Macroeconomics Ch 1

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The opportunity cost of producing the 91st unit of wheat is approximately

1/10 of a unit of steel.

The vertical intercept of line (3) on the provided graph is 16, 24/16 or 1.5, or 24

24.

Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is:

4 pens

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

Economics

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

Fewer

Refer to the diagram. Which of the following is a positive statement?

Given its resources and technology, this society is incapable of simultaneously producing 3 units of tractors and 15 units of bread.

Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30 per pount.

How many pounds of potatoes will she purchase? 3 How many pounds would she purchase if she only had $2 to spend? 2

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

Increases in resource supplies and advances in technology Correct

Marginal-benefit and marginal-cost curves... With these curves, the optimal allocation of resources to a particular product will occur when

MB = MC

Which of the following statements is an explanation for the law of increasing opportunity costs?

Many economic resources are better at producing one product rather than another.

Making choices based on comparing marginal benefits with marginal costs:

Marginal analysis

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

Opportunity cost

Which of the following represents a normative economic statement?

The government ought to lower taxes so people have more money.

Explain the typical shapes of the marginal-benefit and marginal-cost curves.

The marginal-benefit curve is downward sloping. The marginal-cost curve is upward sloping.

Which of the following is a microeconomic statement?

The price of smartphones declined 2.8 percent last year.

Which of the following represents a positive economic statement?

The unemployment rate is 4.8 percent.

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

Utility

A production possibilities table for DVDs and computers is shown below. Type of Production Production Alternatives A B C D E Computers 0 20 40 60 80 DVDs 80 75 65 40 0

What is the opportunity cost of computers when moving from point A to point B? 5 DVDs What is the opportunity cost of computers when moving from point B to point C? 10 DVDs What is the opportunity cost of computers when moving from point C to point D? 25 DVDs What is the opportunity cost of computers when moving from point D to point E? 40 DVDs As we produce more computers, opportunity costs are increasing

Because investment and capital goods are paid for with savings, higher savings rates reflect a decision to consume fewer goods in the present and more goods in the future. Households in China save 40 percent of their annual incomes each year, whereas U.S. households save less than 5 percent. At the same time, production possibilities are growing at roughly 7 percent per year in China but only about 3.0 percent in the United States. Use the graphical analysis of "present goods" versus "future goods" to explain the difference between China's growth rate and the U.S. growth rate.

Which point, A or B, best represents the combination of present and future goods in the United States? Point A Which production possibilities curve best represents future growth in the United States? PPC2 Which point, A or B, best represents the combination of present and future goods in China? Point B Which production possibilities curve best represents future growth in China? PPC3

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: Increase Your budget remains $100, and the price of books remains $25, but the price of movie tickets rises to $20: Decrease Your budget remains $100, and the price of movie tickets remains $10, but the price of a book falls to $15: Increase

Economists

are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes.

A person should consume more of something when its marginal

benefit exceeds its marginal cost.

In a relationship between two variables, the "independent variable" refers to the

cause or source variable.

Suppose a city block was going to be used for a parking lot in both New York City and a small town. The opportunity cost would be

greater in New York City because the alternative uses of the city block are more valuable.

Which of the following is a capital resource?

software used by a firm

Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is

two.

In a market system, the allocation of scarce goods involves the consideration of

what must be sacrificed in using a resource for its next-best use.