Chapter 1- True False
The production possibilities frontier (PPF) is downward sloping because of scarcity.
T
If an economy is experiencing high unemployment its level of output is inside its PPF
T
"no free lunch" means that we must pay money for everything we get
F
If we say that two variables are directly related, this means that an increase in one variable is associated with an increase in the other variable.
T
Resources are being efficiently allocated to a product when the marginal benefit (MB) of the product equals its marginal cost (MC)
T
The PPF bows outward form the origin because opportunity costs increase as the production of a good increases.
T
If the marginal benefit (MB) of an activity exceeds its marginal cost (MC), then society is under-allocating resources to this activity or producing too little.
T
According to marginal analysis a decision maker takes an action if the marginal benefit of the action is positive
F
An economic model is unrealistic and therefore of no practical significance
F
Economic growth is represented by a movement from a point inside the PPF to a point on the curve.
F
Economic models are limited to variables that are directly related to one another
F
Economics is primarily concerned with determining the most equitable distribution of society's income
F
For an economy to reach its maximum output, an economy must eliminate scarcity.
F
Form an economic perspective, then a student decides to attend another year of college the student has concluded that the marginal benefits of attending college has increased that year.
F
Given a substantial expansion of society's wants the economy can produce at a point outside its production possibilities frontier.
F
If an economy is operating efficiently, it is not possible to increase production of any good.
F
Scarcity arises when people find themselves living in poverty
F
Scarcity arises when there is never enough of anything
F
The effect of reducing high unemployment will be to shift the economy's PPF outward
F
The process of accumulating common stocks and bonds is known as investment
F
To realize an efficient allocation of resources an economy must achieve an equitable distribution of income.
F
An economic explanation for why most college-aged movies stars do not attend college is ___________________.
Opportunity cost too high
Allocative efficiency arises when the optimal amount of those goods and services most highly valued by society are produced.
T
An unemployed worker is a factor of production
T
Costs exist because resources are limited and have alternative uses.
T
Economic efficiency means that an economy is producing the maximum output from its available resources.
T
The opportunity cost of economic growth is the current _________________ that must be forgone.
consumption
When the marginal cost (MC) of an activity exceeds its marginal benefit (MB), then society is ____________ resources to this activity or producing too much, "there is too much of a good thing."
over-allocating
When the government chooses to old more roads these resources are no longer available for public education. This dilemma illustrates that concept of _______________.
tradeoffs, opportunity cost
