ECO-251: Chapter 1 - Limits, Alternatives, and Choices

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events.

avoids; scientific; actual

Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______.

the economizing problem

The outward bowing shape of the production possibilities curve is due to ______.

the law of increasing opportunity costs

The optimal allocation of resources occurs when ______.

the marginal benefit of the good equals the marginal cost

______ goods satisfy wants directly, whereas ______ goods do so indirectly.

Consumer; capital

Points ______ the production possibilities curve represent a maximum output of two products as long as the economy is fully employed.

along

A consumer's ______ line or constraint shows various combinations of two products that can be purchased with a specific amount of income. Listen to the complete question

budget

Factories, storage, transportation, and machinery are all examples of ______ goods.

capital

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered as society's scarce _______ resources.

economic

This ______ table lists the different combinations of pizza and robots that can be produced with a specific set of resources.

production possibilities

Which of the following describes a budget line?

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

A point that lies inside the production possibilities curve reflects which of the following?

A failure to achieve full employment

Which of the following enables society to produce more goods with current resources?

Advances in technology

What does every point on a budget line graph represent?

All combinations of goods that can be purchased with a given income

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?

Because of our limited incomes conflicting with our insatiable wants for goods and services

In which of the following ways do capital goods differ from consumer goods?

Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods. Consumer goods satisfy wants directly.

Specializing and participating in international trade allows an economy to do which of the following?

Circumvent the output limits imposed by its own production possibilities curve Increase the quantities of capital and consumer goods available to society

Which of the following combinations are unattainable given a consumer's budget line?

Combinations that fall beyond the budget line

Which of the following combinations are attainable given a consumer's budget line?

Combinations that fall inside the budget line Combinations that fall on the budget line

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following?

Factors of production

True or false: Economists use the terms "capital" and "money" interchangeably.

False

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

False

What do combinations of output that fall inside the production possibilities curve represent?

Goods that are attainable Less total output than points on the curve

When a country engages in international specialization, it focuses on producing which of the following?

Goods with the lowest opportunity costs

Which of the following can be stated as potentially true about any economy?

Its current choice of position on its production possibilities curve helps determine the curve's future location.

What do economists call the physical actions and mental activities that people contribute to the production of goods and services?

Labor

______ economics considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies.

Normative

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources?

Production possibilities curve

What is the cause of a society's increasing opportunity costs with respect to the production of goods?

Resources that are not fully interchangeable

______ economies must forgo some of one good to gain more of another, whereas ______ economies are able to increase production of both goods.

Static; dynamic

Economic growth is the result of which of the following?

Technological advances Increases in the supply of resources Improvements in resource quality

Suppose an economy produces consumer goods and capital goods. Its current combination of production involves a higher level of capital goods than consumer goods. Which of the following can be inferred from this current choice on its production possibilities curve?

That its present choice in production may result in higher future prospects for economic growth

The following figure illustrates which of the following?

That the resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable. That as one moves to the right and produces more pizzas, the number of robots that must be given up rises.

A production possibilities curve with an increasing slope is the result of which of the following?

The law of increasing opportunity costs

Which statement best describes combinations of goods that are beyond the production possibilities curve?

They are unattainable.

Which statements best describe the combinations of goods that lie on the production possibilities curve?

They utilize all of an economy's available resources. They are attainable.

True or false: A decrease in income will shift the budget line to the left.

True

True or false: A trade-off occurs when some quantity of production of a good is given up in order to produce another good.

True

Which of the following resources would be considered to be land by an economist?

Water Oil and mineral deposits Forests Arable land

Consumers must forgo certain goods and services based on a limited budget because ______.

a consumer spends his or her limited budget purchasing a combination of goods and services that maximize his or her satisfaction

For economists, ______ goods include all manufactured aids used in producing consumer goods and services.

capital

Which of the following are general categories economists use to classify economic resources?

capital labor entrepreneurial ability land

The straight-line budget constraint indicates ______ opportunity cost.

constant

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.

consumers' incomes are limited

What is the simplified term economists use to refer to "factors of production"?

inputs

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced.

inside

A manufacturing firm builds a new warehouse to expand its inventory capacity. Economists refer to this activity as ______.

investment

In economics, the term ______ describes spending that pays for the production and accumulation of capital goods.

investment

The work-related activities of a teacher and doctor fall under the resource category of _______.

labor

From an economic standpoint, ______ includes all natural resources used in the production process.

land

As a result of our ______ incomes and ______ wants, it is in our self-interest to economize or pick and choose goods and services that maximize our satisfaction.

limited; insatiable

Economists do not include money as an economic resource because ______.

money produces nothing

Improvements in the methods of production allows for the creation of ______.

more goods with available resources

The disagreement among economists typically revolves around ______.

normative economics

A production possibilities curve (PPC) illustrates the attainable combination ______,

of two goods that can be produced given a specific set of resources (Reason: It is true that two goods are illustrated on the graph. However, these two goods are meant to represent (imply) the combinations of the many goods that can be produced in an economy given a set of resources.)

Trade-offs arising from limited resources give rise to ______.

opportunity costs

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve.

outside

Unemployment in the economy is graphically represented by ______ the production possibilities curve.

points inside

A ______ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

production possibilities table

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

resources are being allocated efficiently

Arable land, water, machinery, and professional athletes are all considered economic ________ used in the production of goods and services.

resources, categories, factors, or inputs

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______.

scarce economic resources

An increase in income will ______.

shift the budget line to the right

The ratio of the price of two goods on a graphed budget line is measured by its _______.

slope

In this figure, obtaining more books by giving up some movies is called a(n) ______; whereas losing two books in order to gain 1 movie is referred to as ______ cost.

trade-off; an opportunity

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______.

unlimited

For better or worse, people have ______.

virtually unlimited wants