Econ Chapter 2

Why is there scarcity?

Because our unlimited wants exceed our limited resources

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:

C to F

Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy:

is not using its resources efficiently.

Scarcity implies that:

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

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

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

the benefit to his grades from studying for an hour

The opportunity cost of attending university is likely to include all except which of the following?

the cost of haircuts received during the school term

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above:

the economy begins using its resources efficiently to produce both food and clothing. the economy operates at its productive capacity once it reaches Point B. the economy increases production of both clothing and food. Correct! All of the above occur.

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

the production possibilities frontier

Scarcity exists because of:

unlimited wants and limited resources.

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 opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

$44

Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

15 points on the history exam.

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:

7 points on the economics exam

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:

All points on the production possibilities frontier are equally efficient.

Refer to Figure 2-1. The most inefficient point depicted is:

Point G