Macro economics chapter 2 quiz questions

principle of diminishing marginal utility states that ______.

As a person receives more of a good, the additional utility from each additional unit of the good declines.

Which of the following is an example of a sunk cost?

Chris purchases a ticket for a movie but leaves halfway through because it is too scary.

Which of the following is a true statement about budget constraints?

Each point on the budget constraint represents a combination of two different goods whose total costs add up to the consumer's total budget.

When making a decision, rational people thinking at the margin will _____________sunk costs.

Ignore

What is true of the product that satisfies allocative efficiency

It is the combination of products that society most desires.

At one time, most of the cars produced in Mexico were sold in Mexico. Today, however, Mexico both exports and imports cars. How could comparative advantage explain this scenario?

Mexico specializes in the production of high-end cars, which it exports, and imports low-end cars that can be produced at lower cost elsewhere.

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

Positive statements

What is the opportunity cost of owning a business?

The profits that could be earned in another business using the same amount of resources

The particular mix of goods a society produces represents the combination that society most desires.

allocative efficiency

The law of diminishing returns states that as additional increments of resources _____________, the marginal benefit from those additional increments ________________.

are added; will decline eventually

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.

When an entity can produce a good at a lower opportunity cost than another country, this is referred to as _________________.

comparative advantage

The production possibilities frontier (PPF) has a _________ because of the law of the diminishing returns.

curved shape

What conditions must be present for productive efficiency?

given the available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good

All points inside the production possibility frontier represent:

inefficient production points

The concept of comparative advantage says that a country will export a product only if

its opportunity cost of producing the product, relative to other goods, is at least as low as in other countries.

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

Which of the following is the best definition of marginal utility

the additional utility that a consumer derives from consuming one additional unit of a good

The opportunity cost of attending university is likely to include all except which of the following

the cost of haircuts received during the school term

Economists generally believe that a country should specialize in the production of a good or service if:

the country can produce the product while forgoing fewer alternative products than any other country

Every month Michael receives $45 to purchase ammunition and fishing equipment. What is the opportunity cost of allocating all $45 on fishing equipment?

the lost opportunity to buy ammunition