Question

QUESTION 1

1. Economists use the word marginal to mean

   		1. A decision that is only secondary in importance.
   		2. The extra benefit or cost of a decision.
   		3. When firms concentrate on their profit margin.
   		4. When an economy is producing efficiently.

5 points   

QUESTION 2

1. Economists use the word rationality to mean....

   		1. When people correctly analyze a situation and come to the best decision possible.
   		2. Only a hypothetical scenario, people are never really rational.
   		3. When people make the best decision on the margin.
   		4. When people use the information that they're given to come to the best decision possible.

5 points   

QUESTION 3

1. Suppose that on her way to work, Mary stops to get gas and pays $2 a gallon. However, there is a gas station one block away selling gas for $1.50 a gallon. Mary's decision to pay a higher price in gas can be seen as rational under which scenario(s)?

   		1. Mary was unaware of the fact that the other gas station had lower gas prices.
   		2. Mary's decision is in fact not rational, for if she were, she would have made the best possible decision.
   		3. Although Mary was aware of the other gas station, she was late for work, and had to knowingly pay a higher price.
   		4. Both 1 and 3.

5 points   

QUESTION 4

1. One of the basic facts of life is that people face trade-offs when they make decisions. This unavoidable facts comes from a reality that economists call

   		1. Scarcity.
   		2. The market.
   		3. Rationality.
   		4. Economics.

5 points   

QUESTION 5

1. Economists use the term opportunity cost to mean....

   		1. A missed opportunity to make a better decision.
   		2. One's daily expenditures.
   		3. The value of the highest alternative you must give up when taking a course of action.
   		4. The direct cost of taking a course of action.

5 points   

QUESTION 6

1. Suppose that you have $5 to spend at a grocery store, and can purchase either good A or good B for the same price. Suppose you attach a value of 8 to good A, and attach a value of 10 to good B. The opportunity cost of purchasing good B would then be...

   		1. 8, as you would have to forgo the enjoyment of consuming good A.
   		2. $5.
   		3. 2, as that is the difference between 10 and 8.
   		4. There is no opportunity cost in this situation, as you are consuming the good that you are valuing the most.

5 points   

QUESTION 7

1. A society can have a _______ economy in which the government decides on how resources are to be allocated, or a _______ economy in which the decisions of households and firms interacting in markets allocate economic resources.

   		1. Market; centrally planned.
   		2. Market, mixed.
   		3. Centrally planned; mixed.
   		4. Centrally planned; market.

5 points   

QUESTION 8

1. A _______ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

   		1. Centrally planned.
   		2. Mixed.
   		3. Market.
   		4. Rich.

5 points   

QUESTION 9

1. Suppose a firm can produce a good for $5 using a specific technology, or $2 using another technology. The latter option would be an instance of

   		1. An opportunity cost.
   		2. The market economy at work.
   		3. Production efficiency.
   		4. Comparative advantage.

5 points   

QUESTION 10

1. What do economists mean by​ scarcity?

   		1. Economists mean that the economy is unable to produce increasing quantities of goods and services.
   		2. Economists mean that production is inefficient.
   		3. Economists mean that people are not employed.
   		4. Economists mean that unlimited wants exceed limited resources

Answer 1

Q1) Marginal in economics basically means a change in something when an additional unit is produced. For example, marginal cost refers to the addition to the total cost when an additional unit of an output is produced or marginal revenue refers to the addition to the total revenue when an additional unit of the commodity is sold or marginal utility refers to the addition to the total utility when an additional unit of a commodity is consumed. So, marginal basically means addition to the total when an additional unit of a commodity is sold, produced, consumed,etc.

So, the economists use word marginal to mean the extra benefit or cost or cost of a decision.