Chapter 2 Econ 130

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

C to F

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible.

budget constraint

Marginal thinking is best demonstrated by

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines

law of diminishing marginal utility

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.

normative statement

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is

the benefit to his grades from studying for an hour

Scarcity exists because of:

unlimited wants and limited resources

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income

utility

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above:

All of the above

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:

All points on the production possibilities frontier are equally efficient.

Refer to Figure 2-1. The most inefficient point depicted is:

Point G

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

The opportunity cost of an action

is a subjective valuation that can be determined only by the individual who chooses the action.