Week 2: Choice in a World of Scarcity

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: a. G to F b. C to F c. B to E d. A to B

C to F

Which of the following would most likely shift the production possibilities curve inward? a. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time b. an increase in the production of capital goods c. technological progress d. an increase in the number of hours factories are in use

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. a. budget constraint b. utility level c. personal preference d. opportunity set

budget constraint

Marginal thinking is best demonstrated by: a. acquiring the information relevant to a choice before making that choice b. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. c. deciding to never purchase a coat made with animal skins or furs d. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: a. 8 points on the history exam b. 12 points on the economics exam c. 10 points on the economics exam d. 7 points on the economics exam

7 points on the economics exam

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. a. marginal analysis b. marginal utility c. budget constraint d. sunk costs

sunk costs

The opportunity cost of attending university is likely to include all except which of the following? a. the cost of required textbooks b. tuition fees c. the cost of haircuts received during the school term d. the income you forgo in order to attend classes

the cost of haircuts received during the school term

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. a. utility b. sunk cost c. opportunity cost d. marginal benefit

utility

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: a. the economy begins using its resources efficiently to produce both food and clothing. b. the economy operates at its productive capacity once it reaches Point B. c. the economy increases production of both clothing and food. d. All of the above occur

All of the above occur

Weird question waiting on Ahmed

Idk

As a person receives more of a good, the _______________ from each additional unit of the good declines. a. marginal utility b. sunk costs c. utility d. budget constraint

Marginal utility

In many cases, it is reasonable to refer to the ________________ as the price. a. marginal utility b. opportunity cost c. sunk cost d. budget constraint

Opportunity cost

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. a. risk premium b. time value of money c. opportunity set d. consumption choice

Opportunity set

If you paid for a non-refundable season ticket for your favorite football team, the decision to go or not go to a specific match should not be affected by the cost of the season ticket because it is a a. sunk cost b. marginal benefit c. marginal cost d. retrievable cost

Sunk cost

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. a. utility b. opportunity set c. production possibilities frontier d. budget constraint

Utility

In principle, we can a. ignore positive statements when choosing among various public policy alternatives. b. confirm or refute normative statements by examining evidence. c. confirm or refute positive statements by examining evidence. d. ignore normative statements when choosing among various public policy alternatives.

confirm or refute positive statements by examining evidence.

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices. a. utility b. marginal analysis c. consumption d. diminishing marginal utility

diminishing marginal utility

Scarcity implies that: a. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. b. consumers are too poor to afford the goods and services available. c. consumers would be willing to purchase the same quantity of a good at a higher price. d. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce.

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. a. marginal analysis b. utility c. consumption d. the budget constraint

marginal analysis

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. a. normative statement b. opportunity cost c. trade-off d. budget constraint

normative statement