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Study Guide Eco/365

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ECO/365 Final Examination Study Guide

This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.

Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week.

Week One: Fundamentals of Microeconomics

Objective: Differentiate between macroeconomics and microeconomics.

1. Macroeconomics is
a. the study of individual choice and …show more content…

11. Suppose wages and employment decrease. These changes were most likely caused by a(n)
a. decline in immigration
b. increase in emigration
c. increase in the working age population
d. decline in business activity in the economy

12. The incentive effect refers to how much a person will change his or her
a. hours worked in response to a change in the wage rate
b. wage rate in response to a change in productivity
c. quantity demanded of a taxed good in response to a change in the tax rate
d. wage rate in response to a change in the tax rate on earnings

Objective: Analyze the effect of changes in marginal revenues and costs on a firm’s profit-making potential.

13. Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her explicit costs for the new business include
a. only the expenses incurred for office space, equipment, and supplies
b. only her foregone salary of $42,000 per year
c. both the expenses incurred for office space, equipment, and supplies, and her foregone salary of $42,000 per year
d. neither the expenses incurred for office space, equipment, and supplies, nor her foregone salary of $42,000 per year

14. If your company cell phone bill is either $40 when you use up to 300 minutes per month or $80 when you use between 300 to 400 minutes per month, the marginal cost of the 301st minute is
a. $0.13

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