Quiz - Chapter Two

Possibilities Economics History I 93 75 II 85 86 III 74 92 Sabrina has to study for two examinations and has a limited amount of time. Look at the above table, which presents alternative possible exam scores with three alternative allocations of Sabrina's time. The opportunity cost of scoring a 93 on the economics exam instead of a 74 is: 19 points on the history exam. 8 points on the history exam. 18 points on the history exam. 17 points on the history exam.

17 points on the history exam.

Which of the following is an example of a sunk cost? Jenny purchases a new winter coat online but returns it because it is too small. Amy buys lunch at a restaurant and dislikes the food. The manager of the restaurant agrees to give her a refund for the meal. Kyle's laptop crashes, but it is still under warranty, so he is able to have it repaired at no cost. Chris purchases a ticket for a movie but leaves halfway through because it is too scary.

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? All along the budget constraint, giving up some of one good does not mean a consumer must also give up some of the other good. Each point on the budget constraint represents a combination of two different goods whose total costs add up to the consumer's total budget. The relative price of one good compared to the other determines the consumer's total budget. Some points along the budget constraint represent combinations of

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

What conditions must be present for productive efficiency? The mix of goods produced and their distribution to consumers maximize customer satisfaction. Workers are well-paid. Given available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good. Producers supply the quantity of each product that consumers demand.

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

What is the opportunity cost of owning a business? I. The economic profits that the business earns II. The accounting profits that the business earns III. The profits that could be earned in another business using the same amount of resources II only I only I and III only III only

III only

What is true of the product combination that satisfies allocative efficiency? It is one of many combinations of products that don't use all available resources. It is the combination of products that is most beneficial to the firms, but not buyers. It is a combination of products that is outside of the production possibilities frontier. It is the combination of products that society most desires.

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? The pattern is not due to comparative advantage but due to government restrictions on production. It cannot; comparative advantage predicts that a country either exports a product or imports it, not both. Mexico has a comparative disadvantage in automobiles. Mexico specializes in the production of high-end cars, which i

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.

Which type of efficiency is discussed in the following statement? The particular mix of goods a society produces represents the combination that society most desires. productive efficiency comparative advantage efficiency allocative efficiency production possibilities efficiency

allocative efficiency

The law of diminishing returns states that as additional increments of resources ______________, the marginal benefit from those additional increments _______________. are reduced, will decline eventually are added; will increase eventually are reduced; will remain the same are added; will decline eventually

are added; will decline eventually

The 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 increases as a person receives more of a good, the additional utility from each additional unit of the good declines people don't enjoy consuming more of a good people enjoy consuming more of a good

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

Marginal thinking is best demonstrated by: acquiring the information relevant to a choice before making that choice 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. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake deciding to never purchase a coat made with animal skins or furs

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 ________________. productive efficiency comparative advantage allocative efficiency natural resource distribution

comparative advantage

The production possibilities frontier (PPF) has a ___________ because of the law of the diminishing returns. indeterminate shape constant slope curved shape hooked shape

curved shape

When making a decision, rational people thinking at the margin will ___________ sunk costs. calculate recover ignore consider

ignore

All points inside the production possibility frontier indicate: economic growth. infeasible production points. efficient production points. inefficient production points.

inefficient production points.

The concept of comparative advantage says that a country will export a product only if All the other answers It can produce it using less labor than other countries its opportunity cost of producing the product, relative to other goods, is at least as low as in other countries. Its productivity is higher in producing the good than the productivity of other countries in producing it.

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. marginal utility marginal analysis opportunity cost budget constraint

opportunity cost

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. tradeoffs negative statements utilitarianism positive statements

positive statements

Which of the following is the best definition of marginal utility? All of the other three answers. the additional quantity produced as the firm adds one additional unit of an input the amount of utility divided by the number of units produced the additional utility that a consumer derives from consuming one additional unit of a good

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 tuition fees the income you forgo in order to attend classes the cost of required textbooks

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 production possibility frontier is closer to the origin than that of any other country. the country can produce the product while forgoing fewer alternative products than any other country. the production possibility frontier is further from the origin than that of any other country. the country can produce the product using more resources than any other country.

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

Adam Smith, In Wealth of Nations, introduced the concept of _____________ which suggests selfish individual actions could possibility lead to a broader social good. the invisible hand ceteris paribus market equilibrium comparative advantage

the invisible hand

Every month Michael receives $45 to purchase ammunition and fishing equipment. What is the opportunity cost of allocating all $45 on fishing equipment? the amount used to purchase fishing equipment the lost opportunity to buy ammunition the purchased fishing equipment the amount of time Bruce must work to purchase fishing equipment

the lost opportunity to buy ammunition