macroeconomic

The adage, "There is no such thing as a free lunch," means

• even people on welfare have to pay for food.
  
  

• the cost of living is always increasing.
  
  

• people face tradeoffs.

• all costs are included in the price of a product.

Long is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or new running shoes. Both the heart rate monitor and running shoes cost $120, so he can only buy one. This illustrates the principle that

• people face trade-offs.

• rational people think at the margin

• trade can make everyone better off

• people respond to incentives

When society requires that firms reduce pollution, there is

• a tradeoff because of reduced incomes to the firms' owners and workers

• a tradeoff only if some firms are forced to close.

• a tradeoff only if some firms are forced to close.

• no tradeoff, since everyone benefits from reduced pollution.

Which of the following is true?

• Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.

• Government policies usually improve upon both equality and efficiency.

• As long as the economic pie continually gets larger, no one will have to go hungry.

• Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

Minister Tran Tuan Anh wants to increase taxes on people with high incomes and use the money to help the poor. Minister Tien Dung argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

• we should agree with Mr. Tuan Anh.

• we should agree with Mr. Tien Dung.

• a good decision requires that we recognize both viewpoints.

• there are no tradeoffs between equity and efficiency.

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

• $0

• $15

• $305

• $315

Which of the following statements exemplifies a principle of individual decision-making?

• Trade can make everyone better off

• Governments can sometimes improve market outcomes

• The cost of something is what you give up to get it

• All of the above are correct

Long spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

• the improvement in his grades from studying for the hour

• the improvement in his grades from studying minus the enjoyment of watching TV

• the enjoyment he would have received if he had watched TV with his friends

• Since Long chose to study rather than to watch TV, the value of studying must have been greater to him than the value of watching TV

People are willing to pay more for a diamond than for a bottle of water because

• the marginal cost of producing an extra diamond far exceeds the marginal cost of
  producing an extra bottle of water

• the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water

• producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices

• water prices are held artificially low by governments, since water is necessary for life

Suppose the cost of flying a 200-seat plane for Vietjet Air is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

• sell the ticket because the marginal benefit exceeds the marginal cost

• sell the ticket because the marginal benefit exceeds the average cost

• not sell the ticket because the marginal benefit is less than the marginal cost

• not sell the ticket because the marginal benefit is less than the average cost