economics exam 1

Which of the following are accurate statements regarding globalization?

International agreements and treaties between countries have contributed to globalization. One way to measure globalization is examining the amount of imports and exports.

In marginal analysis, when comparing costs and benefits, an optimal choice is found when ______. Select two correct answers.

MB>MC, MB=MC

What term is best described as the additional satisfaction gained from purchasing a good given the price of the product?

Marginal utility per dollar

Which two explanations represent models in the study of economics?

Models simplify real world interactions for the purposes of illustration. Economic models are used to test theories.

What is true of a budget constraint?

budget constraint is a straight line

Microeconomics concentrates on which of the following?

firms, household debt management plans, household budgets

_______________ is the expanding cultural, political, and economic connections between people around the world.

globalization

In economics, utility can be described as _

a level of satisfaction

Which of the following is the best definition of marginal utility?

the additional utility that a consumer derives from consuming one additional unit of a good

Assume Brandon can buy either 1 DVD for $20 or 3 CDs for $25 . What is the opportunity cost if he decides to buy 3 CDs?

the lost opportunity to buy 1 DVD.

Bruce is allotted $22 per week to buy fishing equipment and ammunition. What is the opportunity cost if he spends all $22 on fishing equipment?

the lost opportunity to by ammunition

A nation's comparative advantage in the production of an item is determined by

the opportunity cost of producing the item relative to a trading partner's opportunity cost

True or False The slope is the same at every point on a budget line and different at various points on a production possibilities frontier.

true

True or false? In market economies, economic decisions are determined by market forces

true

True or false? The U.S. economy is less affected by globalization than most other countries relative to its GDP.

true

True or false? The division and specialization of labor has been a force against the problem of scarcity.

true

True or false? The marginal satisfaction associated with consumption of a product can also be described as the marginal utility.

true

Carissa has $15 to spend on folders and notebooks. Folders cost $1.25 each. Notebooks cost $2.50 each. Graph Carissa's budget constraint by moving the endpoints of the line segment in the graph.

15/1.25=12, 15/2.50= 6

The price of each ride at the fair is $7 . Your benefit associated with each ride decreases with each ride because you start to get dizzy. How many rides should you go on if your marginal benefit for each ride is as follows- first ride: $25 , second ride: $18 , third ride: $11 , fourth ride: $4 , fifth ride: $0 ?

3 rides

On a short road trip, if Mary spends her entire budget on gas and diner meals, Mary can afford either 35 gallons of gas or 7 diner meals. What is the opportunity cost of one diner meal?

35/7=5

osh is just learning to manage his finances. He knows that he makes $50 a month in chores that he can spend on whatever he wants. Right now, he is interested in buying more video games ( Q 1 ) and goldfish ( Q 2 ) for his aquarium. Video games are expensive and cost $25 per game, but goldfish are cheaper and are only $5 per fish. Using Josh's budget constraint, how many goldfish can he purchase if he purchases one video game?

50-25=25/5=5

Anna has a fixed budget for entertainment for the year and likes movies and concerts. If Anna spends her entire budget on movies, she can go to 70 movies. If she spends her entire budget on concerts, she can go to 35 concerts. What is the opportunity cost of a concert?

70/35= 2

Which of the following situations would be most accurately depicted by a production possibilities frontier?

A country is debating whether its resources should be used in producing cars or soybeans.

Which of the following situations is best described by a PPF.

A country is deciding how to allocate resources between infrastructure projects and national defense.

Identify the two groups that do not interact in a circular flow diagram for a two-sector economy.

Exporters Importers

Which scenarios would be best represented by a budget constraint? There are two correct answers.

Finn has an allowance to spend on his dog. He must decide whether to spend the allowance on new doggy treats for $10 per bag or new water balls for $3 per ball. Sam has received a $500 scholarship that he can use for books and tuition.

Which of the following is not an example of scarcity?

Home Depot offered a wage higher than the minimum wage resulting in an influx of job applications.

If someone was to conduct a study in the field of microeconomics, which of the following questions might they attempt to answer?

How do people decide whether to work full or part time? What determines how households and individuals spend their budgets?

What is the opportunity cost of owning a business? I. The economic profits that the business earns II. The accounting profits that the business earns III. The profits that could be earned in another business using the same amount of resources

III

Which scenario is asking you to apply marginal analysis?

It costs $3 to go down the water slide. The first time you go down the slide, you are really excited, but your interest decreases each time you go down. How many times should you go down the water slide?

Angelo wants to buy coffee and doughnuts for his co-workers. He has to pay cash, and doesn't know if he can afford it. How can he determine whether his coffee and doughnut order is within his budget constraint?

Multiply the price of coffee by the number of cups of coffee he wants to buy, then add it to the price of doughnuts multiplied by the number of donuts he wants to buy. Compare it to the amount of money he has to spend.

Why might Belgium, France, Italy, and Sweden have a higher export to GDP ratio than the United States?

The U.S. contains more of the division of labor inside its borders, while the other countries need to trade across borders in order to take advantage of division of labor, specialization, and economies of scale.

Which of the following is the strongest definition of the term division of labor?

The production of a good or service is split up into separate tasks performed by different workers.

Choose the best option below that illustrates an example of scarcity.

The value for ivory has increased leading to an increase in the poaching of African Elephants and a decrease in the African Elephant population.

Identify one key takeaway from the Circular Flow Diagram.

There are no free exchanges between firms and households.

Suppose you have a team of two workers. One is a baker and one is a chef. Should each worker specialize in what they do best or should each worker try to do everything from appetizer to dessert?

Workers who specialize in certain tasks can complete those tasks more quickly and with higher quality, so they should each specialize in their particular skill. When workers, such as a chef and a baker, focus on a particular skill they have developed through training, education, interests, or talents, they are more productive than if they produce a combination of things. Given this, they should specialize in their particular skill.

Specialization in a particular small job allows workers to focus on the parts of the production process where they have a(n) __________________.

advantage

Comparative advantage is a measure of _____.

advantage due to specialization

The law of diminishing returns states that the marginal productivity of additional resources employed

can be high initially but will eventually decrease

The production possibilities frontier has a __________ due to the law of diminishing returns.

curved shape

A production possibilities frontier

demonstrates the constraints that society faces in production

True or false? Graphs are rarely used to express economic models.

false

True or false? In the circular flow, households are on the receiving end of payments for goods and services.

false

True or false? Marginal analysis compares total benefits and total costs to determine the optimal outcome or choice rather than how costs and benefits change from one option to another.

false

True or false? In underground economies, governments are heavily involved in making decisions on the goods sold and the prices set.

false

Which of the following, when placed in the empty box shown below best completes the circular flow diagram?

households

The Department of Agriculture estimated that the expenditures a middle-income, husband and wife family of three would incur to raise one additional child from birth in 2005 to age 17 would be $250,530 . What type of analysis does this scenario involve?

microeconomics

Which description best fits the definition of opportunity cost?

the measure of cost by what is given up in exchange for what is obtained