Prin of Macro-Assignment 1
Refer to the below tables. Opportunity costs are:
constant in both Duckistan and Herbania. larger in Duckistan than in Herbania. increasing in both Duckistan and Herbania. increasing in Duckistan and constant in Herbania
Refer to the below tables. Suppose that the amount and quality of resources are the same in both countries. We can conclude that:
(a) Duckistan is technologically better than Herbania at producing military goods. (b) Herbania is technologically better than Herbania at producing both military goods and civilian goods. (c) the total opportunity cost of producing 4 units of military goods is the same in both countries. (d) Herbania is technologically superior to Duckistan in producing civilian goods.
A person should consume more of something when its marginal: (a) benefit exceeds its marginal cost. (b) cost exceeds its marginal benefit. (c) cost equals its marginal benefit. (d) benefit is still positive.
(a) benefit exceeds its marginal cost.
Refer to the below production possibilities curve. At the onset of the Second World War the United States had large amounts of idle human and property resources. Its economic adjustment from peacetime to wartime can best be described by the movement from point: (Go to assmt 1)
(a) c to point b. (b) b to point c. (c) a to point b. (d) c to point d
Refer to the below diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles: (Go to assmt 1)
(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
The law of increasing opportunity costs states that: (a) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. (b) the sum of the costs of producing a particular good cannot rise below the current market price of that good. (c) if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount. (d) if the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate.
(a) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.
Refer to the below tables. Opportunity costs of producing military goods are: (Go to assmt 1)
(a) increasing in Duckistan but constant in Herbania. (b) constant in both Duckistan and Herbania. (c) larger in Duckistan than in Herbania. (d) smaller in Duckistan than Herbania.
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: (a) opportunity costs. (b) marginal benefits that exceed marginal costs. (c) imperfect information. (d) normative economics.
(a) opportunity costs.
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: (a) rational self-interest, because he attempting to increase his own income by identifying and satisfying someone else's wants. (b) greedy, because he is asking for a high wage. (c) selfish, because he is asking for a wage that is higher than others might charge. (d) irrational, because some neighbors refused his offer
(a) rational self-interest, because he attempting to increase his own income by identifying and satisfying someone else's wants.
The law of increasing opportunity costs exists because: (a) resources are not equally efficient in producing various goods. (b) the value of the dollar has diminished historically because of persistent inflation. (c) wage rates invariably rise as the economy approaches full employment. (d) consumers tend to value any good more highly when they have little of it.
(a) resources are not equally efficient in producing various goods.
In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of: (a) scarcity and opportunity costs. (b) money and real capital. (c) complementary economic goals. (d) full production
(a) scarcity and opportunity costs.
Refer to the below diagram. The direct economic impact of the destruction and loss of lives caused by the terrorist attacks of September 11, 2001 is illustrated by the: (Go to assmt 1) (a) shift of the production possibilities curve from CD to AB. (b) shift of the production possibilities curve from AB to CD. (c) move from x to y on production possibilities curve AB. (d) move from y to x on production possibilities curve AB.
(a) shift of the production possibilities curve from CD to AB.
In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that: (a) the marginal benefits of additional defense goods outweighed the marginal cost. (b) the marginal cost of additional defense goods outweighed the marginal benefit. (c) there cannot be too many defense goods. (d) civilian goods are not worth producing.
(a) the marginal benefits of additional defense goods outweighed the marginal cost.
The production possibilities curve shows: (a) the various combinations of two goods that can be produced when society employs all of its scarce resources. (b) the minimum outputs of two goods that will sustain a society. the various combinations of two goods that can be produced when (c) some resources are unemployed. (d) the ideal, but unattainable, combinations of two goods that would maximize consumer satisfactions.
(a) the various combinations of two goods that can be produced when society employs all of its scarce resources.
Which of the following is an economic explanation for why most college-aged movie stars do not attend college (a) they are too dumb to get into college (b) they would find college life boring (c) the opportunity cost in terms of reduced income is too great (d) they cannot afford the room, board, and tuition fees most colleges charge
(a) they are too dumb to get into college (b) they would find college life boring (c) the opportunity cost in terms of reduced income is too great (d) they cannot afford the room, board, and tuition fees most colleges charge
Which of the following most closely relates to the idea of opportunity costs? (a) tradeoffs. (b) economic growth. (c) technological change. (d) capitalism.
(a) tradeoffs
In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population? (a) Immigration of new workers into Japan. (b) Advancements in technology that make labor more productive. (c) Reduced employment of capital because fewer workers are available to use it. (d) Greater consumption of goods imported from other countries.
(b) Advancements in technology that make labor more productive.
Refer to the below tables. Suppose that technology and the quality of resources are the same in both countries. We can conclude that: (a) Duckistan has more resources than Herbania. (b) Herbania has more resources than Duckistan. (c) Duckistan has greater opportunity costs than Herbania. (d) Prices are twice as high in Herbania as in Duckistan.
(b) Herbania has more resources than Duckistan.
Refer to the below 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.
The point on the production possibilities curve that is most desirable can be found by: (a) estimating the marginal costs of both products in real or physical terms. (b) comparing marginal benefits and marginal costs. (c) determining where least-cost production occurs. (d) calculating where economic growth will be greatest.
(b) comparing marginal benefits and marginal costs.
Kara was out jogging and despite being tired, decided to run one more mile. Based on her actions, economists would conclude that Kara: (a) must be an avid runner. (b) decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. (c) decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile. (d) was not very tired, so the marginal cost of the extra mile was very low.
(b) decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile.
The optimal point on a production possibilities curve is achieved where: (a) the smallest physical amounts of inputs are used to produce each good. (b) each good is produced at a level where marginal benefits equal marginal costs. (c) large amounts of capital goods are produced relative to consumer goods. (d) large amounts of consumer goods are produced relative to capital goods.
(b) each good is produced at a level where marginal benefits equal marginal costs.
Refer to the below 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.
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: (a) distorted priorities. (b) opportunity costs. (c) increasing opportunity costs. (d) productive efficiency.
(b) opportunity costs.
A country can CONSUME some combination of goods outside its production possibilities curve by: (a) idling some of its resources. (b) specializing and engaging in international trade. (c) buying the debt (bonds and stocks) of foreign nations. (d) producing more capital goods and fewer consumer goods.
(b) specializing and engaging in international trade.
The concept of opportunity cost: (a) is irrelevant in socialistic economies because of central planning. (b) suggests that the use of resources in any particular line of production means that alternative outputs must be forgone. (c) is irrelevant if the production possibilities curve is shifting to the right. (d) suggests that insatiable wants can be fulfilled.
(b) suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.
The construction of a production possibilities curve assumes: (a) the quantities of all resources are unlimited. technology is fixed. some resources are unemployed.
(b) technology is fixed.
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.
Consumers might leave a fast-food restaurant without being served because: (a) they are misinformed about the marginal cost and marginal benefits of the food being served. (b) they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit. (c) the environment is not conducive to a rational choice. (d) the lines waiting for service are not of equal length.
(b) they conclude that the marginal cost (monetary plus time costs)
The negative slope of the production possibilities curve is a graphical way of indicating that: (a) any economy "can have its cake and eat it too." (b) to produce more of one product we must do with less of another. (c) the principle of increasing opportunity costs applies to only parts of the economy. (d) consumers buy more when prices are low than when prices are high.
(b) to produce more of one product we must do with less of another.
Refer to the below diagram. This production possibilities curve is: (Go to assmt 1) (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.
The law of increasing opportunity costs is reflected in a production possibilities curve that is: (a) an upsloping straight line. (b) a downsloping straight line. (c) concave to the origin. (d) convex to the origin.
(c) concave to the origin.
Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact: (a) is an example of irrational behavior. (b) implies that reading should be taught through phonics rather than the whole language method. (c) contradicts the economic perspective. (d) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.
(d) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.
Opportunity cost is best defined as: (a) the monetary price of any productive resource. (b) the amount of labor that must be used to produce one unit of any product. (c) the ratio of the prices of imported goods to the prices of exported goods. (d) the amount of one product that must be given up to produce one more unit of another product.
(d) the amount of one product that must be given up to produce one more unit of another product.
A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive? a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen. b. Throw the bagels away and produce 8 fewer dozen bagels tomorrow. c. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen. d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.
a. Lower the price of the remaining bagels, even if the price falls
A production possibilities frontier can shift outward if a. resources are shifted from the production of one good to the production of the other good. b. the economy abandons inefficient production methods in favor of efficient production methods. c. government increases the amount of money in the economy. d. there is a technological improvement.
a. resources are shifted from the production of one good to the production of the other good.
Refer to the below diagram. The combination of computers and bicycles shown by point G is:
attainable, but too costly. unattainable, given currently available resources and technology. attainable, but involves unemployment. irrelevant because it is inconsistent with consumer preferences.
After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal cost of going to Spain increases. b. The marginal benefit of going to Spain increases. c. The marginal benefit of going to Ireland increases. d. The marginal cost of going to Ireland decreases.
b. The marginal benefit of going to Spain increases.
A rational decision maker takes an action only if the a. marginal benefit is greater than both the average cost and the marginal cost. b. marginal benefit is greater than the marginal cost. c. marginal benefit is less than the marginal cost. d. average benefit is greater than the average cost.
b. marginal benefit is greater than the marginal cost.
Refer to the below diagram. The movement down the production possibilities curve from point A to point E suggests that the production of: (Go to assmt 1)
both bicycles and computers are subject to constant opportunity costs. bicycles, but not computers, is subject to increasing opportunity costs. both bicycles and computers are subject to increasing opportunity costs. computers, but not bicycles, is subject to increasing opportunity costs
Suppose this economy is producing at point D. Which of the following statements would best explain this situation? (Go to assmt 1) a. The economy has insufficient resources to produce at a more desirable point. b. The economy's available technology prevents it from producing at a more desirable point. c. There is widespread unemployment in the economy. d. Any of the above statements would be a legitimate explanation for this situation.
c. There is widespread unemployment in the economy.
Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that a. improvements in efficiency sometimes come at the expense of equality. b. people respond to incentives. c. people face tradeoffs. d. rational people think at the margin.
c. people face tradeoffs.
If households are sellers in the markets represented by Box D of this circular-flow diagram, then a. Box D must represent the markets for factors of production. b. Box C must represent the markets for goods and services. c. firms are buyers in the markets represented by Box D. d. All of the above are correct.
d. All of the above are correct.
It is possible for this economy to produce (Go to assmt 1) a. 80 gadgets and 50 widgets. b. 30 gadgets and 90 widgets. c. 50 gadgets and 80 widgets. d. 90 gadgets and 30 widgets.
d. 90 gadgets and 30 widgets.
In drawing a production possibilities curve we hold constant: (a) the money supply (b) the consumer price index. (c) both technology and resource supplies. (d) resource supplies only.
(c) both technology and resource supplies
Refer to the below tables. Suppose that Duckistan and Herbania are each producing 14 units of civilian goods and 2 unit of military goods. Then: ( Go to assmt 1) (a) Duckistan is fully employing its resources but Herbania is not. (b) both Duckistan and Herbania are fully employing their resources. (c) Herbania is fully employing its resources by Duckistan is not. (d) neither Duckistan nor Herbania are fully employing their resources.
(a) Duckistan is fully employing its resources but Herbania is not.
College-age athletes who drop out of college to play professional sports a. are well aware that their opportunity cost of attending college is very high. b. underestimate the value of a college education. c. are concerned more about present circumstances than their future. d. are not rational decision makers.
a. are well aware that their opportunity cost of attending college is very high.
Refer to the below production possibilities curve. At the onset of the Second World War the Soviet Union was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movement from point: c to point b. b to point c. a to point b. c to point d.
c to point b.
Refer to the below 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.
Refer to the below 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.
