CH 2

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour. The opportunity cost of attending class this evening is:"

44

"Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:"

All points on the production possibilities frontier are equally efficient.

Why is there scarcity?

Because our unlimited wants exceed our limited resources

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

C to F

Refer to Figure 2-1. The most inefficient point depicted is:

Point G

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

"The choice on a production possibilities set that is socially preferred, or the choice on an individual s budget constraint that is personally preferred, will display _____________________."

allocative efficiency

*WRONG ANSWER* The opportunity cost of an action:

can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.

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

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

"Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines."

law of diminishing marginal utility

"Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good."

marginal analysis

"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"

marginal analysis

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

marginal utility

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

"In many cases, it is reasonable to refer to the ________________ as the price."

opportunity cost

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

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

opportunity set

The lesson of __________ is to forget about the money that is irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

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

"As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good."

the production possibilities frontier

Scarcity exists because of:

unlimited wants and limited resources.

"In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income."

utility