Econ: Chapter 2 Problem Set

Which of the following would an economist classify as​ capital? A. a guitar used by a musician B. a post office employee C. a​ $50 bill D. a corporate bond

A. a guitar used by a musician

If an economy begins to use its resources more​ efficiently, it will move... A. closer to its production possibilities frontier​ (ppf). B. from one point to another point along its ppf. C. farther away from its ppf. D. from a point along its ppf to a point outside its ppf.

A. closer to its production possibilities frontier​ (ppf).

The concept of opportunity cost is based on the principle of... A. scarcity. B. need. C. consumption. D. profit.

A. scarcity.

Which of the following does not constitute an act of​ "investment" as economists use the​ term? A. The city council authorizes the construction of a new fire station. B. A retiree buys 50 shares of stock at​ $10 a share and then sells the stock at a profit for​ $20 a share. C. An accountant attends a seminar on changes in the federal tax code. D. A department store increases its inventory of football jerseys before the Super Bowl.

B. A retiree buys 50 shares of stock at​ $10 a share and then sells the stock at a profit for​ $20 a share.

The basic coordinating mechanism in a​ free-market system is... A. the corporation. B. price. C. a central government authority. D. quantity.

B. price.

The marginal rate of transformation is the... A. process of using resources to produce new capital. B. slope of the production possibility frontier. C. transformation of resources into a form that is useful to people. D. dollar value of the best forgone alternative.

B. slope of the production possibility frontier.

In a​ laissez-faire economy​ ________ what gets​ produced, how it is​ produced, and who gets it. A. consumers but not firms determine B. the behavior of buyers and sellers determines C. the central government authority determines D. firms but not consumers determine

B. the behavior of buyers and sellers determines

Refer to the information provided in the figure at right to answer the question that follows. The marginal rate of transformation in moving from Point A to Point B is A. −3. B. −1.5. C. −30. D. −2/3.

B. −1.5.

The table below represents the output of Poems or TV Commercials per day by two​ authors: Krystal or​ Mark: Krystal Mark Writing Poems 8 12 Writing TV Commercials 2 4 For​ Mark, the opportunity cost of writing one TV commercial is A. 1/3 of a poem. B. 2 poems. C. 3 poems. D. 8 poems.

C. 3 poems.

Refer to the information provided in the figure at right to answer the question that follows. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the... A. 90 LCD televisions that must be forgone to produce 20 additional plasma televisions. B. 120 LCD televisions that must be forgone to produce 40 additional plasma televisions. C. 30 LCD televisions that must be forgone to produce 20 additional plasma televisions. D. 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.

C. 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.

The table below represents the output of Poems and TV Commercials per day by two​ authors: Krystal or​ Mark: Krystal Mark Writing Poems 8 12 Writing TV Commercials 2 4 Which of the following statements is true​? A. Mark has a comparative advantage in both writing TV commercials and writing poems. B. Krystal has a comparative advantage in both writing TV commercials and writing poems. C. Mark has a comparative advantage in writing TV commercials and Krystal has a comparative advantage in writing poems. D. Krystal has a comparative advantage in writing TV commercials and Mark has a comparative advantage in writing poems.

C. Mark has a comparative advantage in writing TV commercials and Krystal has a comparative advantage in writing poems.

Someone has a comparative advantage in producing a good if she can produce that good... A. with more labor and less capital B. using more capital and less labor. C. at a lower opportunity cost. D. in greater quantities.

C. at a lower opportunity cost.

Refer to the information provided in the figure at right for the economy of Macroland to answer the question that follows. Point B represents a situation of... A. less than full employment and production inefficiency. B. less than full employment but production efficiency. C. both full resource employment and production efficiency. D. full employment but production inefficiency.

C. both full resource employment and production efficiency.

Because resources are​ scarce, the opportunity cost of investment in capital is... A. forgone future consumption. B. zero. C. forgone present consumption. D. infinite.

C. forgone present consumption.

Which of the following is not a resource as the term is used by​ economists? A. labor B. buildings C. money D. land

C. money

An institution through which buyers and sellers interact and engage in exchange is... A. "laissez-faire." B. a central authority. C. a production frontier. D. a market.

D. a market.

According to the theory of comparative​ advantage, specialization and free trade will benefit... A. only that trading party that has a comparative advantage in the production of all goods. B. only that trading party that has both an absolute advantage and a comparative advantage in the production of all goods. C. only that trading party that has an absolute advantage in the production of all goods. D. all trading​ parties, even when some are absolutely more efficient producers than others.

D. all trading​ parties, even when some are absolutely more efficient producers than others.

Refer to the information provided in the figure at right to answer the question that follows. According to the​ figure, the optimal point for the economy is... A. A. B. B. C. F. D. indeterminate from the information given.

D. indeterminate from the information given.

Suppose you are deciding whether to spend your tax rebate check on a new iPod or a new digital camera. You are dealing with the concept of... A. comparative advantage. B. the fallacy of composition. C. equity D. opportunity costs.

D. opportunity costs.

Refer to the information provided in the figure at right for the economy of Macroland to answer the question that follows. Macroland is currently operating at Point A. The best explanation for this is that... A. the economy operates as an efficient market. B. the economy has very poor technology. C. the economy has very few resources. D. the​ economy's resources are being used inefficiently.

D. the​ economy's resources are being used inefficiently.