Macro Midterm (Unit 1)

The marginal benefit of a slice of pizza is the:

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

In many cases, it is reasonable to refer to the ________________ as the price.

opportunity cost

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

the increase in skill he obtains from playing basketball for that hour.

Suppose there are two countries (the United States and Canada) that produce two goods (beer and computers). Which of the following is NOT possible?

The United States has the comparative advantage in beer and computers.

Refer to the figure above. Based on the shape of the production possibilities frontier, we can assume that ______.

The opportunity cost of producing bread rises as the production of bread increases

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

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.

budget constraint

Refer to the figures above which display the production possibilities frontiers for two countries, Denmark and Egypt. Which of these two countries has the absolute advantage in producing cherries?

egypt

The economics term, the ___________________________________, means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

As a person receives more of a good, the _______________ from each additional unit of the good declines.

marginal utility