ECO2023 Final

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

All of the above occur

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

Which of the following statements most likely lies within the realm of macroeconomics?

An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

Budget constraint

Which of the following best characterizes the circular flow of income?

Businesses buy resources form households, and households use their income from the sale of resources to buy goods and services form businesses

Specialization:

Can lead to an increase in overall production

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.

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

Division of labor

Which of the following best describes a monetary policy tool?

Interest taxes

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

International trade

In the ____________, households work and receive payment from firms.

Labor market

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

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

Low inflation

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

Market oriented economy

In many cases, it is reasonable to refer to the ________________ as the price.

Opportunity cost

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

Opportunity set

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

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

Macroeconomics primarily examines:

broad issues such as national output, employment and inflation.

The basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.