Micro: Chapter 2 HW homework questions

Published in 1776, ________ was written by Adam Smith.

"An Inquiry into the Nature and Causes of the Wealth of Nations"

Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. 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?

$11,500

Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?

25 pedicures

________ behavioral assumption about humans was that people usually act in a rational, self-interested way.

Adam Smith's

Which of the following is a factor of production?

An acre of forested land

________ a nation's production possibilities frontier represents economic growth.

An outward shift of

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

Bowed outward

To increase gas mileage, automobile manufacturers make cars small and light. Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage. These facts suggest that a positive relationship exists between safety and gas mileage. (True or False)

False

As job opportunities for women and the wages those jobs pay have increased, the opportunity cost of doing housework has ________, so many families have chosen to hire specialists in households chores, such as cleaning services and lawn care services, because the cost of these specialists is ________ than the cost of the wife (or husband) performing those chores.

Increased; lower

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

Italy has the comparative advantage in cheese

A critical function of the government in facilitating the operation of a market economy is

Setting up and enforcing property rights

Economic growth is represented on a production possibilities frontier model by the production possibility frontier

Shifting outward

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

Switzerland has the comparative advantage in watches

A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier. (true or false)

True

The recession of 2007-2009 would most likely be represented in a production possibilities frontier graph by

a point inside the frontier.

If property rights are not well enforced, all of the following are likely to occur except

a significant number of people will be willing to risk their funds by investing them in local businesses.

An outward shift of a nation's production possibilities frontier can occur due to

an increase in the labor force

Individuals who have never been the best at doing anything

can still have a comparative advantage in producing some product.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

consume a combination of goods that lies outside its own production possibilities frontier

The opportunity cost of taking an on-line history class is

equal to the highest value of an alternative use of the time and money spent on the class.

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

invisible hand

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

opportunity cost

If the production possibilities frontier is linear, then

opportunity costs are constant as more of one good is produced.

If the best lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should

specialize in being a lawyer because its opportunity cost is lower.

Comparative advantage means

the ability to produce a good or service at a lower opportunity cost than any other producer.

Without technological advancement, how can a nation achieve economic growth?

through an increase in supplies of factors of production