Econ 101 Quiz 2

Which of the following is an example of a sunk cost?

Chris purchases a ticket for a movie but leaves halfway through because it is too scary.

Which of the following is a true statement about budget constraints?

Each point on the budget constraint represents a combination of two different goods whose total costs add up to the consumer's total budget

What is the opportunity cost of owning a business? I. The economic profits that the business earns II. The accounting profits that the business earns III. The profits that could be earned in another business using the same amount of resources

III only

What is true of the product combination that satisfies allocative efficiency?

It is the combination of products that society most desires

At one time, most of the cars produced in Mexico were sold in Mexico. Today, however, Mexico both exports and imports cars. How could comparative advantage explain this scenario?

Mexico specializes in the production of high-end cars, which it exports, and imports low-end cars that can be produced at lower cost elsewhere.

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above

all of the above

Which type of efficiency is discussed in the following statement?The particular mix of goods a society produces represents the combination that society most desires.

allocative efficiency

The law of diminishing returns states that as additional increments of resources ______________, the marginal benefit from those additional increments _______________.

are added; will decline eventually

The principle of diminishing marginal utility states that __________

as a person receives more of a good, the additional utility from each additional unit of the good declines

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:

c to f

Marginal thinking is best demonstrated by

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

When an entity can produce a good at a lower opportunity cost than another country, this is referred to as ________________

comparative advantage

The production possibilities frontier (PPF) has a ___________ because of the law of the diminishing returns

curved shape

What conditions must be present for productive efficiency?

given available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good.

When making a decision, rational people thinking at the margin will ___________ sunk costs

ignore

All points inside the production possibility frontier indicate:

inefficient production points.

The concept of comparative advantage says that a country will export a product only if

its opportunity cost of producing the product, relative to other goods, is at least as low as in other countries.

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be

positive statements

Which of the following is the best definition of marginal utility?

the additional utility that a consumer derives from consuming one additional unit of a good

The opportunity cost of attending university is likely to include all except which of the following?

the cost of haircuts received during the school term

Economists generally believe that a country should specialize in the production of a good or service if

the country can produce the product while forgoing fewer alternative products than any other country.

Adam Smith, In Wealth of Nations, introduced the concept of _____________ which suggests selfish individual actions could possibility lead to a broader social good.

the invisible hand

Bruce is allotted $22 per week to buy fishing equipment and ammunition. What is the opportunity cost if he spends all $22 on fishing equipment?

the lost opportunity to buy ammunition

Which description best fits the definition of opportunity cost?

the measure of cost by what is given up in exchange for what is obtained