Econ Test 1

Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:

an application of the Cost-Benefit Principle

The Scarcity Principle applies to:

everyone

The fundamental reason firms outsource is that:

hiring low-wage workers overseas reduces firms' costs

how do we (facts) indicates what

positive economics

Regarding specialization, it is generally true that:

specialization imposes costs as well as benefits

costs that have already been incurred and cannot be recovered(non-refundable)

sunk costs

Microeconomics differs from macroeconomics in that microeconomics focuses on:

the choices made by individuals and the implications of those choices

Which of the following would not be studied in macroeconomics?

How a sharp increase in gasoline prices is likely to affect SUV sales

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

an economic problem because Chris has only one hour, and engaging in one activity means giving up the other

The marginal cost of an activity is the:

change in the total cost of the activity that results from carrying out an additional unit of the activity

attainable points

inefficient and efficient points

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an:

inefficient point

if marginal benefit is less than marginal cost that is

irrational

A study of the impact of various government policies on economic growth would be considered:

macroeconomics

The field of economics that would be most concerned with a recent fall in interest rates is:

macroeconomics

whole

macroeconomics

individuals

microeconomics

Points that lie below the production possibilities curve are inefficient because:

more of one good could be produced without producing less of the other

An editorial in the paper argues that a person only should be allowed to attend school if the marginal cost of educating that person is less than the marginal benefit of educating that person. The writer's reasoning is an application of:

normative economics

should indicates what

normative economics

what is the reason for the bow shape on the PPC

opportunity costs increase and production increase

Production possibilities curves for large economies are generally bow-shaped because:

opportunity costs tend to increase with increases in production

During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why?

the opportunity cost of attending college is lower when unemployment is high

Which of the following would not be studied in microeconomics?

whether a federal budget should be balanced

comparative advantage

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

for which they have a lower opportunity cost compared to

In general, individuals and nations should specialize in producing goods ______ other individuals or nations.