Unit one (micro)

The slope of a production possibilities curve is ___ because ____

Negative; producing more of one good requires producing less of the other ( the downward slope of the production possibilities curve shows that having more of one good means having less of the other.)

Who Time to make pie time to make cake Martha 60 Minutes 80 Minutes Julia 50 minutes 60 Minutes Refer to table above. According to the table, Martha has the absolute advantage in:

Neither pies nor cakes

Units of activity Total Cost Total Benefit 0 $0 $0 1 $30 $100 2 $40 $160 3 $60 $190 4 $100 $210 5 $150 $220 6 $210 $225 Refer to the table above. The avg benefit of 2 units of activity is:

$80

To earn extra money in the summer, you grow tomatoes and sell them at the local farmers' market for 30 cents per pound. By adding compost to your garden, you can increase your yield as shown in the table below. Pound of Compost Pounds of tomatoes 0 100 1 120 2 125 3 128 4 130 5 131 6 131.5 If compost costs 30 cents per pound and your goal is to make as much profit as possible, how many pounds of compost should you add?

5 lbs of compost The The benefit of adding a pound of compost is the extra revenue you'll get from the extra tomatoes that result. Therefore, one should continue to add compost until the revenue exceeds the cost. By adding 5 pounds of compost you'll get an extra 1 pound of tomatoes, or 30 cents in extra revenue, which covers the 30-cent cost of the extra pound of compost. But adding the sixth pound of compost gives only 0.5 extra pounds of tomatoes, so the corresponding revenue increase (15 cents) is less than the cost of the compost. You should add 5 pounds of compost and no more.

All else equal, relative to a person who earns minimum wage, a person who earns $30 per hour has:

A higher opportunity cost of taking the day off work ( all else equal, giving up a day of work "costs" the person who can earn $30 per hour more than it does someone who earns the minimum wage)

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

An economic problem because Chris has only one hour, and engaging in one activity means giving up the other (Chris has to make a trade-ff: if Chris goes to the gym, Chris cannot study and vice versa)

If Al has an absolute advantage over Beth in preparing meals, then: A. it takes Al more time to prepare a meal than Beth. B. the problem of scarcity applies to Beth but not to Al. C. Al's opportunity cost of preparing a meal is lower than is Beth's D. Al can prepare more meals in a given time period than Beth

D. Al can prepare more meals in a given time period than Beth (absolute advantage means being able to produce more in a given time period)

The marginal benefit of an activity is the

Extra benefit associated with an extra unit of the activity ( marginal cost is the additional cost of carrying out one additional unit of an activity)

In general, individuals and nations should specialize producing goods ____ other individuals or nations

For which they have a lower opportunity cost compared to ( the principle of comparative advantage states that people should specialize in the activities for which their opportunity cost is the lowest)

a study of the impact of various government policies on economic growth would be considered

Macroeconomics (Macroeconomics is the study of the performance of national economies and the policies that governments use to try to improve that performance)

The extra cost that results from carrying out one additional unit of an activity is the ____ of the activity.

Marginal cost (Marginal cost is the additional cost of carrying out one additional unit of an activity)

The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:

Microeconomics (Microeconomics is the study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets)

A study that deals with the salaries of university professors would be considered

Microeconomics (the study of individual markets, such as the market for professors, is part of microeconomics)

One thing that distinguishes normative economic principles from positive economic principles is that

Normative principles tell us how people should behave, and positive principles tell us how people will behave (normative economic principles describe how people should behave; positive economic principles predict how they will behave)

According to the Cost-Benefit Principle, you should go see the latest Star Wars movie with your friends this week-end if:

The extra benefits of seeing the movie are greater than the extra costs of seeing the movie ( the cost-benefit principle tells us that we should make choices by weighing the extra benefits of an action against its extra costs)

The production possibilities curve shows:

The maximum production of one good for every possible production level of the other good (the production possibilities curve describes the maximum amount of one good that can be produced for every possible level of production of the other good)

Alex received a 4-year scholarship the State U. That covered tuition and fees, room and board, and books and supplies. if alex becomes a full-time student then:

The opportunity cost of attending State U. includes the money Alex could have earned working for 4 years. (even though Alex has no out-of-pocket costs, by attending State U Alex would be giving up on 4 years worth of earnings)

During times of high unemployment, college often observe an increase in enrollment even if tuition remains unchanged. Why?

The opportunity cost of attending college is lower when unemployment is high (Applying the Incentive Principle, if we observe more people going to college, then it is likely because either the benefit ofgoing to college has go up, or the cost of going to college has gone down. An increase in the unemployment rate lowers the opportunity cost of going to college because individuals who otherwise might have preferred to work, will be less able to find jobs)

Economics is best defined as the study of

how people make choices in the face of scarcity and the implications of those choices for

The Scarcity Principle applies to

everyone

According to the incentive principle, people will be less likely to smoke if the government A. increases taxes on smoking-cessation devices such as nicotine patches. B. increases taxes on cigarettes, effectively raising the price. C. subsidizes hospitals treating lung disease D. invests more money in cancer research

increases taxes on cigarettes, effectively raising the price. ( the incentive principle states that a person is more likely to take an action if its benefit rises, and less likely to do something if the cost rises)

If you have a comparative advantage in a particular task, then

you give up less to accomplish that task than do others ( comparative advantage means having a lower opportunity cost