Charitable donations to the Red Cross
A) can be explained by the rational ignorance theory.
B) can be explained by the rational self-interest theory.
C) cannot be explained by the rational self-interest theory.
D) prove that there is no scarcity in the United States.
Ques. 2The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium.
B) larger the shifts in supply will be after a change in demand.
C) greater the reliance by sellers to change the nominal price.
D) more quickly a shock to the economy can be absorbed.
Ques. 3Opportunity cost exists because of
A) poverty.
B) scarcity.
C) greed.
D) self-interest.
Ques. 4When income is 15,000, the amount of income taxes owed is 2,000; when income increases to 20,000, the amount owed increases to 3,000. The average income tax rate when a person earns 15,000 is
A) 75 percent.
B) 15 percent.
C) 13.3 percent.
D) 20 percent.
Ques. 5Jaime's father gives her a pen for her graduation from college, but Jaime wants a smartphone. This implies that
A) Jaime's father is not acting out of self-interest because he knows that she really wants a smartphone.
B) Jaime's father is acting out of self-interest because he wants to give her something useful.
C) Jaime is not acting out of her self-interest by wanting something different from what her father gives her.
D) Jaime is not rational by asking for a smartphone instead of a pen.
Ques. 6A government action that can help correct positive externalities is
A) a tax on producers of the good that provides external benefits.
B) a subsidy to consumers of the good that provides external benefits.
C) an effluent fee charged to producers of the good that provides external benefits.
D) regulations aimed at reduced production by sellers of the good that provides external benefits.
Ques. 7The supply of eggs comes from chickens. The price of eggs will decrease if
A) the supply of chickens decreases.
B) the supply of eggs decreases.
C) the price of chickens increases.
D) the demand for eggs decreases.
Ques. 8If Joey goes surfing for four hours instead of earning 10 per hour for those four hours, his opportunity cost is
A) the good time spent surfing.
B) the cost of gasoline used to get to the beach.
C) the travel time to the beach.
D) 40.
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