Opportunity cost is what you give up to get an item. Because there is no such thing as a free lunch, what would likely be given up to obtain each of the items listed below? (CH1)

An individual farmer is likely to have market power in the market for wheat. (T/F)

(F) a single farmer is too small to influence the market.

In a and b above and c and d above, which is the opportunity cost of which—college for work or work for college? corn for beans or beans for corn?

Each is the opportunity cost of the other because each decision requires giving something up.

Farmer Jones has 100 acres of land. He can plant corn, which yields 100 bushels per acre, or he can plant beans, which yield 40 bushels per acre. He chooses to plant beans.

Farmer Jones gives up 10,000 bushels of corn.

Farmer Jones has 100 acres of land. He can plant corn, which yields 100 bushels per acre, or he can plant beans, which yield 40 bushels per acre. He chooses to plant corn

Farmer Jones gives up 4,000 bushels of beans.

Adam Smith's "invisible hand" concept describes how corporate business reaches into the pockets of consumers like an "invisible hand." (T/F)

(F) the "invisible hand" refers to how markets guide self-interested people to create desirable social outcomes.

When the government redistributes income with taxes and welfare, the economy becomes more efficient. (T/F)

(F) the economy becomes less efficient because it decreases the incentive to work hard.

Economics is the study of how (a) to fully satisfy our unlimited wants. (b) society manages its scarce resources. (c) to reduce our wants until we are satisfied. (d) to avoid having to make trade-offs. (e) society manages its unlimited resources.

(b) society manages its scarce resources.

Trade-offs are required because wants are unlimited and resources are (a) efficient. (b) economical. (c) scarce. (d) unlimited. (e) marginal.

(c) Scarce

Productivity can be increased by (a) raising minimum wages. (b) raising union wages. (c) improving the education of workers. (d) restricting trade with foreign countries.

(c) improving the education of workers.

Which of the following involve a trade-off? (a) buying a new car (b) going to college (c) watching a football game on Saturday afternoon (d) taking a nap (e) All of the above involve trade-offs.

All of the above involve trade-offs.

Susan can work full time or go to college. She chooses college.

Susan gives up income from work (and must pay tuition).

To a student, the opportunity cost of going to a basketball game would include the price of the ticket and the value of the time that could have been spent studying. (T/F)

T

When economists say, "There ain't no such thing as a free lunch," they mean that all economic decisions involve trade-offs. (T/F)

T