Chapter 1 and 2 Review
Carl is considering attending a concert with a ticket price of $35. He estimates that the cost of driving to the concert and parking there will total an additional $20. In order to attend the concert, Carl will have to take time off from his part-time job. He estimates that he will lose 5 hours at work, at a wage of $6 per hour. Carl's opportunity cost of attending the concert equals what?
$85
A professional basketball players' union negotiates a contract that dramatically increases all players' salaries. How would this influence the opportunity cost for a player who was considering giving up basketball to pursue a career in broadcasting?
It would increase the opportunity cost of becoming a broadcaster.
Economics is the study of choice under conditions of:
Scarcity
Sven has a comparative advantage over Alice in cooking but not in doing the laundry. Which of the following must be true?
Sven must have allowed opportunity cost than Alice for cooking.
Combinations of goods on the production possibilities curve
can be produced using current available resources and technology
High-income people will sometime pay higher prices at convenience stores for goods that are available at discount stores. They do this because
crowded and understaffed discount stores impose higher time costs
Due to a scarcity of resources:
every society must choose among competing uses of available resources
In a market economy, most of what we consume is obtained by
exchange
The money we pay for a good or service
general is only part of its opportunity cost
In examining consumer behavior, one of the constraints faced by consumers is
income
Characteristic of entrepreneurship?
it is associated with risk taking and innovation
The system of resource allocation in the US is a
market system with elements of tradition and command
Molly needs 30 minutes to wash the car and 45 minutes to mow the lawn. Renee needs 1 hour to wash the car and 2 hours to mow the lawn. Which of the following statements is correct
molly should specialize in both tasks Renee should specialize in both tasks Each woman should specialize in the task in which she has the absolute advantage - Absolute advantage is not an appropriate guide for determining specialization Neither woman should specialize.
A shift in the production possibilities frontier could be due to
technological improvements in production.
If a society is on its production possibilities front, and decides to produce more health care,
the cost of producing an additional unit of health care will rise.
The concave shape of the production possibilities front reflects
the law of increasing opportunity cost
The principle of specialization and exchange implies that
total production is highest when individuals specialize according to their comparative advantages
The opportunity cost of any activity can be measured by the
value of the best alternative to that activity
