Micro: Unit 1

Nation Aga can produce either 3 units of good X or 1 unit of good Y with one hour of labor, while nation Kaza can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, mutually beneficial exchange can take place between Aga and Kaza if

Aga exchanges 212212 units of good XX for 1 unit of good Y.

Assume an economy uses one input, labor, to produce two goods, X and Y, with constant opportunity cost. Which of the following would cause a parallel shift to the right of the production possibilities curve

An increase in the amount of labor available for production

Nation Alpha can produce either 3 units of good X or 1 unit of good Y with one hour of labor, whereas nation Beta can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, which of the following is true?

Beta has an absolute advantage in the production of good X

Cost-benefit analysis assumes rational agents do which of the following?

Compare additional costs and additional benefits when making a decision

In the country Beta it takes two hours of labor to produce a unit of tea and four hours of labor to produce a unit of bread. In the country Zeta it takes three hours of labor to produce a unit of tea and nine hours of labor to produce a unit of bread. Which of the following is true?

Country Beta has the lower opportunity cost in producing bread and therefore a comparative advantage in producing bread.

Cindy and Martin both sew t-shirts in a small factory. Using the same resources, Martin can sew twelve t-shirts and Cindy can sew nine t-shirts in one day. Which of the following can be concluded from the given information?

Martin has an absolute advantage in sewing t-shirts.

If Nation X produces coffee at a higher opportunity cost than Nation Y, which of the following is true?

Nation Y must have a comparative advantage in producing coffee

Which of the following is associated with a command economy?

Public ownership of the means of production

Which of the following best explains why individuals and societies must make choices when presented with alternatives?

Resources are scarce

Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?

Sam has a comparative advantage in making blankets.

An economy produces two goods: X and Y. Its production possibilities curve is linear with the intercept on the Y axis at 1,000 units and the intercept on the X axis at 100 units. Which of the following statements is correct?

There is a constant opportunity cost with each unit of good X costing 10 units of good Y

Which of the following statements regarding specialization and trade is true?

With specialization and trade, a country can consume beyond its production possibilities curve.

Which of the following is an example of a scarce factor of production?

airplanes

Assume there are two goods in a market economy. The amount of each good produced is determined by

buyers and sellers' interactions in the market for each good

Which of the following economic systems primarily relies on prices for allocating resources and goods?

free- market

Compared to a market economy, in a command economy there is greater

government involvement in the allocation of resources

A power company decides to use wind turbines to provide electricity instead of coal. Which basic economic question does this decision answer in a free market economy?

how will goods and services be produced

An outward shift of a production possibilities curve can be caused by

improving technology

Which of the following explains why a production possibilities curve is often represented as concave (bowed out) from the origin?

increasing opportunity cost

the basic economic problem of all countries is the existence of

limited resources and unlimited wants

Because of conflict and political instability in Country Y , millions of its citizens emigrate to Country X. Which of the following best explains what will happen to Country X's production possibilities curve (PPC)

ppc will shift outwards overtime

Individuals in any society must make choices regarding the types of goods and services to be produced because

resources are scarce and human wants are unlimited

The study of economics exists because people are confronted with the basic problem of

scarcity

Oren's father tells Oren he can have one dessert after dinner. He can choose from a scoop of ice cream, a slice of apple pie, a cup of chocolate pudding, or a piece of fruit. Oren prefers chocolate pudding to a piece of fruit; he prefers apple pie to chocolate pudding; and he prefers ice cream to apple pie. If Oren chooses a scoop of ice cream, what is his opportunity cost?

slice of apple pie

Which of the following is an example of a nonrival resource?

solar engery

In contrast to a market economy, a command economy relies on which of the following?

the government to allocate resources

As a factor of production, capital refers to

tools and machinery used to produce goods and services