ECON 2301 Chapter 2 Quiz

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. a) allocative efficiency b) the production possibilities frontier c) trade-offs d) scarcity

a) allocative efficiency

Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: a) 10 points on the economics exam b) 8 points on the history exam c) 7 points on the economics exam d) 12 points on the economics exam

c) 7 points on the economics exam

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. a) Opportunity cost b) productive efficiency c) budget constraint d) production possibilities frontier

c) budget constraint

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. a) personal preference b) utility level c) budget constraint d) opportunity set

c) budget constraint

The marginal benefit of a slice of pizza is the: a) total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices b) difference between the value of the slice to the consumer and the price of the slice. c) maximum amount that a consumer is willing to pay for the slice. d) price of the slice of pizza

c) maximum amount that a consumer is willing to pay for the slice.

In many cases, it is reasonable to refer to the ________________ as the price. a) budget constraint b) sunk cost c) opportunity cost d) budget constraint

c) opportunity cost

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: a) nothing, because he enjoys playing basketball more than studying. b) the increase in skill he obtains from playing basketball for that hour. c) the benefit to his grades from studying for an hour. d) nothing, because he had a free pass into the sports complex to play basketball.

c) the benefit to his grades from studying for an hour.

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. a) budget constraint b) opportunity set c) utility d) production possibilities frontier

c) utility

Marginal thinking is best demonstrated by: a) 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. b) deciding to never purchase a coat made with animal skins or furs c) acquiring the information relevant to a choice before making that choice d) measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

a) 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.

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. a) normative statement b) budget constraint c) trade-off d) opportunity cost

a) normative statement

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. a) opportunity set b) consumption choice c) time value of money d) risk premium

a) opportunity set

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. a) utility b) marginal benefit c) opportunity cost d) sunk costs

a) utility

Which of the following would most likely shift the production possibilities curve inward? a) an increase in the number of hours factories are in use b) a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time c) an increase in the production of capital goods d) technological progress

b) a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

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

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

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. a) law of trade-offs b) law of diminishing marginal utility c) production possibilities frontier d) law of increasing marginal utility

b) law of diminishing marginal utility

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. a) utility b) marginal analysis c) the budget constraint d) consumption

b) marginal analysis

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: a) Point B b) Point C c) Point D d) All points on the production possibilities frontier are equally efficient.

d) All points on the production possibilities frontier are equally efficient.

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: a) the economy begins using its resources efficiently to produce both food and clothing. b) the economy operates at its productive capacity once it reaches Point B. c) the economy increases production of both clothing and food. d) All of the above occur.

d) all of the above occur

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. a) utility b) opportunity cost c) benefit analysis d) marginal analysis

d) marginal analysis

Scarcity exists because of: a) the market mechanism. b) specialization and division of labor. c) the allocation of goods by prices. d) unlimited wants and limited resources.

d) unlimited wants and limited resources.