Econ HW 1 and 2 multiple choice
the cost-benefit principle
An individual (or a firm or a society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs.
Working efficiently and splittng her time equally between the two tasks, Jordan can write 4 essays and outline 6 chapters each week. If Jordan's production possibilities curve is a straight line, it must be true that
6 essays and 3 chapter outlines would be attainable and efficient.
If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 3 pounds of toffee an hour. Suppose that Ana and Leo decide to work together as a team. Can they produce 2.5 pounds of fudge and 2.5 pounds of toffee each hour?
Yes, this point is attainable, but inefficient.
normative economics
makes prescriptions about the way the economy should work
The extra cost that results from carrying out one additional unit of an activity is the _____ of the activity.
marginal cost
The marginal benefit of an activity is the:
extra benefit associated with an extra unit of the activity.
positive economics
focuses on facts and cause-and-effect relationships
Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an
inefficient point
An editorial in the paper argues that a person only should be allowed to attend school if the marginal cost of educating that person is less than the marginal benefit of educating that person. The writers reasoning is an application of:
normative economics.
Outsourcing is a term increasingly used to refer to the act of
replacing relatively expensive American workers with low-wage workers overseas.
When a U.S. firm engages in outsourcing, it benefits ______ and harms ______.
the U.S. consumers of the firm's products; the firm's U.S. employees.
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
absolute advantage
the ability to produce a good using fewer inputs than another producer
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:
the benefits of studying for an additional hour exceed the costs of studying for an additional hour.
The opportunity cost of an activity includes the value of:
the next-best alternative that must be foregone.
Economics
the study of the production, distribution, and consumption of goods and services
The Principle of Increasing Opportunity Costs states that
when increasing production, resources with the lowest opportunity costs should be used first.
