Econ_ Chapter 1
Ann is a manager at a private construction company. David works in the city planning
department of the government. Based on this information, which of the following is most
likely to be true?
David will make decisions based on benefit-cost analysis.
As a result of historically high gasoline prices in 2008, traffic volume in the United States
(measured in terms of billions of miles driven per month) declined significantly. These
changes were caused by a _____ of gasoline and _____.
shortage; a decrease in the quantity demanded of gasoline
The price of computers has fallen, while the quantity purchased has remained constant.
This implies that the demand for computers has:
decreased, while the supply of computers has increased.
Which of the following correctly explains a probabilistic model?
A probabilistic model shows the possibility of a range of outcomes.
The government is deciding whether it should build a veteran’s hospital in an urban area.
It will choose to build the hospital only if:
the total benefits from the hospital exceed total costs.
California imposes strict new regulations on the blending of gasoline that increase
production costs. As a result, the:
supply of gasoline will decrease.
Which of the following is true of economic models?
Models are simplified descriptions of processes, relationships, or other phenomena.
Maximizing profit by enumerating the profit outcomes of different courses of action
Becomes increasingly costly as the number of choices increase.
A cosmetics company is conducting a second-year review of one of its newest products.
The marketing department expects that the firm will continue to earn profits from the
sale of the product in the third year as it did in the past two years. Senior management,
however, feels that the profit projections would vary based on other factors such as the
price of the competitor's products, the actual level of sales, and the possibility of cost
reductions. In other words, the senior management is undertaking
a sensitivity analysis
The market demand curve shows the quantity of a good or service that:
households would buy at various prices.
A research study estimates that the direct cost of constructing a bridge
connecting two boroughs in a city is $10 million. The revenue from the
tolls on the bridge is estimated to be $8 million. The dollar value of
pollution from the construction is estimated to be $5 million but the dollar
value of the benefit to the city's residents is calculated to be $20 million.
The construction of the bridge is most likely to be undertaken by:
