Q: Which equation correctly represents the net benefit in cost-benefit analysis?

$\text{Net Benefit} = \text{Benefit} - \text{Opportunity Cost}$

Q: Suppose the average wage for workers with 12 years of education is $\$5170$ and for those with 16 years is $\$8130$. What is the percentage increase in wages associated with 4 more years of education?

$\frac{8130 - 5170}{5170} \times 100 \approx 57\%$

Question 1

Which of the following best describes the concept of 'scarcity' in economics?

Accepted Answer

Scarcity means that the quantity of resources available is less than the quantity people want.

Question 2

John is deciding whether to buy a hamburger. According to the principle of optimization, what is John most likely to do?

Accepted Answer

He will buy the hamburger if the pleasure outweighs the cost and other cons.

Question 3

Which equation correctly represents the net benefit in cost-benefit analysis?

Accepted Answer

$	ext{Net Benefit} = 	ext{Benefit} - 	ext{Opportunity Cost}$

Question 4

A student spends 1 hour surfing the web instead of working a part-time job that pays NOK 150 per hour. What is the opportunity cost of surfing the web for 1 hour?

Accepted Answer

NOK 150, because that is the wage the student gives up.

Question 5

Which of the following statements best distinguishes positive analysis from normative analysis in economics?

Accepted Answer

Positive analysis describes what economic agents actually do, while normative analysis recommends what they should do.

Question 6

Apple is considering building a laptop factory in China. According to economic theory, what is Apple most likely optimizing?

Accepted Answer

Apple is optimizing profits.

Question 7

Which of the following is an example of a trade-off in economics?

Accepted Answer

Choosing to work more hours means giving up leisure time.

Question 8

Suppose the average wage for workers with 12 years of education is $\$5170$ and for those with 16 years is $\$8130$. What is the percentage increase in wages associated with 4 more years of education?

Accepted Answer

$\frac{8130 - 5170}{5170} 	imes 100 \approx 57\%$

Question 9

Which of the following best describes equilibrium in economics?

Accepted Answer

Equilibrium is a situation where all agents are optimizing and no one can benefit by changing their own behavior.

Question 10

In the context of the scientific method in economics, what is the correct sequence of steps?

Accepted Answer

Develop models, make predictions, test with data.

Question 11

Which of the following is a correct statement about causation and correlation in economics?

Accepted Answer

Correlation between two variables does not necessarily imply causation.

Question 12

If a government wants to know whether a new tax policy causes a change in consumer behavior, what is the gold standard method for determining causality?

Accepted Answer

Running a randomized experiment with treatment and control groups.

Question 13

Which of the following is an example of an economic agent?

Accepted Answer

A consumer deciding what to buy.

Question 14

Suppose you have 5 hours of spare time and can either work or surf the web. If you spend $x$ hours working and $y$ hours surfing, which equation represents your time constraint?

Accepted Answer

$5 = x + y$

Question 15

Which of the following is NOT a principle emphasized in economics according to the lecture?

Accepted Answer

Randomness

Question 16

A model predicts that each additional year of education increases wages by 10%. If a worker with 12 years of education earns $\$5000$, what is the predicted wage for a worker with 16 years of education?

Accepted Answer

$5000 	imes 1.1^4 = 5000 	imes 1.4641 = \$7320.5$

Question 17

Which of the following is a reason why economists use models?

Accepted Answer

To simplify reality and make predictions that can be tested with data.

Question 18

Which of the following is an example of a positive correlation?

Accepted Answer

Higher education is associated with higher wages.

Question 19

Why is it important to be skeptical of arguments based on anecdotal evidence in economics?

Accepted Answer

Because a few examples may not represent the general trend or causality.

Principles of Microeconomics: Core Concepts and Methods (SE 112 Lecture 1 Study Notes)

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