Homework: Chapter 2

Which of the following cause(s) economic growth?

(incorrect) c and d.

In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

(incorrect) has shown no growth between Year X and Year Y.

Which of the following is true of the production possibilities curve?

All of these are correct.

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.

Bill has $10 to spend on a Superman, Batman, or an X-Men T-shirt. Bill buys the Superman T-shirt and the Batman shirt was a close second choice. What is the opportunity cost?

The Batman T-shirt.

The production possibilities curve for the nation of Economagic shifts to the left. This could have been caused by:

a war that destroyed some of Economagic's resource base.

The opportunity cost of an activity means the:

amount of other things that must be sacrificed in order to engage in the activity.

One source of economic growth is:

increasing capital.

The process of accumulating capital is called:

investment

According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study:

outweighs the extra cost.