Opportunity costs arise from
A) choices.
B) taxes.
C) mistakes.
D) regrets.
Ques. 2Suppose a hurricane causes a great deal of destruction in Florida. After the hurricane, it takes much longer than usual for the reconstruction to take place. A possible explanation for this is
A) greed by suppliers of construction materials increased.
B) government prevented price gouging during the reconstruction period.
C) prices of construction materials fell in the Midwest.
D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.
Ques. 3You like to sleep until 11:00 am during the semester. What is the opportunity cost of attending an 8:00 am class?
A) nothing, since you can go back to bed later
B) sleep
C) obtaining the notes from the 8:00 am class
D) the money you spend on coffee to stay awake
Ques. 4A subsidy is sometimes used by the government to correct the problems associated with
A) negative externalities.
B) positive externalities.
C) public goods.
D) monopolies.
Ques. 5If you were to face a marginal tax rate of 15 percent, how much would your tax bill increase when your income increased by 2,000?
A) 30
B) 300
C) 450
D) 600
Ques. 6A five-cent deposit on beer bottles
A) provides a positive incentive because it rewards people for recycling.
B) provides a negative incentive because it punishes people who do not recycle.
C) is an irrational policy, because it fails to take into account incentives.
D) is an irrational policy, because it fails to take into account self-interest.
Ques. 7Suppose that short skirts that were fashionable in the 1990s become unfashionable in the late 2000s. If other factors were held constant, then there would be
A) a rightward movement along the supply curve.
B) a rightward shift of the demand curve.
C) a leftward shift in the demand curve.
D) a leftward movement along the supply curve.
Ques. 8A government subsidy is typically used
A) to correct a negative externality.
B) to provide a government-inhibited good.
C) to reduce inflation.
D) to correct a positive externality.
Ques. 9If more buyers came into the market for a good, we would expect to see the market demand curve
A) shift inward and to the left.
B) remain unchanged since none of the determinants of individual demand changed.
C) shift outward and to the right.
D) reflect a positive relationship between price and quantity demanded.
Ques. 10When income is 15,000, the amount of income income taxes owed is 2,000; when income increases to 20,000, the amount owed increases to 3,000. The marginal tax rate in this case is
A) 20 percent.
B) 13.3 percent.
C) 15 percent.
D) 25 percent.
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