13) Wichita is building a convention center and inancing it with revenues raised from a
city hotel tax. Local politicians assert that the convention center is essentially free for
Wichita residents because out-of-town visitors are paying for it. Someone who is practicing
the economic way of thinking would disagree because
A) they believe that Wichita does not need a new convention center.
B) there are other projects that could be undertaken with the tax funds.
C) the convention center may not pass a marginal cost-beneit test.
D) the hotel tax may lead to a decline in visits to Wichita.
E) the hotel tax may reduce commercial property values in the area.
Skill: Level 5: Critical thinking
Section: Integrative
Status: New
AACSB: Relective thinking
14) Suppose that your public library charges a ixed monthly membership fee of $12.
Members are allowed to check out as many books as they want under this plan. The
average member checks out 4 books per month. Suppose that your public library changes
its policy. Now each book costs $3 to check out but there is no longer a monthly
membership fee. What efect do you think the new policy will have on the total number of
books checked out from your library each month? The new policy is likely to ______the
number of booked checked out because ________.
A) leave unchanged; members have already shown that they are willing to pay $12 to check
out 4 books per month
B) leave unchanged; the average cost of the library service is the same under both plans
C) reduce; the marginal beneit of checking out books is now lower under the new policy
D) reduce; the marginal cost of checking out books is now higher under the new policy
E) increase; the average beneit of checking out more than 4 books is now higher under the
new policy
Skill: Level 5: Critical thinking
Section: Integrative
Status: New
AACSB: Application of knowledge
111
15) In New York City, when he was the mayor Michael Bloomberg recommend that the city,
with the help of private donors, make cash payments to poor and underprivileged parents
who can certify that their children are attending school on a regular basis. The payments
would start after third grade and go through high school, rising each year as dropout rates
get higher and a child’s forgone earning potential is higher. What economic concept does
this policy represent?
A) public goods
B) technological progress
C) externalities
D) the “invisible hand”
E) incentives
Skill: Level 5: Critical thinking
Section: Integrative
Status: New
AACSB: Relective thinking
16) Nathan drinks three cups of cofee per day. The marginal beneit that he enjoys from
drinking the third cup is
A) less than the marginal beneit that he receives from drinking the second cup.
B) the same as the total beneit from drinking all three cups minus the total beneit of
drinking the irst two cups.
C) both A and B.
D) greater than the marginal beneit that he receives from drinking the second cup.
E) none of the above.
Skill: Level 5: Critical thinking
Section: Integrative
Status: New
AACSB: Relective thinking
112
1.5 Chapter Figures
1) The relationship between distance traveled in 5 hours and speed shown in the igure
above is
A) direct, linear.
B) inverse, linear.
C) direct, non-linear.
D) inverse, positive.
E) direct, negative.
Skill: Level 2: Using deinitions
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
2) The relationship between distance traveled in ive hours and speed shown in the igure
above is
A) positive.
B) negative.
C) inverse.
D) cross-sectional.
E) multilateral.
Skill: Level 2: Using deinitions
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
113
3) The igure above shows the relationship between distance sprinted and recovery time.
The curve becomes steeper because as the distance sprinted increases,
A) the extra recovery time needed from sprinting another 100 yards increases.
B) the extra recovery time needed from sprinting another 100 yards decreases.
C) the recovery time increases.
D) the recovery time decreases.
E) the relationship between distance sprinted and recovery time becomes more inverse.
Skill: Level 2: Using deinitions
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
114
4) The igure above shows the relationship between study time and the number of problems
worked. The curve becomes less steep because as you study more,
A) study time becomes less efective.
B) study time becomes more efective.
C) the number of problems worked increases.
D) the number of problems worked decreases.
E) the relationship between study time and the number of problems worked changes from
direct to inverse.
Skill: Level 2: Using deinitions
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
115
5) The igure above shows the relationship between the journey length and the cost of trip
per mile. The curve becomes latter because as the journey length increases,
A) the fall in the cost per mile becomes smaller.
B) the fall in the cost per mile becomes greater.
C) the cost per mile decreases.
D) the cost per mile increases.
E) the cost per mile remains unchanged.
Skill: Level 2: Using deinitions
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
116
6) What is the slope of the line in the igure above?
A) 0.75
B) -0.75
C) 1.33
D) -1.33
E) zero
Skill: Level 3: Using models
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
117
7) What is the slope of the line in the igure above?
A) 0.75
B) -0.75
C) 1.33
D) -1.33
E) zero
Skill: Level 3: Using models
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
118
8) In the igure above, what is the slope of the curve at point A?
A) 0.75
B) -0.75
C) 1.33
D) -1.33
E) zero
Skill: Level 3: Using models
Section: Chapter 1 Appendix – Checkpoint 3
Status: Old
AACSB: Analytical thinking
1.6 Essay: Deinition and Questions
1) What is the relationship between wants, resources, scarcity, and choices? Discuss the
relationship for an individual and for a society.
Skill: Level 2: Using deinitions
Section: Checkpoint 1.1
Status: Old
AACSB: Written and oral communication
119
2) Why do economists say that even very rich people face scarcity?
Skill: Level 3: Using models
Section: Checkpoint 1.1
Status: Old
AACSB: Written and oral communication
3) What do economists mean when they discuss “scarcity”?
Skill: Level 2: Using deinitions
Section: Checkpoint 1.1
Status: Old
AACSB: Written and oral communication
4) Deine economics and describe its branches of study.
Skill: Level 2: Using deinitions
Section: Checkpoint 1.1
Status: Old
AACSB: Written and oral communication
120