ECON 101 Quiz 2
A farmer has 20 acres of land. He decides he will raise corn on part of it and hogs on the other part. He debates how much to allocate to each product. His choice of two products is which of the following?
a trade off
In economics, prices are a method of advising consumers about scarcity. In here cases, consumers typically respond in which way?
adjusting heir consumption
Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above:
all of the above occur.
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display ____________.
allocative efficiency
Economists define a group of goods available for consumption as which of the following?
an opportunity set
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.
Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy:
is not using its resources efficiently.
Constraints define the opportunity set and which of the following?
limit choices
Most choices involve ____________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal analysis
As a person receives more of a good, the ____________ from each additional unit of the good declines.
marginal utility
Philosophers draw a distinction between positive statements, which describe the world as it is, and ____________, which describe how the world should be.
normative statements
About 540 million passengers took plane trips in the United States in 2012. Since the 9/11 hijackings, security screening has become more intensive, and consequently, the procedure takes one hour longer than in the past. If the average price of time for air travelers is $25 per hour, the ________________ of delay in airports is 540 million hours x 25 dollars/hour, or $13.5 billion per year.
opportunity cost
Attending college is a case where the ____________ exceeds the monetary cost.
opportunity cost
In many cases, it is reasonable to refer to the ________________ as the price.
opportunity cost
No society can produce everything it wants due to which of the following reasons?
scarcity
The lesson of _____________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.
sunk costs
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:
the benefit to his grades from studying for an hour
As depicted in _______________, it is necessary to give up some of one good to gain more of the other good.
the production of possibilities frontier
In deciding how many hours to work, Beulah will make a choice that maximizes her ______________; that is, she will choose according to her preferences for leisure time and income.
utility
Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:
15 points on the history exam.
Which of the following characteristics relate to budget constraints?
A diagram that shows the possible choices.
Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:
All points on the production possibilities frontier are equally efficient.
Adam Smith suggested that demand and supply adjusted to each other due to what?
An invisible hand
Why is there scarcity?
Because our unlimited wants exceed our limited resources
Which of the following characteristics relate to sunk cost?
Costs that were incurred in the past and cannot be recovered, and thus should not affect current decisions.
Law of diminishing marginal utility is when it is impossible to produce more of one good without decreasing the quantity produced of another good.
False
The term utility describes a diagram that shows the combinations of output that are possible for an economy to produce.
False
Allocative efficiency is when the mix of goods being produced represents the allocation that society most desires.
True
Inflation is rise in the overall level of prices.
True
Sunk cost is costs that were incurred in the past and cannot be recovered, and thus should not affect current decisions.
True
The term efficiency refers to when it is impossible to get more of something without experiencing a tradeoff of less of something else.
True
The term marginal analysis refers to comparing the benefits and costs of choosing a little more or a little less of a good.
True
Time value of money is the cost of having to wait for repayment.
True
What is meant by productive efficiency?
When it is impossible to produce more of one good without decreasing the quantity produced of another good.
Which of the following characteristics relate to allocative efficiency?
When the mix of goods being produced represents the allocation that society most desires.
The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:
either b) or c) occurs, but not as a result of a)
A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned.
inflation
The opportunity cost of an action:
is a subjective valuation that can be determined only by the individual who chooses the action.