MicroEcon Ch 2 Quiz

Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?

A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.

If increasingly more units of good Y must be given up as each successive unit of good X is produced, then the PPF for these two goods is

a downward-sloping curve that is bowed outward.

Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is

a downward-sloping straight line.

If there is always a three-for-one tradeoff between goods X and Y, then the PPF between X and Y is

a downward-sloping straight line.

economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or OX and 30Y, or. It follows that the production possibility frontier (PPF) is

a downward-sloping straight line.

Productive efficiency implies that

gains are impossible in one area without losses in another.

PPF is bowed outward as a result of

increasing opportunity costs.

Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only?

(4)

economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or 0X and 30Y. It follows that opportunity cost of 1X is ___Y.

1.0

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is

3 loaves of bread for Andy and 1 loaf of bread for John.

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:

8 points on the history exam

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:

8 points on the history exam. 15 points on the history exam. 14 points on the history exam. ? 17 points on the history exam.

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

? All of these choices occur. the economy begins using its resources efficiently to produce both food and clothing. the economy operates at its productive capacity once it reaches Point B. the economy increases production of both clothing and food. All of these choices occur.

Along the production possibilities frontier, the most efficient point of production depicted in Figure 2.1 is:

? All points on the production possibilities frontier are equally efficient. Point B Point C Point D All points on the production possibilities frontier are equally efficient.

What is the reason for the law of increasing opportunity costs?

? As more of a good is produced, the taxes applied to the production of the good rise.

Why is there scarcity?

? Because our unlimited wants exceed our limited resources

An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in Figure 2-1 in the movement from:

? C to F A to B B to E C to F G to F

Which of the following is a positive statement?

? I enjoy summer evenings when it cools off.

What does it mean if a person makes a "decision at the margin"?

? The person compares marginal benefits and total costs and then decides what to do.

An economy can produce the following combinations of goods: 50X and 0Y, 40X and 10Y, 30X and 20Y, 20X and 30Y, 10X and 40Y, and 0X and 50Y. The production possibilities frontier (PPF) for the economy is

? a straight (downward-sloping) line because the opportunity cost of producing the two goods is constant.

The point where the PPF intersects the horizontal axis is

? attainable and efficient.

With a constant opportunity cost between goods A and B, the PPF would

? be a straight line.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible.

? 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.

? budget constraint ? opportunity cost

Positive economics is concerned with

? cause-effect relationships.

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.

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.

? diminishing marginal utility

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:

? either b) or c) occurs, but not as a result of a).

Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy:

? is not using its resources efficiently.

Productive inefficiency implies that

? it is impossible to obtain gains in one area without losses in another.

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.

? marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines.

? marginal utility

An economy exhibits productive efficiency if it produces

? maximum output with given resources and technology.

Within the production possibilities frontier (PPF) framework, choice is depicted by the

? need to select among the points making up the PPF

In economics, a synonym for utility is

? satisfaction.

Opportunity cost is the value of

? the best forfeited alternative.

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

In all cases, positive economics deals with

? what is.

Refer to Exhibit 2-7. The change in the PPF of the economy from PPF1 to PPF2 corresponds to an advance in technology that makes

resources completely unspecialized.

In the production possibilities framework, economic growth is depicted by the PPF

shifting rightward (away from the origin).

decrease in the quantity of resources

shifts the PPF inward.

An increase in the quantity of resources

shifts the PPF outward

Productive efficiency implies

the impossibility of gains in one area without losses in another.

If a production possibilities frontier (PPF) is concave downward, it follows that

the opportunity costs (of producing the good on the horizontal axis) rise as more of the good is produced.

Points outside (or beyond) the PPF are

unattainable.

Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A? ALEX WITH GOOD A OR AMBER WITH GOOD B

AMBER

Which of the following is an illustration of the law of increasing opportunity costs?

As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.

Which of the following statements is true?

If scarcity did not exist, neither would a PPF.

Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ is unattainable.

J

Refer to Exhibit 2-8. Through specialization and trade ____________________ can consume a combination of goods that lies beyond his/her PPF.

NOT: Maya, but not Mario,

Suppose Kelsey is taking just two courses and is at a point inside her PPF of grades. If Kelsey changes her work habits then it is impossible for either one of her grades to rise. both of her grades to rise. both of her grades to fall. either one of her grades to rise while the other grade remains constant. none of the above is impossible in this situation

NOT: both of her grades to fall.

PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are

NOT: relatively cheap at low levels of output.

If an economy is operating on its production possibilities frontier (PPF), are there any unemployed resources in the economy?

No, because if there were any unemployed resources the economy would be producing below its PPF.

Some of our farm fields are being left unused. Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and electronics products on the other axis)?

With unemployed resources, we are at a point inside the PPF.

The most inefficient point depicted in Figure 2.1 is:

Point A Point C Point D ? Point G

Which of the following statements is true?

Productive inefficiency implies that it is possible to produce more of one good and no less of another, but only if additional resources are made available. Productive efficiency implies that it is possible to produce more of one good and no less of another, even without additional resources. Productive inefficiency implies that it is impossible to produce more of one good and no less of another. ? Productive inefficiency implies that it is possible to produce more of one good and no less of another, even without additional resources.

In all cases, macroeconomics deals with

aggregates or the entire economy.

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point inside that PPF. Assuming that the PPF has not shifted, this could be due to

an increase in unemployment of some resources.

point where the PPF intersects the horizontal axis is

attainable and efficient

If the economy is on the production possibilities frontier (PPF), the economy is operating

b and c

Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society may move to PPF2 as a result of

both a and c

PPF is a straight line as a result of

constant opportunity costs.

Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs), but country 1 produces twice the output that country 2 produces. It follows that

country 1's PPF lies further to the right than country 2's PPF.

If it is impossible to produce more of one good without getting less of another, then the economy is operating

efficiently.

A society is productive inefficient when

it produces at a point inside or below its PPF. it does not produce the maximum output with its given resources and technology. it can produce more of one good without giving up some of another good. ? both a and b all of the above