MACRO !!!

Why is money not an economic resource?

money, as such, is not productive.

Which of the following is a labor resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

A. a computer programmer

95. Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must: A. achieve economic growth. B. use its resources more efficiently than the data in the table now indicate. C. allocate its available resources most efficiently among alternative uses. D. achieve the full employment of available resources.

A. achieve economic growth.

Economists contend that most economic decisions are what?

purposeful

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. What is this a reflection of?

purposeful behavior

Other things equal, an increase in a consumer's money income does what?

shifts her budget line rightward because she can now purchase more of both products.

An increase in money income does what?

shifts the consumer's budget line to the right.

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates what?

Opportunity costs

The term "other things equal" means that:

a number of relevant variables are assumed to be constant

According to economists, economic self-interest is what?

a reality that underlies economic behavior

Why should you decide to go to a movie?

if the marginal benefit of the movie exceeds its marginal cost.

If we say that two variables are directly related, this means that:

an increase in one variable is associated with an increase in the other variable.

In drawing a production possibilities curve we hold constant:

both technology and resource supplies.

Unemployment is illustrated by what?

by a point inside the production possibilities curve.

The slope of a straight line can be determined by:

comparing the absolute vertical change to the absolute horizontal change between two points on the line.

The law of increasing opportunity costs is reflected in a production possibilities curve that is:

concave to the origin.

The law of increasing opportunity costs states that:

if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.

Opportunity cost is best defined as:

the amount of one product that must be given up to produce one more unit of another product.

In moving along a given budget line:

the prices of both products and money income are assumed to be constant.

In economics, the pleasure, happiness, or satisfaction received from a product is called what?

utility

What are Positive statements concerned with?

what is.

What are Normative statements concerned with?

what ought to be.

The optimal allocation of resources is found:

where MB = MC.

151. Refer to the above diagram. The vertical intercept: A. is 40. B. is 50. C. is 60. D. cannot be determined from the information given.

B. is 50.

120. Refer to the above diagram. The combination of computers and bicycles shown by point F: A. is unattainable, given currently available resources and technology. B. is attainable, but implies that the economy is not using all its resources. C. is irrelevant because it is inconsistent with consumer preferences. D. suggests that opportunity costs are constant.

B. is attainable, but implies that the economy is not using all its resources.

Which of the following is a land resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

C. silicon (sand) used to make computer chips

Ben says that "An increase in the tax on beer will raise its price." Holly argues that "Taxes should be increased on beer because college students drink too much." We can conclude that:

Holly's statement is normative, but Ben's is positive.

If the production possibilities curve is a straight line:

economic resources are perfectly substitutable between the production of the two products.

What do Economic models do?

emphasize basic economic relationships by purposefully simplifying the complexities of the real world.

Economic resources are also called:

factors of production.

The production possibilities curve illustrates the basic principle that:

if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

The problems of aggregate inflation and unemployment are:

major topics of macroeconomics.

In constructing models, what do economists do?

make simplifying assumptions

When entering a building, Sam diverts his path to go through an open door rather than make the physical effort to open the closed door that is directly in his path. This is an example of what?

marginal benefit-marginal cost analysis

Economics involves marginal analysis because:

most decisions involve changes from the present situation

Assume an economy is incurring unemployment. The effect of resolving this problem will be to:

move the level of actual output to the economy's production possibilities curve.

Assume an economy is operating at some point on its production possibilities curve, which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods:

must be decreased.

A positive statement is one that is:

objective and is based on facts.

Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of what?

opportunity costs

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of what?

scarcity and opportunity costs

What can Macroeconomics best be described as?

study of the large aggregates of the economy or the economy as a whole.

What does the concept of opportunity cost suggest?

suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

If the output of product X is such that marginal benefit equals marginal cost:

the correct amount of resources is being allocated to X's production.

Marginal costs exist because:

the decision to engage in one activity means forgoing some other activity.

If a positive relationship exists between x and y:

the relationship will graph as an upsloping line.

Economics may best be defined as what?

the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

Which one of the following expressions best states the idea of opportunity cost?

"There is no such thing as a free lunch."

68. Suppose you have a money income of $10, all of which you spend on Coke and popcorn. In the above diagram, the prices of Coke and popcorn respectively are: A. $.50 and $1.00. B. $1.00 and $.50. C. $1.00 and $2.00. D. $.40 and $.50.

A. $.50 and $1.00.

160. In the above diagram the vertical intercept and slope are: A. 4 and -1 1/3 respectively. B. 3 and -1 1/3 respectively. C. 3 and + 3/4 respectively. D. 4 and + 3/4 respectively.

A. 4 and -1 1/3 respectively.

62. Refer to the budget line shown in the diagram above. If the consumer's money income is $20, which of the following combination of goods is unattainable? A. 4 units of C, and 6 units of D. B. 5 units of C, and no units of D. C. 1 unit of C, and 8 units of D. D. 2 units of C, and 6 units of D.

A. 4 units of C, and 6 units of D.

139. Refer to the above diagram. Which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of PP3, rather than PP2? A. A. B. B. C. C. D. D.

A. A.

Which of the following statements is true? A. Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole. B. Macroeconomics focuses on specific decision-making units of the economy; microeconomics examines the economy as a whole. C. Every topic in economics is either a microeconomic or a macroeconomic issue; a topic cannot be both. D. Topics in microeconomics have public policy implications; topics in macroeconomics do not.

A. Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole.

Which of the following is a macroeconomic statement? A. The gross profits of all U.S. businesses were $182 billion last year. B. The price of beef declined by 3 percent last year. C. General Motors' profits increased last year. D. The productivity of steelworkers increased by 1 percent last year.

A. The gross profits of all U.S. businesses were $182 billion last year.

153. Refer to the above diagram. The equation that shows the relationship between Y and X is: A. Y = 50 + 1/4 X. B. X = 1/4Y. C. Y = .4X. D. Y = 1/4 X - 50.

A. Y = 50 + 1/4 X.

161. Refer to the above diagram. The slope of curve ZZ at point A is approximately: A. +2. B. +2 1/2. C. -2 1/2. D. +4.

B. +2 1/2.

110. Refer to the above diagram. Starting at point A, the opportunity cost of producing each successive unit of tractors is: A. a constant 2 units of bread. B. 2, 4, 6, and 8 units of bread. C. 8, 6, 4, and 2 units of bread. D. the reciprocal of the output of tractors.

B. 2, 4, 6, and 8 units of bread.

128. Refer to the above diagram for athletic shoes. The optimal output of shoes is: A. Q1. B. Q2. C. Q3. D. greater than Q3.

B. Q2.

Which of the following statements is correct? A. The value of the independent variable is determined by the value of the dependent variable. B. The value of the dependent variable is determined by the value of the independent variable. C. The dependent variable designates the "cause" and the independent variable the "effect." D. Dependent variables graph as upsloping lines; independent variables graph as downsloping lines.

B. The value of the dependent variable is determined by the value of the independent variable.

Which of the following is real capital? A. a pair of stockings B. a construction crane C. a savings account D. a share of IBM stock

B. a construction crane

150. Refer to the above diagram. The variables X and Y are: A. inversely related. B. directly related. C. unrelated. D. negatively related.

B. directly related.

152. Refer to the above diagram. The slope of the line: A. is - 1/4. B. is + 1/4. C. is .40. D. cannot be determined from the information given.

B. is + 1/4.

Which of the following will not produce an outward shift of the production possibilities curve? A. an upgrading of the quality of a nation's human resources B. the reduction of unemployment C. an increase in the quantity of a society's labor force D. the improvement of a society's technological knowledge

B. the reduction of unemployment

118. Refer to the above diagram. The combination of computers and bicycles shown by point G is: A. attainable, but too costly. B. unattainable, given currently available resources and technology. C. attainable, but involves unemployment. D. irrelevant because it is inconsistent with consumer preferences.

B. unattainable, given currently available resources and technology.

119. Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles: A. cannot be achieved because resources are fully employed. B. will cost 1 unit of computers. C. will cost 2 units of computers. D. will cause some resources to become unemployed.

B. will cost 1 unit of computers.

Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income. Letting C represent consumption and Y represent income, the equation that summarizes this relationship is:

C = 100 + .8Y.

163. Refer to the above diagram. The slope of curve ZZ at point C is approximately: A. -4. B. -2. C. -2 2/5. D. +3.

C. -2 2/5.

111. Refer to the above diagram. Starting at point E, the production of successive units of bread will cost: A. a constant 8 units of tractors. B. a constant 6 units of tractors. C. 1/8, 1/6, 1/4, and 1/2 units of tractors. D. 1/2, 1/4, 1/6, and 1/8 units of tractors.

C. 1/8, 1/6, 1/4, and 1/2 units of tractors.

Which of the following is a normative statement? A. The temperature is high today. B. The humidity is high today. C. It is too hot to play tennis today. D. It will cool off later this evening.

C. It is too hot to play tennis today.

Which of the following is a positive statement? A. The humidity is too high today. B. It is too hot to jog today. C. The temperature is 92 degrees today. D. Summer evenings are nice when it cools off.

C. The temperature is 92 degrees today.

92. Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be: A. 4 units of capital goods. B. 2 units of capital goods. C. 3 units of capital goods. D. 1/3 of a unit of capital goods.

D. 1/3 of a unit of capital goods.

102. Refer to the above diagram. This economy will experience unemployment if it produces at point: A. A. B. B. C. C. D. D.

D. D.

63. Refer to the budget line shown in the diagram above. The absolute value of the slope of the budget line is: A. MUC/MUD. B. one-half. C. PD/PC. D. PC/PD.

D. PC/PD.

Which of the following is a capital resource? A. a computer programmer B. a corporate bond issued by a computer manufacturer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

D. a piece of software used by a firm

Which of the following will shift the production possibilities curve to the right? A. an increase in the unemployment rate from 6 to 8 percent B. a decline in the efficiency with which the present labor force is allocated C. a decrease in the unemployment rate from 8 to 6 percent D. a technological advance that allows farmers to produce more output from given inputs

D. a technological advance that allows farmers to produce more output from given inputs

101. Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if: A. the ratio of capital to consumer goods is minimized. B. it chooses point C. C. it chooses point B. D. it chooses point A.

D. it chooses point A.

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.

The alternative combination of two goods which a consumer can purchase with a given money income is shown by what?

a budget line.

what does the economic perspective entail?

a comparison of marginal benefits and marginal costs in decision making

Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line:

is 1/5.

A normative statement is one that:

is based on value judgments.

Microeconomics:

is concerned with individual economic units and specific markets.

Any combination of goods lying outside of the budget line is what?

is unattainable, given the consumer's income.

The four factors of production are:

land, labor, capital, and entrepreneurial ability

The economizing problem is one of deciding how to make the best use of:

limited resources to satisfy virtually unlimited wants.

When economists say that people act rationally in their self interest, they mean that individuals do what?

look for and pursue opportunities to increase their utility

What does the term "ceteris paribus" mean?

other things equal

Purposeful behavior means that:

people weigh costs and benefits to make decisions.

Why does the scarcity problem persist?

persists because economic wants exceed available productive resources.

A production possibilities curve shows:

the maximum amounts of two goods that can be produced assuming the full use of available resources.

Which of the following most closely relates to the idea of opportunity costs?

tradeoffs

Which of the following is not a main function of the entrepreneur? A. make routine pricing decisions. B. innovate. C. assume the risk of economic losses. D. makes strategic business decisions.

A. make routine pricing decisions.

140. Refer to the above diagram. An improvement in technology will: A. shift the production possibilities curve from PP1 to PP2. B. shift the production possibilities curve from PP2 to PP1. C. move the economy from A to C along PP1. D. move the economy from A, B, or C on PP1 to D.

A. shift the production possibilities curve from PP1 to PP2.

131. Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then: A. society should produce fewer shoes to achieve the optimal allocation of resources. B. society should produce more shoes to achieve the optimal allocation of resources. C. resources are being allocated efficiently to the production of shoes. D. shoes are more valuable to society than alternative products

A. society should produce fewer shoes to achieve the optimal allocation of resources.

129. Refer to the above diagram for athletic shoes. If the current output of shoes is Q1, then: A. society would consider additional units of shoes to be more valuable than alternative uses of those resources. B. society would consider additional units of shoes to be less valuable than alternative uses of those resources. C. society would experience a net loss by producing more shoes. D. resources are being allocated efficiently to the production of shoes.

A. society would consider additional units of shoes to be more valuable than alternative uses of those resources.

93. Refer to the above table. As compared to production alternative D, the choice of alternative C would: A. tend to generate a more rapid growth rate. B. be unattainable. C. entail unemployment. D. tend to generate a slower growth rate.

A. tend to generate a more rapid growth rate.

If the equation y = -10 + 2.5x was plotted: A. the vertical intercept would be -10. B. the slope would be -7.5. C. it would graph as a downsloping line. D. the slope would be -10.

A. the vertical intercept would be -10.

117. Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost: A. will be 4 units of bicycles. B. will be 2 units of bicycles. C. will be zero because unemployed resources are available. D. of doing so cannot be determined from the information given.

A. will be 4 units of bicycles.

165. The slope of a line parallel to the horizontal axis is: A. zero. B. one. C. infinite. D. one-half.

A. zero.

Which of the following would be most likely to shift the production possibilities curve to the right? A. a sudden and substantial expansion of consumer wants B. an improvement in the literacy level and general level of education C. a decline in the size of the population and labor force D. shifting resources from the production of capital goods to the production of consumer goods

B. an improvement in the literacy level and general level of education

115. Refer to the above diagram. Points A, B, C, D, and E show: A. that the opportunity cost of bicycles increases, while that of computers is constant. B. combinations of bicycles and computers that society can produce by using its resources efficiently. C. that the opportunity cost of computers increases, while that of bicycles is constant. D. that society's demand for computers is greater than its demand for bicycles.

B. combinations of bicycles and computers that society can produce by using its resources efficiently.

96. Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that: A. the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point. B. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. C. the production possibilities data would graph as a straight downsloping line. D. the economy's resources are presumed to be scarce.

B. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

158. The movement from line A to line A' represents a change in: A. the slope only. B. the intercept only. C. both the slope and the intercept. D. neither the slope nor the intercept.

B. the intercept only.

(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when: A. tuition expenses are high and rising. B. the opportunity cost of attending college is extraordinarily high. C. the price of textbooks is high and rising. D. the economy is growing rapidly and jobs are plentiful.

B. the opportunity cost of attending college is extraordinarily high.

162. Refer to the above diagram. The slope of curve ZZ at point B is: A. infinity. B. zero. C. +1. D. -1.

B. zero.

Which of the following statements pertains to macroeconomics? A. Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. B. A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. C. National income grew by 2.7 percent last year. D. The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

C. National income grew by 2.7 percent last year.

Which of the following is a microeconomic statement? A. The real domestic output increased by 2.5 percent last year. B. Unemployment was 6.8 percent of the labor force last year. C. The price of personal computers declined last year. D. The general price level increased by 4 percent last year.

C. The price of personal computers declined last year.

Other things equal, which of the following would shift an economy's production possibilities curve to the left? A. the discovery of a low-cost means of generating and storing solar energy B. the entrance of more women into the labor force C. a law requiring mandatory retirement from the labor force at age 55 D. an increase in the proportion of total output that consists of capital or investment goods

C. a law requiring mandatory retirement from the labor force at age 55

116. Refer to the above diagram. This production possibilities curve is: A. convex to the origin because opportunity costs are constant. B. linear because opportunity costs are constant. C. concave to the origin because of increasing opportunity costs. D. convex to the origin because of increasing opportunity costs.

C. concave to the origin because of increasing opportunity costs.

164. The slope of a line parallel to the vertical axis is: A. zero. B. one. C. infinite. D. one-half.

C. infinite.

159. In the above diagram variables x and y are: A. both dependent variables. B. directly related. C. inversely related. D. unrelated.

C. inversely related.

138. Refer to the above diagram. The concept of opportunity cost is best represented by the: A. shift of the production possibilities curve from PP1 to PP2. B. move from B on PP1 to E on PP2. C. move from B on PP1 to C on PP1. D. move from D inside PP1 to B on PP1.

C. move from B on PP1 to C on PP1.

130. Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then: A. resources are being allocated efficiently to the production of shoes. B. society would consider additional units of shoes to be more valuable than alternative products. C. society would consider additional units of shoes to be less valuable than alternative products. D. society would experience a net gain by producing more shoes.

C. society would consider additional units of shoes to be less valuable than alternative products.

107. Which of the following is not correct? A typical production possibilities curve: A. indicates how much of two products a society can produce. B. reveals how much each additional unit of one product will cost in terms of the other product. C. specifies how much of each product society should produce. D. indicates that to produce more of one product society must forgo larger and larger amounts of the other product.

C. specifies how much of each product society should produce.

(Consider This) A direct cost of going to college is: A. tuition, while an indirect cost (opportunity cost) is books and other supplies. B. forgone income while in college, while an indirect cost (opportunity cost) is tuition. C. tuition, while an indirect cost (opportunity cost) is forgone income while in college. D. books and supplies, while an indirect cost (opportunity cost) is food and housing.

C. tuition, while an indirect cost (opportunity cost) is forgone income while in college.

94. Refer to the above table. A total output of 3 units of capital goods and 4 units of consumer goods: A. is irrelevant because the economy is capable of producing a larger total output. B. will result in the maximum rate of growth available to this economy. C. would involve an inefficient use of the economy's scarce resources. D. is unobtainable in this economy.

C. would involve an inefficient use of the economy's scarce resources.

Which of the following lists includes only capital resources (and therefore no labor or land resources)? A. an ice arena; a professional hockey player; hockey uniforms. B. the owner of a new startup firm; a chemistry lab; a researcher. C. a hydroelectric dam; water behind the dam; power lines. D. autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers to and from the airport.

D. autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers to and from the airport.

121. Refer to the above diagram. The movement down the production possibilities curve from point A to point E suggests that the production of: A. computers, but not bicycles, is subject to increasing opportunity costs. B. bicycles, but not computers, is subject to increasing opportunity costs. C. both bicycles and computers are subject to constant opportunity costs. D. both bicycles and computers are subject to increasing opportunity costs.

D. both bicycles and computers are subject to increasing opportunity costs.

61. Refer to the budget line shown in the diagram above. If the consumer's money income is $20, the: A. prices of C and D cannot be determined. B. price of C is $2 and the price of D is $4. C. consumer can obtain a combination of 5 units of both C and D. D. price of C is $4 and the price of D is $2.

D. price of C is $4 and the price of D is $2.

109. Refer to the above diagram. This production possibilities curve is constructed so that: A. resources are presumed to be perfectly shiftable between bread and tractors. B. the opportunity cost of bread diminishes as more bread is produced. C. the opportunity cost of tractors increases as more bread is produced. D. the opportunity cost of both bread and tractors increases as more of each is produced.

D. the opportunity cost of both bread and tractors increases as more of each is produced.

Most of the disagreement among economists involves:

Normative statements

A production possibilities curve illustrates:

Scarcity

66. The shift of the budget line from cd to ab in the above figure is consistent with: A. decreases in the prices of both M and N. B. an increase in the price of M and a decrease in the price of N. C. a decrease in money income. D. an increase in money income.

a decrease in money income.

What is Microeconomics is concerned with?

a detailed examination of specific economic units that make up the economic system.

The production possibilities curve is a frontier between what?

a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant.

What does a budget line show?

all possible combinations of two goods that can be purchased, given money income and the prices of the goods.

The assertion that "There is no free lunch" means what?

all production involves the use of scarce resources and thus the sacrifice of alternative goods.

What is the basic purpose of the other-things-equal assumption?

allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

A budget line shows the:

alternative combinations of two goods that a consumer can purchase with a given money income.

What is associated with macroeconomics?

an empirical investigation of the general price level and unemployment rates since 1990

If we say that two variables are inversely related, this means that:

an increase in one variable is associated with a decrease in the other.

What are Economic theories?

are generalizations based on a careful observation of facts.

72. Suppose Elroy's budget line is as shown on the above diagram. If his tastes change in favor of Coke and against popcorn, the budget line will:

be unaffected.

A person should consume more of something when its marginal means what?

benefit exceeds its marginal cost

Suppose that an economy is producing on its production possibilities curve, but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. How can this economy improve its allocation?

by producing more of one good and less of the other.

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia:

can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods.

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, it:

can produce more of both consumer goods and capital goods by using resources that are currently idle.

The study of economics is primarily concerned with what?

choices that are made in seeking the best use of resources

The basic difference between consumer goods and capital goods is that

consumer goods satisfy wants directly while capital goods satisfy wants indirectly.

Kara was out jogging and despite being tired, decided to run one more mile. Based on her actions, economists would conclude that Kara:

decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile.

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. What does this fact imply?

implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

If two variables are inversely related, then as the value of one variable:

increases, the value of the other decreases.

What does purposeful behavior suggest?

individuals will make different choices because of different desired outcomes

The main function of the entrepreneur is to:

innovate

For economists, the word "utility" means

pleasure and satisfaction

What does the slope of a budget line reflect?

price ratio of the two products

Which of the following is assumed in constructing a typical production possibilities curve?

production technology is fixed.

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because what?

productive resources are limited

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as:

rational self-interest, because he attempting to increase his own income by identifying and satisfying someone else's wants.

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:

resources are limited.

A nation's production possibilities curve is bowed out from the origin because:

resources are not equally efficient in producing every good.

The law of increasing opportunity costs exists because:

resources are not equally efficient in producing various goods.

If the production possibilities curve were a straight down-sloping line, this would suggest that:

resources are perfectly shiftable between the production of these two goods.

If the equation y = 5 + 6x was graphed, the slope would be what?

slope would be +6.

If the equation y = 15 - 4x was plotted, the slope would be what?

slope would be -4.

In drawing the production possibilities curve we assume that:

technology is fixed.

The construction of a production possibilities curve assumes:

technology is fixed.

Any point inside the production possibilities curve indicates:

that more output could be produced with available resources.

Macroeconomics approaches the study of economics from the viewpoint of:

the entire economy

If someone produced too much of a good, this would suggest that:

the good was produced to the point where its marginal cost exceeded its marginal benefit.

The economic perspective refers to what?

the making of purposeful decisions in a context of marginal costs and marginal benefits.

What is the economizing problem?

the need to make choices because economic wants exceed economic means.

What is an economic explanation for why most college-aged movie stars do not attend college?

the opportunity cost in terms of reduced income is too great

When the economist says that economic wants are insatiable, this means that:

these wants are virtually unlimited and therefore incapable of complete satisfaction.

A point inside a production possibilities curve best illustrates:

unemployment.