Ch 2 Quiz

Why is there scarcity? a. Because the opportunity set determines this. b. Because theory dictates it. c. Because our unlimited wants exceed our limited resources d. Because human wants are limited.

Because our unlimited wants exceed our limited resources

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: a. A to B b. B to E c. C to F d. G to F

C to F (from on PPF to directly inside PPF)

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: (inside PPF to on the PPF) 1. the economy begins using its resources efficiently to produce both food and clothing. 2. the economy operates at its productive capacity once it reaches Point B. 3. the economy increases production of both clothing and food. 4. All of the above occur.

all of the above occur

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. 1. Opportunity cost 2. productive efficiency 3. budget constraint 4. production possibilities frontier

budget constraint

Scarcity implies that: 1. consumers would be willing to purchase the same quantity of a good at a higher price. 2. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. 3. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. 4. consumers are too poor to afford the goods and services available.

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. 1. utility 2. opportunity cost 3. benefit analysis 4. marginal analysis

marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines. 1. utility 2. sunk costs 3. marginal utility 4. budget constraint

marginal utility

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. 1. negative statements 2. positive statements 3. tradeoffs 4. utilitarianism

positive statements

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. 1. sunk costs 2. opportunity costs 3. marginal analysis 4. budget constraints

sunk costs

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. 1. the production possibilities frontier 2. allocative efficiency 3. scarcity 4. utility

the production possibilities frontier