1. Suppose the price index in State College, PA is 122 and 263 in New York City (as always, we assume the basket is exactly the same in both locations). Suppose also that you are currently making $75,000 in State College. What income do you need to be offered in New York City to maintain the exact same purchasing power that you currently have in State College? Round your answer to the nearest dollar.
A) $161,680
B) $34,791
C) $197,250
D) $91,500
E) None of the above are correct
2. In 2010, Nittanyville consumed 205,000 tons of sugar. In 2011, sugar consumption rose to 265,000 tons. Calculate the percentage change in sugar consumption.
A) 1.77%
B) 2.29%
C) 22.64%
D) 29.27%
E) 5.23%
3. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.
A) equitably
B) rationally
C) emotionally
D) selfishly
4. Which of the following is a positive economic statement?
A) People should not buy SUVs.
B) The government should mandate electric automobiles.
C) Scarcity necessitates that people make trade-offs.
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.
5. In one hour of labor input, South Korea can produce either 100 computer chips or 50 bed linens. In the U.S., in one hour of labor input, either 150 computer chips or 100 bed linens can be made. Select the correct response below.
A) S. Korea has a comparative advantage in bed linen manufacturing.
B) The U.S. has an absolute advantage in computer chips manufacturing.
C) The U.S. has a comparative advantage in computer chip manufacturing.
D) S. Korea has an absolute advantage in bed linen manufacturing.
E) All of the above are correct
6. Economists reason that the optimal decision is to continue any activity up to the point where the
A) marginal benefit is zero.
B) marginal benefit is greater than the marginal cost.
C) marginal cost is zero.
D) marginal benefit equals the marginal cost.