Assignment 1

Refer to the below tables. Suppose that technology and the quality of resources are the same in both countries. We can conclude that:

Herbania has more resources than Duckistan.

Refer to the below tables. Suppose that the amount and quality of resources are the same in both countries. We can conclude that:

Herbania is technologically superior to Duckistan in producing civilian goods.

A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive?

Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.

Refer to the below tables. Opportunity costs of producing military goods are:

smaller in Duckistan than Herbania.

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

The marginal benefit of going to Spain increases.

Refer to the below diagram. This production possibilities curve is:

concave to the origin because of increasing opportunity costs.

The law of increasing opportunity costs is reflected in a production possibilities curve that is:

concave to the origin.

The law of increasing opportunity costs states that:

if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.

A country can CONSUME some combination of goods outside its production possibilities curve by:

specializing and engaging in international trade.

The concept of opportunity cost:

suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

The construction of a production possibilities curve assumes:

technology is fixed.

Opportunity cost is best defined as:

the amount of one product that must be given up to produce one more unit of another product.

In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that:

the marginal benefits of additional defense goods outweighed the marginal cost.

The production possibilities curve shows:

the various combinations of two goods that can be produced when society employs all of its scarce resources.

A production possibilities frontier can shift outward if

there is a technological improvement.

Consumers might leave a fast-food restaurant without being served because:

they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit.

The negative slope of the production possibilities curve is a graphical way of indicating that:

to produce more of one product we must do with less of another.

In drawing a production possibilities curve we hold constant:

both technology and resource supplies.

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population?

Advancements in technology that make labor more productive.

Refer to the below tables. Suppose that Duckistan and Herbania are each producing 14 units of civilian goods and 2 unit of military goods. Then:

Duckistan is fully employing its resources but Herbania is not.

College-age athletes who drop out of college to play professional sports

are well aware that their opportunity cost of attending college is very high.

A person should consume more of something when its marginal:

benefit exceeds its marginal cost.

The point on the production possibilities curve that is most desirable can be found by:

comparing marginal benefits and marginal costs.

Kara was out jogging and despite being tired, decided to run one more mile. Based on her actions, economists would conclude that Kara:

decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile.

The optimal point on a production possibilities curve is achieved where:

each good is produced at a level where marginal benefits equal marginal costs.

A rational decision maker takes an action only if the

marginal benefit is greater than the marginal cost.

Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of:

opportunity costs.

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates:

opportunity costs.

Candice 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.

The law of increasing opportunity costs exists because:

resources are not equally efficient in producing various goods.

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:

scarcity and opportunity costs.

Which of the following is an economic explanation for why most college-aged movie stars do not attend college.

the opportunity cost in terms of reduced income is too great

An exception to the advice "go to college, stay in college, and earn a degree" occurs when:

the opportunity cost of attending college is extraordinarily high.

Which of the following most closely relates to the idea of opportunity costs?

tradeoffs