U1 Study Guide Questions
d) As the production of cars increases, what happens to the OC of cars? A.It increases. B.It decreases. C.It remains the same.
A.It increases.
e) As the production of fighter jets increases, what happens to the OC of fighter jets? A.It increases. B.It decreases. C.It remains the same.
A.It increases.
If there is a shortage of one good or service, does it mean that there is a shortage of all goods and services? A.No. The shortage only applies to the specific market for a specific good or service. B.Yes. Since shortages cannot be eliminated, the markets for all goods and services face a shortage.
A.No. The shortage only applies to the specific market for a specific good or service.
In a market-oriented economy, who sets the price of a good or service? A.The buyers and the sellers set the price together through the interaction of Demand and Supply. B.Only the sellers through their interaction with Supply. C.The government sets the price. D.Only the buyers through their interaction with Demand.
A.The buyers and the sellers set the price together through the interaction of Demand and Supply.
d) What does comparative advantage mean? A.When one country can produce a good at a lower opportunity cost than another country. B.When one country can produce a good at a higher opportunity cost than another country. C.When one country can produce a good using fewer resources than another country. D.When one country can produce a good using more resources than another country. E.When one country can produce both goods.
A.When one country can produce a good at a lower opportunity cost than another country.
Which of the following is true of resources? A.Their availability is unlimited. B.They are inputs used to produce goods and services. C.When resource availability is increased, scarcity is eliminated. D.Both b and c.
B.They are inputs used to produce goods and services.
Can a shortage be eliminated? A.No, a shortage cannot be eliminated. B.Yes, a shortage can be eliminated by raising the price of the good or service. C.Yes, a shortage can be eliminated by lowering the price of the good or service.
B.Yes, a shortage can be eliminated by raising the price of the good or service.
Are all resources scarce? A.No, only some resources are scarce. B.Yes, all resources are scarce.
B.Yes, all resources are scarce.
What is the definition of scarcity? A.At a specified price, quantity demanded is greater than quantity supplied. B.Wants are limited and resources are unlimited; thus, we cannot satisfy everyone's wants. C.Wants are unlimited and resources are limited; thus, we cannot satisfy everyone's wants. D.At a specified price, quantity demanded is less than quantity supplied.
C. Wants are unlimited and resources are limited; thus, we cannot satisfy everyone's wants.
To make things simpler and to focus attention on what really matters, economists would A.Ignore all variables. B.Think at the margin C.Respond to incentives D.Use assumptions
D. Use assumptions
What is the definition of a shortage? A.Wants are unlimited and resources are limited; thus, we cannot satisfy everyone's wants. B.At a specified price, quantity demanded is less than quantity supplied. C.Wants are limited and resources are unlimited; thus, we cannot satisfy everyone's wants. D.At a specified price, quantity demanded is greater than quantity supplied.
D.At a specified price, quantity demanded is greater than quantity supplied.
Which of the following people would be considered unemployed according to official labor statistics? A.Sergeant Miriam of the U.S. Army. B.Fred, who raises his family's children, cleans his family's home, and prepares family meals. C.Zsa Zsa, who cannot earn her living as an actress while she is recovering from an injury. D.Bob, who quit his job as a dishwasher and now responds every day to the help wanted advertisements.
D.Bob, who quit his job as a dishwasher and now responds every day to the help wanted advertisements.
Can scarcity be eliminated? A.Yes, scarcity can be eliminated if we discover more resources. B.Yes, scarcity can be eliminiated if we lower the price of all goods and services. C.Yes, scarcity can be eliminated if we raise the price of all goods and services. D.No, scarcity cannot be eliminated.
D.No, scarcity cannot be eliminated.
The opportunity cost of attending college is likely to include all of the following except: A.The cost of required textbooks B.Tuition fees C.The income you forego in order to attend class D.The cost of haircuts received during the school term E.The cost of the paper and pencils needed to take notes
D.The cost of haircuts received during the school term
What is the most basic economic problem? A.Economic Growth B.Productivity C.Greed D.Profit E.Scarcity F.The theory of Demand and Supply
E. Scarcity
In 1 day: The US can produce 50 computers (C) or 1000 cases of wine (W). France can produce 25 computers (C) or 800 cases of wine (W). b. Who has an absolute advantage in computers? Who has an absolute advantage in wine? A.France has an absolute advantage in the production of both goods. B.Neither country has an absolute advantage in either good. C.The U.S. has an absolute advantage in producing wine; France has an absolute advantage in producing computers. D.The U.S. has an absolute advantage in producing computers; France has an absolute advantage in producing wine. E.The U.S. has an absolute advantage in the production of both goods.
E. The U.S. has an absolute advantage in the production of both goods.
Which of the following best defines rational behavior? A.Analyzing the total costs of a decision B.Analyzing the total benefits of a decision C.Undertaking an activity as long as the total benefit exceeds the total cost D.Undertaking an activity as long as the marginal benefit exceeds zero E.Undertaking an activity as long as the marginal benefit exceeds or equals the marginal cost
E. Undertaking an activity as long as the marginal benefit exceeds or equals the marginal cost
The unemployment rate in an economy is 6%. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is: A.6 million B.9 million C.12 million D.18 million E.24 million
UER = U/LF .06(150) = U B. 9 Million
c) Which of the following are assumptions of the PPF model: I.Only two goods are being compared. II.Producers want to maximize profits. III.The amount of resources is held fixed. IV.Technology is held constant. V.Utility is held constant. VI.The economy is operating at full employment and is productively efficient.
YES I. Only two goods are being compared III. The amount of resources is held fixed. IV. Technology is held constant VI. The economy is operating at full employment and is productively efficient NO II. Producers want to maximize profits. V. Utility is held constant.
In 1 day: The US can produce 50 computers (C) or 1000 cases of wine (W). France can produce 25 computers (C) or 800 cases of wine (W). a.What does absolute advantage mean? A.When one country can produce a good at a higher opportunity cost than another country. B.When one country can produce a good using more resources than another country. C.When one country can produce a good using fewer resources than another country. D.When one country can produce a good at a lower opportunity cost than another country. E.When one country can produce both goods.
C. When one country can produce a good using fewer resources than another country.
The natural rate of unemployment: A.means that the economy will always operate at its natural rate B.means that the economy will always realize its potential output C.is equal to the total of frictional and structural unemployment D.is a fixed unemployment rate that does not change over time
C. is equal to the total of frictional and structural unemployment
Identify each of the following as either a positive or a normative statement: a) UFOs land in my backyard at least twice a week. b) The study of physics is more valuable than the study of sociology. c) College students should study both physics and sociology. d) The unemployment rate in France is higher than that in the United States.
Positive Normative Normative Positive
Which of the following would be included in U.S. GDP? Answers are "YES" or "NO." a) A BMW (made in Germany) purchased in the U.S. b) A Honda (made in the U.S.) purchased in the U.S. c) A Ford (made in the U.S.) purchased in Canada d) A bakery buys chocolate chips to make cookies e) You buy chocolate chips to make cookies f) A bakery sells cookies to your neighbors g) Your kids sell cookies to your neighbors
a) no b) yes c) yes d) no e) yes f) yes g) no
