MICRO Unit 1

True or False; An economies resource is always scarce, the scarcity can not change over time _____________.

False

A new technology improves the efficiency of extracting copper from ore

rightward shift of PPC

How are changes in opportunity cost related to decision-making behavior? 1. The lower the opportunity cost of doing an activity X, the more likely activity X will be done. 2. The higher the opportunity cost of doing activity X, the more likely activity X will be done. 3. Changes in the opportunity cost play no role in decision-making. 4. The lower the opportunity cost of doing activity Y, the more likely activity X will be done. 5. The higher the opportunity cost of doing activity Y, the less likely activity X will be done.

1. The lower the opportunity cost of doing an activity X, the more likely activity X will be done.

What is the most important task of all economics? 1. To make the best use of scarce resources 2. to balance imports and exports 3. to balance the government's budget 4. to save money to reduce the national debt

1. To make the best use of scarce resources

The cost of a trade-off is known as the ________ of that decision. 1. marginal cost 2. net cost 3. opportunity cost 4. comparative cost 5. explicit cost

3. opportunity cost

Economics is concerned with the trade-offs that emerge because of scarcity. The term "trade-offs" refers to: 1. the decision about whether households or businesses should bear the entire burden of the scarcity problem. 2. the buying and selling that occur as unwanted goods are exchanged for goods that are desired. 3. the alternatives given up when making choices. 4. recycling and transforming old goods into new goods to reduce scarcity problems. 5. forcing businesses to produce some goods and services and not others.

3. the alternatives given up when making choices.

Why would economists find it surprising if the CEO of a large company does his or her own housework? 1. The opportunity cost of CEO's time is quite high because they have an abundance of time to spend on housework. 2. The opportunity cost of CEO's time is quite low because they have a scarcity of time to spend on housework. 3. The opportunity cost of CEO's time is quite low because they have an abundance of time to spend on housework. 4. The opportunity cost of CEO's time is quite high because they have a scarcity of time to spend on housework. 5. The opportunity cost of a CEO's time is equal to that of everyone else that works at the same company.

4. The opportunity cost of CEO's time is quite high because they have a scarcity of time to spend on housework.

In economics, choices are necessary because of the presence of: 1. luxuries. 2. inefficiency. 3. needs. 4. scarcity. 5. incentives.

4. scarcity.

The opportunity cost of going to school rather than working is the cost of: 1. food. 2. housing. 3. clothing. 4. health care. 5. potential wages.

5. potential wages.

The opportunity cost for Elijah of going to a water park is: 1. the price of the admission pass. 2. zero, if he can go with his parents who will pay. 3. zero, if it is raining that day and the water park is closed. 4. the price of the admission pass plus the highest valued alternative activity Elijah could have done instead. 5. the highest valued alternative activity Elijah could have done instead.

5. the highest valued alternative activity Elijah could have done instead.

Identify the opportunity cost in the following: Your economics class is planning a two hour review session. KiKi can either go to the review session, play tennis, or watch a movie. _______________.

Cannot be determined because her next best alternative isn't given

Defense spending is reduced to allow government to spend more on health care

a movement along the line from point B to point C, (point C is greater quantity healthcare)

Where would you plot full employment on a production possibilities frontier? a)a point on the PPF b)a point beyond the PPF c)a point below the PPF

a)a point on the PPF

Opportunity cost is evident on the production possibilities frontier (PPF) graph: a)as you move from one point on the frontier to another point on the frontier. b)as you move from the origin to any inefficient point. c)as you move from one unattainable point to an efficient point on the frontier. d)as you move from an inefficient point to the origin. e)at any one single point on the graph.

a)as you move from one point on the frontier to another point on the frontier.

The opportunity cost of every investment in capital goods is: a)current consumption (consumer goods). b)future consumption (capital goods today). c)absolute advantage. d)comparative advantage. e)scarcity.

a)current consumption (consumer goods).

Greater investment in capital goods today leads to: a)greater growth in the production possibilities frontier (PPF) in the future. b)greater consumption today. c)the end of scarcity. d)less opportunity cost. e)scarcity.

a)greater growth in the production possibilities frontier (PPF) in the future.

A town on the Gulf Coast is battered by a massive hurricane that destroys most of its productive resources. The community's production possibilities frontier (PPF) would show an: a)inward shift of the PPF. b)outward shift of the PPF. c)outward rotation along the x axis. d)outward rotation along the y axis. e)increase in opportunity cost.

a)inward shift of the PPF.

The production possibilities frontier (PPF) shows: a)the trade-off between the efficient production of two different goods. b)the difference between micro analysis and macro analysis. c)the difference between normative and positive analysis. d)how a firm should price a new product. e)how price and quantity are related for a single good.

a)the trade-off between the efficient production of two different goods

When there is no comparative advantage between countries a)there are no gains from specialization and trade b)there must be an absolute advantage c)the benefits resulting from trade are increased d)each should try and specialize in the production of a particular commodity

a)there are no gains from specialization and trade

Where would you plot unemployment on a production possibilities frontier? a)a point on the PPF b)a point inside the PPF c)a point beyond the PPF

b)a point inside the PPF

When the opportunity cost to produce a good for 2 countries differ, a basis for mutually beneficial international trade exists. This situation describes the principle of a)economic growth b)comparative advantage c)equilibrium d)absolute advantage

b)comparative advantage

Think of the production possibilities frontier (PPF) model. When society is producing the largest possible output from its resources, it is operating: a)inefficiently. b)efficiently. c)with no opportunity cost. d)inside (within) the PPF. e)beyond its opportunity cost.

b)efficiently

Which of the following describes Jonathan having a comparative advantage in producing apples? a)being able to produce more apples (by volume) than anyone else b)giving up less production of other goods when producing an apple c)being able to produce more apples (by weight) than anyone else d)being able to sell apples at a lower price than anyone else and still make a profit

b)giving up less production of other goods when producing an apple

When the opportunity cost of producing a good rises as you produce more of it, you experience: a)normative economics. b)increasing relative costs. c)downward-sloping demand. d)inferior goods. e)increasing marginal utility.

b)increasing relative costs

As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF, you experience: a)decreasing relative cost. b)opportunity cost. c)macroeconomics. d)unlimited resources. e)unattainable combinations.

b)opportunity cost.

Economic growth can be depicted on a production possibilities frontier (PPF) as an: a)inward shift of the PPF. b)outward shift of the PPF. c)inward rotation along the x axis. d)inward rotation along the y axis. e)increase in opportunity cost.

b)outward shift of the PPF.

Suppose that in a time of crisis everyone pitches in and works much harder than usual. How is this represented by a production possibilities frontier? a)The economy moves from a point below the PPF to a point on the PPF. b)The economy moves from a point on the PPF to a point beyond the PPF. c)The entire PPF shifts out.

c)The entire PPF shifts out.

Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant. a)three or more variables b)None of these are true. c)one variable d)two variables

c)one variable

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an: a)increase in opportunity cost. b)inward shift of the PPF. c)outward shift of the PPF. d)outward rotation along the x axis. e)outward rotation along the y axis.

c)outward shift of the PPF.

Which of the following statements is normative? a)The newspaper reports that it is going to rain tomorrow. b)Africa is a continent. c)George Washington was the first president of the United States. d)Microeconomics is a great class.

d) Microeconomics is a great class

Suppose that a politician tells you about a plan to create two expensive but necessary programs to build more production facilities for solar power and wind power. At the same time, the politician is unwilling to cut any other programs. Assuming the resources are already being efficiently used in other programs, where would the point the politician is trying to reach be on the production possibilities frontier? a)an efficient point b)an inefficient point c)a possible point d)an impossible point

d)an impossible point

The production possibilities curve: a)shows all of those combinations of two goods that are most preferred by society b)indicates that any combination of goods lying outside the curve is economically inefficient c)shows all of those levels of production that are consistent with a stable price level d)is a curve between all combinations of two goods that can be produced and those combinations that cannot be produced

d)is a curve between all combinations of two goods that can be produced and those combinations that cannot be produced

The unemployment rate falls from 9% to 6% of the labor force

from a point inside the curve

The State of New York, the bottling law requires that consumers receive a 5 cent refund on returned empty bottles or cans. The state of New York is applying which economic way of thinking when enacting the legislation? _______________

incentives/benefits to get people to do something

Standardized test scores of high school and college students drop.

leftward shift of PPC

The economics results because there are __________ resources and __________ material wants.

limited, unlimited

For each scenario select from the following the economic principle best being illustrated: resources are scarce opportunity cost marginal cost / marginal benefit people respond to incentives To decide whether you should work one more hour per week, you compare the benefits from that additional hour of work to the costs of giving up an hour of exercise each week: You are using the economic principle of ______________.

marginal cost / marginal benefit