chapter 2

7. Why is there scarcity?

C. Because our unlimited wants exceed our limited resources

4. 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. C to F

11. "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:

D. $44

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

D. All points on the production possibilities frontier are equally efficient.

1. Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.

A. normative statement

12. The opportunity cost of attending university is likely to include all except which of the following?

A. the cost of haircuts received during the school term

9. Scarcity implies that:

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

14. 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:

C. 7 points on the economics exam

8. Scarcity exits because of:

D. unlimited wants and limited resources.

18. Marginal thinking is best demonstrated by?

A. choosing to spend one more hour studying economics because you think the improvement in your

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

A. the production possibilities frontier

20. The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.

A. utility

13. Referring 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:

B. 15 points on the history exam.

19. The marginal benefit of a slice of pizza is the:

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

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

B. marginal analysis

16. 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.

C. budget constraint

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

C. opportunity cost

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

C. the benefit to his grades from studying for an hour

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

D. Point G

15. The opportunity cost of an action:

D. is a subjective valuation that can be determined only by the individual who chooses the action.