Econ Exam - Chapter's Assignment Review

A production possibilities frontier with a bowed-outward shape indicates

increasing opportunity costs as more and more of one good is produced.

Economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost.

Economic models do all of the following except

portray reality in all its minute details.

Which of the following is not a factor of production?

$1,000 in cash

Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

$56,500

Table 2-7 ​FredBarneyPogo Sticks2428Unicycles814 Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. What is Fred's opportunity cost of making a pogo stick?

1/3 of a unicycle

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake?

2/5 of a cappuccino

Which of the following is a normative economic statement?

Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

________ is a situation in which a good or service is produced at the lowest possible cost.

Productive efficiency

Which of the following is a positive economic statement?

Raising the tax on gasoline raises the selling price of gasoline.

Identify whether each of the following transactions will take place in the factor market or in the product market.a. Graciela buys a Tesla Motors Model X.b. Lashan works 60 hours a week at a law firm.c. Tito sells his family's farmland to a housing developer.d. Tesla Motors increases employment at its Fremont, California plant.

Your Answer: a- product market b- factor market c- factor market d- factor market

Holding everything else constant, an increase in the price of MP3 players will result in

a decrease in the quantity of MP3 players demanded.

A decrease in the price of GPS systems will result in

a smaller quantity of GPS systems supplied.

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods.

False

In the circular flow model, households demand resources such as labor services in the factor market.

False

Table 2-6 ​SerenaHaleyBracelets89Necklaces1612 Table 2-6 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-6. Which of the following statements is true?

Haley has a comparative advantage in making bracelets and Serena in making necklaces.

Ford assembles some cars in Mexico because the lower wages the company pays to Mexican workers and the lower prices it pays for auto parts in Mexico reduces Ford's costs. This is an example of Ford reacting to which of the three key economic ideas?

People respond to economic incentives.

The popularity of digital cameras has enticed large discount stores like Walmart and Costco to offer digital photo printing services. How does the offering of the printing service by Walmart and Costco affect the digital photo printing market?

The demand curve for digital photo printing services shifts to the right.

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

The demand curve for traditional cameras shifts to the left.

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?

The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.

Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

The supply curve shifts to the right.

Which of the following is a macroeconomic question?

What factors determine the price of carrots?

What is opportunity cost?

Your Answer: Opportunity Cost is the highest valued alternative that must be given up to engage in an activity.

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.gasoline prices b.unemployment c.inflation d.health care costs e.air pollution f.economic growth

a. gasoline prices- micro b. unemployment- macro c.inflation- macro d. health care costs- micro e. air pollution- micro f, economic growth- macro

Which of the following are positive economic statements and which are normative economic statements? a.An increase in the price of gasoline will decrease the quantity of gasoline purchased. b.The government should eliminate the minimum wage. c.All states should raise the minimum wage to at least $10 per hour. d.The government should scrap its current income tax structure in favor of a flat tax. e.Unemployment has increased since the onset of the recession. f.The government should not bail out investment banks during a financial crisis.

a. positive economic statement b. normative economic statement c. normative economic statement d. normative economic statement e. positive economic statement f. normative economic statement

Mr. Peabody chooses to invest in companies that produce goods and services based on consumer preferences. Mr. Peabody is investing in companies that are attempting to be

allocatively efficient.

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?

at least $125,000

You have an absolute advantage whenever you

can produce more of something than others with the same resources.

In economics, the term "equity" means

economic benefits are distributed fairly.

Optimal decisions are made at the point where marginal cost equals zero.

false

Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are

substitutes

The income effect of a price change refers to the impact of a change in

the price of a good on a consumer's purchasing power.

A change in all of the following variables will change the market demand for a product except

the price of the product.

When voluntary exchange takes place, both parties gain from the exchange.

true

Allocative efficiency best explains ________, and productive efficiency best explains ________.

what will be produced; how something will be produced

Which of the following is not an example of an economic trade-off that a firm has to face?

whether or not consumers will buy its products