Quiz 2

Elisa is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that people face tradeoffs. improvements in efficiency sometimes come at the expense of equality. people respond to incentives. rational people think at the margin.

A

Look at graph Question 17 acquire more resources or experience a technological advance. begin using its available resources more efficiently than it is currently using them. None of the above are correct; the economy will never be able to reach point L. shift resources away from the production of nails and toward the production of hammers.

A

Look at graph Question 18 4 cups of coffee . efficiency. More than one of the above is correct. employment.

A

Unemployment would cause an economy to produce inside its production possibilities frontier. produce outside its production possibilities frontier. experience an inward shift of its production possibilities frontier. produce on its production possibilities frontier.

A

Which of the following is a positive, as opposed to a normative, statement? The US Department of Justice sued AT&T to block its merger with T-Mobile. The wireless telephone service market is too highly concentrated. Antitrust laws should be used to prevent further concentration in the wireless telephone service market The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers.

A

Which of the following is an example of a normative, as opposed to positive, statement? All of the choices are normative statements. The federal government should raise taxes on wealthy people. The social security system is a good system and it deserves to be preserved as it is. Gasoline prices ought to be lower than they are now.

A

Which of the following is an example of a positive, as opposed to normative, statement? More than one of the above are positive statements. When the minimum wage is increased, unemployment is a predictable consequence. Increasing government spending is the best way to help the economy move out of a recession. The income tax rate should be increased to offset the budget deficit.

A

Look at graph Question 15 50 blankets. zero. 50 blankets and 60 pillows. 60 pillows.

B

Look at graph Question 19 All of the choices are correct. economic growth. simultaneous technological advances in the book and DVD industries. a reallocation of resources away from the production of DVDs and toward the production of books.

B

Look at graph Question 9 More output can be produced at point A but no additional output can be produced at point B. All resources are fully employed at point A but there is unemployment at point B. This economy produces more blankets at point B than at point A. Point B is unattainable with current resources, but point A is attainable.

B

Which of the following is a correct statement about production possibilities frontiers? An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. An economy can produce only on the production possibilities frontier. An economy can produce at any point inside or outside a production possibilities frontier.

B

College-age athletes who drop out of college to play professional sports are not rational decision makers. underestimate the value of a college education. are well aware that their opportunity cost of attending college is very high. are concerned more about present circumstances than their future.

C

High-school athletes who skip college to become professional athletes usually do so because they cannot get into college. obviously do not understand the value of a college education. understand that the opportunity cost of attending college is very high. are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.

C

Look at graph Question 12 75 baseballs. 125 baseballs and 240 bananas 125 baseballs. 240 bananas.

C

Look at graph Question 13 50 baseballs. 50 baseballs and 60 bananas. zero. 60 bananas.

C

Sheryll decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is nothing, since she would have received less than $30 of enjoyment from the video. the $30 she earns working. the enjoyment she would have received had she watched the video. the $30 minus the enjoyment she would have received from watching the video.

C

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the mount of resources that must be devoted to its production. number of dollars that must be spent to produce it. amount of the other good that must be given up. market price of the additional amount produced.

C

Which of the following is an example of a normative, as opposed to positive, statement? If the price of a product decreases, people's willingness to buy that product will increase. If the national saving rate were to increase, so would the rate of economic growth. Reducing tax rates on the wealthy would benefit the nation. The elimination of trade restrictions would increase an economy's standard of living

C

Which of the following statements about models is correct? Models cannot be used to make predictions. Models cannot be used to explain how the economy functions. Models assume away irrelevant details. The more details a model includes, the better the model.

C

Which of the following statements best captures the relationship between microeconomics and macroeconomics? For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies. Microeconomics and macroeconomics are distinct from one another, yet they are closely related. Microeconomists study markets for small products, whereas macroeconomists study markets for large products.

C

If an economy is producing efficiently, then it is not possible to produce more of any good at any cost. it is possible to produce more of one good without producing less of another good. it is possible to produce more of both goods without increasing the quantities of inputs that are being used. there is no way to produce more of one good without producing less of another good.

D

Look at Table Question 25 400 socks 100 socks 200 socks 300 Socks

D

Look at graph Question 16 L, M, Q L, M N, O, P L, M, N, O, P

D

Look at graph Question 8 B,C A,B D,H F,G

D

When an economy is operating inside its production possibilities frontier, we know that economic growth would have to occur in order for the economy to move to a point on the frontier. in order to produce more of one good, the economy would have to give up some of the other good. all of the economy's resources are fully employed. there are unused resources or inefficiencies in the economy.

D