ECO2013 CH 1-2

if you can produce more of something than others with the same resources, you have

An absolute advantage.

An outward shift of a nation's production possibilities frontier can occur due to

An increase in the labor force.

Which of the following statements is true?

Betty has an absolute advantage in making both products.

A production possibilities frontier with a shape indicates increasing opportunity costs as more and more of one good is produced.

Bowed outward.

Which of the following is a positive economic statement?

If the price of gasoline rises, a smaller quantity of it it will be bought.

Economics is the study of ___ people make to attain their goals, given their ___ resources

Income; Available

_____ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Scarcity.

Firms

Sell goods in the product market

Households

Purchase final goods and services in the product market.

In a market economy, those who are willing and able to buy what is produced

Receive the most of what is produced.

In the circular flow model, households

Spend earnings from resource sales on goods and services in the product market.

Which of the following is an example of an activity undertaken by an entrepreneur?

Starting a snow cone business.

The circular flow model demonstrates

The roles played by households and firms in the market system.

Which of the following statements is true about revenue?

Revenue is the total amount received for selling a good or service.

The study of economics arises due to

Scarcity

Without technological advancement, how can a nation achieve economic growth?

Through an increase in supplies of factors of production.

Which of the following statements is false?

Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.

Refer to Table 2-4. What is Jack's opportunity cost of mowing a lawn?

Two-thirds of a garden cultivated.

Which of the following is a macroeconomic question?

What determines the unemployment rate?

Trade-offs force society to make choices, when answering what three fundamental questions:

What goods and services to produce; how will these goods and services be produced; and who receives them?

Who receives the goods and services produced in the United States depends largely on

How income is distributed.

Which of the following is a microeconomic question?

How will Apple decide on a selling price for the iPad?

An example of a factor of production is

A worker hired by an auto manufacturer.

Refer to Table 2-8. What is Betty's opportunity cost of making a statue?

1/2 of a bench.

Refer to Table 2-8. What is Wilma's opportunity cost of making a statue?

1/3 of a bench.

Refer to Figure 2-2. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized?

150 dozen roses.

Which of the following statements is true about a simple circular flow model?

Producers are buyers in the factor market.

Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

2.5 dozen roses.

What is the Opportunity cost of producing 1 ton of coconuts in Costa Rica?

2/3 of a ton of pineapples.

Refer to Table 2-8. What is Wilma's opportunity cost of making a bench?

3 statues.

The Stogie Shop, a cigar store in the mall,sells hand rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?

4 machine made cigars.

Consider the following statements: a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. c.Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

A and B.

The term "market" in economics refer to

A group of buyers and sellers of a product and the arrangement by which they come together to trade.

When you purchase a new surfboard you do so in the

Product market

Economic models

Are simplified versions of reality

Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision?

At least $60,000

In a market economy ,who decides what goods and services will be produced?

Consumers and producers.

Which of the following statements about economic resources is false?

Economic resources include financial capital and money.

A primary role of _______ is to describe how choices are made, analyze the results of the choices, and advise on how better decisions can be made.

Economists.

Refer to Figure 2-10. In the circular flow diagram, market K represents

Factor markets

Of the following examples, which would most likely be performed by an economist working for the Federal Reserve Bank of San Francisco?

Forecasting production tends in the Pacific Northwest.

Refer to Table 2-4. Which of the following statements is true?

George has an absolute advantage in both tasks.

In economics, tangible merchandise is referred to as

Goods.

The basic economic problem of scarcity

Has always existed and will continue to exist

Which of the following is a microeconomic question?

How does Fiat decide on the price of the 500 Pop model?

The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called

Microeconomics.

Refer to Table 2-4. What is Jack's opportunity cost of cultivating a garden?

One and a half lawns mowed.

Refer to Table 2-4. What is George's opportunity cost of mowing a lawn?

One half of a garden cultivated.

The concept of _____ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

Opportunity cost.

Economists assume that

Optimal decisions are made at the margin.

Refer to Figure 2-1. _____ is inefficient in that not all resources are being used.

Point A.

Refer to Figure 2-1. _____ is technically efficient.

Point B.

Refer to Figure 2-1. _____ is unattainable with current resources.

Point C.

Which of the following statements about positive economic analysis is true?

Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

The processes used to produce goods and services describes

Technology.

Human capital refers to

The accumulated skills and training workers have

Opportunity cost is defined as

The highest-valued alternative that must be given up to engage in an activity.

Which of the following is counted as 'capital' in economics?

The machines that workers have to work with.

The production possibilities frontier shows

The maximum attainable combinations of two products that may be produced in a particular time period with available resources.

Increasing marginal opportunity cost implies that

The more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.