Macroeconomic study plan questions
Which of the following statements are true regarding specialization and trade? (Check all that apply.)
-Specialization and trade make both parties better off -Specialization and trade create more total production than if there was no specialization. -Which good a person specializes in should be based on comparative advantage.
What are the opportunity costs you would have faced had you chosen to not attend college? (Check all that apply.)
-The social and networking experiences that occur while at college. -The higher future earnings you would receive as a result of earning a college degree.
Riding your bicycle 20 miles every day. (Check all that apply.)
-time spent on other leisure activities -time spent resting
Briefly describe the trade-offs involved in the following decision. Specifically, what are the opportunity costs associated with the decision? Pay particular attention to the trade-offs between present and future consumption. After a stressful senior year in high school comma Sherice decides to take the summer off instead of working before going to college.
A and B only
What do you think would happen to the flow of tax revenue to state governments if all 50 states legalized marijuana?
A and B only
In 2012, Colorado and Washington became the first states to legalize marijuana for recreational use, and have since been joined by Oregon, Alaska, and Washington, D.C. In 2014, Colorado is reported to have received over $50 million in tax revenue from the sale of recreational marijuana, much of which was slated to be used for school construction. The potential for increased tax revenues and the benefits these revenues can provide has a number of other states contemplating the possible legalization of recreational-use marijuana. Recall that efficiency means producing what people want at the least cost. Which of the following responses uses the concept of efficiency to argue in favor of states allowing the sale of marijuana?
A and B only.
Taylor receives $100 from his grandmother for his birthday and uses it all to buy shares of stock in Harley-Davidson, Inc.
A and B only. -The opportunity cost of buying the Harley Davidson shares is the price of the shares that could have been spent on other goods and services. -The opportunity cost of Taylor's decision is the value of the next-best alternative not chosen.
What are the benefits that citizens will likely receive if the bridge is built?
A and C only
What nonmonetary costs might be associated with legalizing marijuana use?
A and C only.
For each of the following situations, identify the full cost (opportunity cost) involved: Monique quits her $50,000 per-year job as an accountant to become a full-time volunteer at a women's shelter.
All of the above.
"As long as all resources are fully employed and every firm in the economy is producing its output using the best available technology, the result will be efficient."
All resources must be devoted to the production of a single good.
One of the scarce resources that constrain our behavior is time. Each of us has only 24 hours in a day, and we must allocate our time in a given day among competing alternatives. How do you go about allocating your time in a given day among competing alternatives? How do you go about weighing the alternatives? Once you choose a most important use of time, why do you not spend all your time on that activity?
As more and more time is spent on one activity, the opportunity cost of that activity in terms of other activities rises.
Betty Lou has a car washing and detailing business. She charges $20 to wash a car, a process that takes her 20 minutes and requires no help or materials. For car detailing, a process requiring 1 hour, she charges $50 net of materials. Again, no help is required. What do you suggest Betty Lou do to make the most efficient use of her resources?
Betty Lou should raise the price of car detailing or concentrate on washing cars.
On the Forbes 2015 list of the World's Billionaires, Bill Gates ranks at the top with a net worth of $79.2 billion. Does this "richest man in the world" face scarcity, or does scarcity only affect those with more limited incomes and lower net worth? Source: "The World's Billionaires," Forbes, March 2, 2015.
Bill Gates faces scarcity because resources are limited.
In economics, the concept of equity is rarely debated as most people agree as to what is and what is not equitable.
False
The discipline of economics began to take shape during the time of Franklin Roosevelt's New Deal.
False
Which of the following statements regarding the pure forms of command economies and laissez-faire economies is true?
Neither exist in the world.
The financial costs of obtaining a college education include tuition and fees, textbooks, and for many students the interest they will pay on student loans. There are also opportunity costs associated with obtaining a college education. Which of the following best represents an example of an opportunity cost you experience by choosing to go to college?
The earnings you would have obtained from getting a job right out of high school.
After receiving her master's degree, Molly chooses to enter the doctoral program in Behavioral Science at the University of Texas.
The opportunity cost of entering a doctoral program is the time Molly could have spent on other activities.
The Agrizone Corporation invests $16.5 million in a new inventory tracking system.
The opportunity cost of investing in a new inventory tracking system is any other projects Agrizone could have invested in.
An analysis of a large-scale survey of consumer food purchases by Mark Aguiar and Erik Hurst indicates that retired people spend less for the same market basket of food than working people do. Use the concept of opportunity cost to explain this fact.
The opportunity cost of time for retired people is lower than the opportunity cost of time for working people, so retirees choose to spend more time shopping for lower-priced items compared to people who are still working.
After a night of karaoke, Tiffany forgets to set her alarm and sleeps through her Economics final exam.
The opportunity cost of Tiffany's decision is a better grade on the exam.
Suppose two people decide to specialize and trade based on comparative advantage. Which of the following would be true?
They could reach a consumption point outside their production possibility frontier.
For each of the following, describe some of the potential opportunity costs: Going home for Thanksgiving vacation.
Time spent studying
Being an informed citizen requires a basic understanding of economics.
True
The process of analyzing the additional costs or benefits which arise from a decision is known as marginalism.
True
Which of the following is not one of the three basic questions that economists ask when exploring society?
Why is it produced?
If Davey can produce candles at a lower opportunity cost than Rebecca then Davey definitely has ________ in producing candles relative to Rebecca.
a comparative advantage
On a production possibility frontier, economic growth is represented by
a shift of the ppf up and to the right.
Hector decides to spend the summer backpacking across Europe after he graduates from Harvard University.
all of the above
Sanjay chooses to use his vacation time to paint the exterior of his house.
all of the above
Staying up all night to watch season 5 of Game of Thrones.
all of the above
The federal government using tax revenue to purchase 10,000 acres in Florida for use as a bird sanctuary.
all of the above
Using the concept of equity, argue for or against the legalization of recreational-use marijuana.
all of the above
You are an intern to the editor of a small-town newspaper in Mallsburg, Pennsylvania. Your boss, the editor, asks you to write the first draft of an editorial for this week's paper. Your assignment is to describe the costs and the benefits of building a new bridge across the railroad tracks in the center of town. Currently, most people who live in this town must drive 2 miles through thickly congested traffic to the existing bridge to get to the main shopping and employment center. The bridge will cost the citizens of Mallsburg $25 million, which will be paid for with a tax on their incomes over the next 20 years. What are the opportunity costs of building this bridge?
all of the above
High school football is arguably more popular in West Texas than in any other region of the country. During football season, small towns seem to shut down on Friday nights as local high school teams take to the field, and for the following week the results of the games are the talk of each town. Taking into consideration that many of these towns are one hundred or more miles away from any medium-sized or large cities, what might be an economic explanation for the extreme popularity of high school football in these small West Texas towns?
all of the above are plausible
Upgrading to a balcony suite for your cruise around the Mediterranean Sea.
an excursion you could have purchased with the money spent on the upgrade
To analyze the relationship between two variables while holding the values of other variables unchanged is a device known as
ceteris paribus.
The amount of time that unemployed workers can collect unemployment insurance is increased from 26 weeks to 96 weeks during a recession, resulting in workers remaining unemployed for a longer period of time.
does not shift
A radiation leak at a nuclear power plant results in the long-term evacuation of a 10,000 square-mile area, which significantly reduces the nation's productive capacity.
down and left
A command economy is an economy in which households and businesses dictate what products and services will be produced and how much to charge for those products and services.
false
In a simple, one-person economy, the person does not experience the concepts of scarcity or choice.
false
The data shows that Billabong experiences increasing opportunity costs because ____________.
for every surfboard it produces, it must give up increasing amounts of kayaks.
If a ppf has a negative slope and is bowed out, we experience ________ opportunity costs as we continue to move down and to the right along the curve.
increasing
As you move to the right along a standard bowed out production possibility frontier, the opportunity cost of the good on the x-axis will be
increasing at an increasing rate
A laissez - fairelaissez−faire economy is one in which:
individual people and firms pursue their own self-intrerest without any central direction or regulation.
A foreign government subsidizes its national airline to keep airfares down.
none of the above
The best alternative given up when we make a decision is called the ________ of that decision.
opportunity cost
All of the following are criteria frequently applied in judging economic outcomes except
profitability
Economic growth can be illustrated on a production possibility frontier (ppf) graph as a ____________.
shift of the ppf up and to the right; the shift could be parallel or biased toward one good.
Given scarce resources, how large, complex societies go about deciding what gets produced, how to produce it, and who gets what is produced is referred to as the economic problem.
true
In economics, investment refers to the creation of capital.
true
The basic coordinating mechanism in a free-market economy is price.
true
The collection and use of data to test economic theory is called empirical economics.
true
The idea that consumers dictate the mix of output found in a free market system is referred to as consumer sovereignty.
true
A change in immigration laws significantly increases the number of immigrant workers entering the country.
up and right
An innovation in desalinization technology allows for the more efficient conversion of salt water to fresh water.
up and right
An unexpectedly mild spring results in a bumper crop of citrus fruit in both Florida and California.
up and right
How would each of the following situations affect a nation's production possibilities curve? A law is passed that makes community college tuition free for all U.S. citizens.
up and right
If you were to log onto www.census.gov and click on "Foreign Trade," then click on "Statistics," and finally on "State Export Data," you will find a list of the products produced in your state, which are exported around the world. You discover that Ohio exports more to Canada and Mexico than all other countries combined. Is this fact surprising?
No, because of NAFTA, you would expect the export of goods to Canada and Mexico to be substantial.
Do any economic systems in the world reflect the purest forms of command or laissez-faire economies?
No, in most economies either the government plays a major role or there is some government involvement.
At the end of the 2014 NFL regular season, the Louisiana Lottery allowed customers to enter their non-winning New Orleans Saints scratch-off lottery game tickets in a final second-chance drawing, with a chance to win the 2015 Saints Season Prize Package Experience. This package includes 4 Plaza Sideline tickets and field passes to every 2015 Saints home game, a season parking pass, and overnight accommodations for each home game. Suppose you entered this second-chance drawing and won this Season Prize Package Experience for the Saints' 2015 season. Would there be a cost to you to attend the Saints' games during the 2015 season?
Yes, there would be an opportunity cost each time you went to a game.
