Econ 1000 Week 1 Chapter 1

Given that resources are scarce,

opportunity costs are experienced whenever choices are made

Economic growth is represented by:

the outward shift of the production possibilities curve

Starting from point A on the production possibilities line where 30 units of timber and no food is produced, suppose that we choose to produce more food by moving one parcel of land out of timber production and into food production. In order to minimize the opportunity cost of producing more food, the first plot to be re-purposed should be..

A

Explains why economic choices must be made

The factors of production are scarce

The opportunity cost of playing tennis with your friend is:

the next-best alternative use of your time that is forgone

Assuming all parcel of land are the same, there is a constant trade-off in the production of timber and food. When all land is in use, one more unit of food produced will require...

two fewer units of timber produced

Opportunity cost may be defined as the:

value of goods or services that are forgone in order to obtain something else

Economic models

Focus on basic relationships

Which of the following statement is consistent with central planning?

Government planners play the dominant role in deciding how resources are allocated

In the model where we assume that all five parcels of land are NOT the same, the relationship between food and timber produced when all land is in use is:

Inverse and nonlinear

Which of the following is true about the factors of production?

The factors of production as well as technology determine the physical limits to production

Which of the following is the best example of the "WHAT" economic question?

What is the optimal mix of output?

According to the Latin phrase Ceteris Paribus

nothing else changed

Welfare programs are designed to address the;

"FOR WHOM" question

When society struggles with how to divide up the "economic pie," it is responding to the

"FOR WHOM" question

When society searches for the optimal method of producing goods and services, it is responding to the:

"HOW" question

Macroeconomics focuses on

the economy as a whole

Assuming all land is equally productive in either use, how much output of each type will be produced with 2/5 of the land in timber production and 3/5 of the land in food production?

12 units of timber and 9 units of food

In Table 1.1, the lowest opportunity cost of houses in terms of missiles is:

.00010 of a missile per house

In Table 1.1, the opportunity cost of increasing the production of houses from 17,000 to 21,000 in terms of missiles per house is:

0.00025 of a missle

It is not possible for society to produce this combination with current resources and technology, select the appropriate point

A (outside the curve)

In economics, which of the following is the best example of capital?

A computer used by a lawyer to prepare legal documents

Which of the following individuals is typically associated with laissez faire economic policy?

Adam Smith

Central planning is the principal method for making economic decisions in:

North Korea

A HEADLINE article in the text indicates that North Korea is running out of food. If North Korea is on its production possibilities curve and reduces its production of food so that it can increase the size of its military, this is most consistent with:

a movement along the production possibilities curve

Which of the following is associated with microeconomics?

an increase in sales for a chain of pet supply stores

Ceteris paribus when technological change allows a smaller amount of a resource to be used in producing any combination of two goods, there will be

an outward shift of the production possibilities curve

Which of the following best describes the way resources are allocated in the US economy?

by markets

If resources are limited:

choices that involve tradeoffs must be made

In economics, capital refers to:

goods that can be used to produce other goods

The primary concern of economics is the study of:

how best to allocate scarce resources among competing uses

Ceteris paribus, if North Korea increases the size of its military, then:

its production of consumer goods will decrease

Assuming the level of resources and technology are constant, if France decreases the size of its military, then:

its' production of consumer goods can increase

Which of the following is most consistent with a market economy?

laissez faire

In the model where we assume that all parcels of land are the same, the relationship between food and timber produced when all land is in use is:

linear and inverse

Which of the following is associated with microecon?

not "the country's unemployment rate"

Which of the following is NOT an assumption under which the production possibilities curve is drawn?

not "the economy's resources are fully employed"

Assuming all parcels of land are the same, when all land is in use, one more unit of timber produced will require...

one-half fewer units of food produced

The essential signal of the market mechanism is:

price

Which of the following best describes the "invisible hand"?

price signals drive the market mechanism

In attempting to answer the WHAT question, a society seeks to:

produce the optimal mix of output

The market mechanism:

relies on prices and sales to communicate consumer wants to producers

The central problem of economics is the

scarcity of resources relative to human wants