Chapter 1 Quiz

Suppose a city block was going to be used for a parking lot. The opportunity cost would be ____ in New York City because the alternative uses of the block are more ____.

Greater Valuable

A student will decide to attend class when the marginal ____ of attending exceeds the marginal ____ of attending.

Benefit Cost

Studies indicate that married men on average earn more income than unmarried men of the same age and education level. From this statement, we can conclude that there is a ____, but marriage is not necessarily the cause of ____ income for married men.

Correlation Higher

How (if at all) does each of the following events affect the location of a country's production possibilities curve? The quality of education increases: The number of unemployed workers increases: A new technique improves the efficiency of extracting copper from ore: A devastating earthquake destroys numerous production facilities:

Curve shifts outward No change Curve shifts outward Curve shifts inward

The marginal benefit curve is ____ sloping.

Downward

The scientific method is the technique used by economists to determine:

Economic principles

The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity:

Economics

Why is entrepreneurial ability distinct from labor even though both are considered as a category of economic resource? Because entrepreneurial ability is not directly ____ in production.

Engaged

If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product?

Fewer

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations, would the attainable set of combinations that you can afford increase or decrease? Your budget increases from $100 to $150 while the prices stay the same: Your budget remains $100, the price of books remains $25, but the price of movie tickets rises to $20: Your budget remains $100, the price of movie tickets remains $10, but the price of a book falls to $15:

Increase Decrease Increase

What are the two major ways in which an economy can grow and push out its production possibilities curve? ____ in resource supplies and ____ in technology.

Increases Advances

Economic resources are the natural, human, and manufactured ____ used to produce goods and services.

Inputs

With these curves, the optimal allocation of resources to a particular product will occur when:

MB = MC

The consumer price index rose by 3.8 percent from August 2011 to August 2012:

Macroeconomics

The unemployment rate in the United States was 8.1 percent in August 2012:

Macroeconomics

U.S. output, adjusted for inflation, decreased by 2.4 percent in 2009:

Macroeconomics

Making choices based on comparing marginal benefits with marginal costs:

Marginal analysis

A U.S. software firm discharged 15 workers last month and transferred the work to India:

Microeconomics

An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise:

Microeconomics

Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point:

Microeconomics

For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units. 3,000 units at which MC = $10 and MB = $13: 11 units at which MC = $4 and MB = $3: 43,277 units at which MC = $99 and MB = $99: 82 units at which MC < MB: 5 units at which MB < MC:

More Fewer Current number More Fewer

The next-best thing that must be forgone in order to produce one more unit of a given product:

Opportunity cost

In a market system scarce goods are allocated through the operation of what must be ____ in using a resource for its next best use.

Sacrificed

Suppose that, on the basis of a nation's production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires, but that it can get the robot from another country in exchange for 9,000 pizzas. Now consider the following statement: "Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus 'move outside its production possibilities curve.'" Which of the following explains the relationship between the situation described and the statement? Specialization and trade have the ____ effect as having more and better resources or discovering improved production techniques.

Same

Which of the following best describes the concept of utility and economic behavior? ____ from consuming goods or services.

Satisfaction

The marginal cost curve is ____ sloping.

Upward

The pleasure, happiness, or satisfaction obtained from consuming a good or service:

Utility