Econ Chapters 1-2

Possibility A Economics History I: 94 76 II: 87 84 III: 77 91 Refer to Table 2-1. A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

15 points on the history exam.

Which of the following is not a resource exchanged in the factor markets?

All of the above are traded in the factor market.

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another airplane.

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

A devastating earthquake destroys ten percent of the population in California. As a result:

California's production possibility curve shifts inward.

__________- a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

Economies of scale

Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.

False

In a market economy, government officials make most production decisions in a centralized manner.

False

In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

False

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

False

The main concern of economics is to study how well the stock markets are performing.

False

When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

False

Which of the following is an example of a pure market economy?

No nation has a pure market economy

There are four factors of production: land, labor, capital, and entrepreneurship.

True

To an economist, individuals are acting "rationally" if they are striving to do their best to achieve their goals.

True

Three economic questions must be determined in all societies. What are they?

What goods will be produced? How will goods be produced? Who will get the goods produced?

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

An example of a capital resource is:

a dump truck.

An economy may be operating at a point inside the production possibilities curve if:

a substantial amount of labor is unemployed. a substantial amount of machinery is idle. either b. or c. occur.

Which of the following will shift a production possibilities curve outward?

an improvement in technology

In a command economy, decisions about how to allocate resources are made:

by a central planning board.

In order for a student to acquire an education, many resources are required. Which of the following might be categorized as capital resources?

chalkboards, overhead projectors, and the expertise of professors

Economic models like the _________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

An economy's resources:

consist of land, labor, capital, and entrepreneurial skills.

A market economy depends on market mechanisms to:

determine the most efficient way of using resources.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected ____ doesn't change.

economy

The problem of scarcity:

exists because resources are limited relative to wants.

Economic resources are also known as:

factors of production.

The circular flow of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

Economics is a social science that primarily explores how:

goods and services are produced and distributed in a world with limited resources.

In the simple circular flow model:

households are demanders of products and suppliers of resources.

In the circular flow diagram model:

households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. both a and b are correct

A production possibilities curve that is "bowed out" or concave to the origin:

illustrates a tradeoff in which the opportunity cost of a good increases with the level of its production

Additions to human capital can be made through:

improved education and on-the-job training.

Capital, entrepreneurship, land, and labor are needed to produce goods and services. The respective payments for each of these factors of production are:

interest, profits, rent, and wages and salaries.

The use of large amounts of labor relative to capital in an economy indicates:

labor-intensive production.

Which of the following is not a factor of production?

legal institutions

The branch of economics that studies the aggregate decisions of all households and all firms is called:

macroeconomics.

The central question in economics is how to:

make the best use of scarce resources to satisfy our unlimited wants.

Economics can be divided into two main branches of study:

microeconomics and macroeconomics.

The basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

Money is not considered to be an economic resource because:

money is not directly used to produce goods and services.

Most of economic analysis assumes that people's actions are:

motivated by self-interest.

A market system:

produces answers to a society's "what" and "who" questions, but not the "for whom" question.

Most people consider economics a(n):

social science.

Economics is most importantly concerned with:

studying how we allocate scarce resources to satisfy unlimited wants.

Which of the following is not a payment made to households in exchange for the use of factors of production?

taxes

Human capital is:

the skill or knowledge of individuals.