Econ chapter 2

The presidential candidate should consider

All of the above.

Which of the following events would create economic growth, that is, shift the production possibilities frontier outward?

All of the above.

The cost of (1) a book the price you pay to buy the book, but the cost of (2) a book would include the time spent reading the book.

1-buying 2-consuming

What factors should state governments take into account when deciding how to alfocate the scarce funds in their budgets?

How best to allocate a state government's limited resources is a normative issue and depends on how governors and state legislators evaluate the trade-offs involved.

The production possibilities frontier will shift outward

if resources are used to produce capital goods.

What does increasing marginal opportunity costs mean?

Increasing the production of a good requires larger and larger decreases in the production of another good.

Is it likely that the production possibilities frontier in this situation would be a straight line or bowed out?

The production possibilities frontier would likely be bowed out because not all resources are equally well suited to produce both consumption and capital goods.

Do you agree with Baum that the economic system in Oz wouldn't work in the contemporary united States?

The system in Oz wouldn't work. The wants of people in the United States exceed the resources available to fulfill those wants.

A production possibilities frontier:

shows the maximum attainable combinations of two goods that may be produced with available resources.

It would be more moral to reduce pollution,

taking the cost into account because money spent on pollution reduction is not available for other worthy activities.

What trade-offs do state governments face when new prescription drugs are introduced with much higher prices than existing drugs?

I creases in spending on prescription drugs will require reductions in other government programs or services

Why might price regulations reduce the number of new drugs and medical devices that firms offer for sale?

By reducing firms' potential profits from selling new drugs and medical devices, price regulation may reduce the incentive firms have to devote resources to the research and development necessary to develop these products.

What do economists mean by scarcity?

Economists mean that unlimited wants exceed limited resources.

Which of the following is not scarce according to the economic definition?

None of the above.

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the _____the payoff to devoting additional resources to that activity.

Smaller

What are the implications of this idea for the shape of the production possibilities frontier?

The production possibilities frontier will be bowed outward.

We can show economic inefficiency:

with points inside the production possibilities frontier.

We can show economic efficiency:

with points on the production possibilities frontier.