods to produce.
• how to produce the goods.
• how to assign initial property rights.
• for whom to produce the goods.

19) To engage in economic reasoning, one must compare:

• total cost and total benefit.
• marginal cost, sunk cost, and total benefit.
• sunk cost and marginal cost.
• marginal cost and marginal benefit.

20) Alexandra has determined that studying an hour for her economics quiz will improve her grade on the quiz from a 75 to a 100. She also determines that this improvement is worth $20. To study for an hour for her economics quiz, however, she will have to work one fewer

hour at her part-time job. Alexandra should:

• study for the quiz as long as her hourly wage rate is less than $20.
• study for the quiz as long as her hourly wage rate is more than $20.
• study for the quiz only if her hourly wage rate is exactly $20.
• not study for the quiz because earning a higher grade cannot have a dollar value.

21) Microsoft filed a lawsuit against people who sent spam (junk email) and a website owner who hosted spam services. A spokesman for Microsoft said that Microsoft was "trying to change the economics of spam" by increasing the cost of being a spammer. An economist most likely would agree with which statement about Microsoft's actions?

• A more effective approach would be to educate spammers about the costs they

impose on others.

• A more effective approach would be to appeal to the morals of the spammers and tell

them to follow the Golden Rule.

• Microsoft's approach of trying to change the costs of spamming is the most efficient

way to change behavior.

• Microsoft should not be involved because spamming is just part of the invisible hand

at work and should be left alone.

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