Chapter 2 Study Guide
Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie ticket will cost $10 and a restaurant meal costs $20. Which of the following combinations is part of Alex's budget constraint?
2 movie tickets and 4 restaurant meals
Irfan has the budget constraint described in the graph below. If Irfan purchases 1 hour of tutoring per month and decides to increase his purchases to 2 hours per month, what is the opportunity cost of the 2nd tutoring hour?
2 restaurant meals
Which of the following statements is TRUE?
A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on an economy's production.
Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. Marginal analysis will help Martha in her decision making regarding how to spend her free time because ...
All answers are correct.
The graph below represents the Production Possibility Frontier for the country of OZ for 2 groups of goods or services: Infrastructure (like bridges and roads) and technology and research.
If the country of OZ is currently producing 10 infrastructure projects and wants to produce 5 more, the opportunity cost would be 2 research and technology projects.
An economy will achieve productive efficiency when it ___ and will achieve productive efficiency when it ___.
Is maximizing production and could not increase production of both goods at the same time; is producing the combination of goods and services that most benefit the people in the economy.
If the state of Texas has a lower opportunity cost for producing beef compared to Alaska, then...
Texas has a comparative advantage in beef, and Alaska should purchase beef from Texas.
Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. The utility patterns in the table illustrate the law of marginal diminishing utility because ...
The increase in utility for each additional hour Martha exercises falls
The graph below represents the Production Possibility Frontier for the country of Sandia for 2 groups of goods or services: Infrastructure (like bridges and roads) and technology and research. The Production Possibility Frontier of Sandia illustrates the law of diminishing returns because...
The opportunity cost of producing additional infrastructure projects is higher when Oz is already producing 3 than when it is producing 2 infrastructure projects.
