eco quiz 1

For a country X producing only two products, A and B, the production possibilities curve (PPC) can be used to show that the implicit opportunity cost of producing A should always be declining. True False

False

Division of labor in some cases is used to explain why countries gain when specializing in producing fewer goods and services. True False

TRUE

If a country produces only two products, then by looking at the country's production possibilities curve (PPC), one can see that the opportunity cost of producing one of the products is the same as (equal to) the marginal cost of producing that product. True False

TRUE

It is better to evaluate economic decisions at the marginal, where the decision has to be made as long as its marginal benefit exceeds its marginal cost, if not equal to its marginal cost. True False

True

For a country X producing only two products, A and B, when other things remain equal, points along the country's production possibilities curve (PPC) can be used to show which of the following? All of the above is true. The opportunity cost of producing A is the change in B that results from one unit change in A. The opportunity cost of producing one unit of A is how many units of B should be sacrificed. The opportunity cost of producing A is how many units of B should be sacrificed to increase A by one unit.

All of the above is true.

If the US government believes that the minimum wage is too low in almost all states, what should the government consider before going forward to raise the current federal minimum wage? Only the economic costs associated with increasing the federal minimum wage. All possible costs and benefits associated with increasing the federal minimum wage. Nothing to consider, because there are no costs associated with increasing the federal minimum wage. Only the social costs associated with increasing the federal minimum wage.

All possible costs and benefits associated with increasing the federal minimum wage.

Why economies may gain when specializing in producing fewer goods and services? Because producing fewer products with higher scales allows for an advanced level of "division of labor". Because producing at a higher scale in fewer products always implies higher profits for the producers and greater consumption level for the buyers. Because producing at a higher scale in fewer products always allow consumers to get the products at lower prices. All of the above can be used to explain the gains from specialization in production.

Because producing fewer products with higher scales allows for an advanced level of "division of labor".

Because the number of available goods and services is uncountable, countries may never gain less if they specialize endlessly in producing fewer goods and services. True False

FALSE

For any economy, the "scarcity" problem simply means that the available free resources are "not enough" to produce all goods and services required to satisfy the unlimited human wants. True False

FALSE

What can be used to explain why countries may not always benefit from the specialization in producing fewer goods and services? For a given firm, producing at an extremely high scale should cause the total production cost to be greater than the total revenue. For a given country, producing fewer products at extremely high production scales should increase the country's potentials to engage in international trade. For a given country, producing fewer products at extremely high production scales should lower the country's potentials to engage in international trade. For a given firm, producing at an extremely high scale may embrace higher average cost of production.

For a given firm, producing at an extremely high scale may embrace higher average cost of production.