ECON 2301 Chapters 1-2 – Flashcards

When building a model, economists: A. Attempt to duplicate reality in all of its complexity B. Are careful to avoid the scientific method C. Ignore the facts and instead try to determine what facts should be D. Simplify reality in order to highlight what really matters

The production possibility frontier will shift outward for which of the following reasons? A. An earthquake that destroys buildings B. A decrease in the labor force C. Better technology that improves worker productivity D. A decrease in the unemployment rate

The economy's factors of production are not equally suitable for producing different types of goods. This principle generates: A. Technical efficiency B. Underuse of resources C. Economic growth D. The law of increasing opportunity cost

(Figure: Guns and Butter) On this figure, points A, B, E, and F: A. Indicate that society wants butter more than it wants guns B. Indicate combinations of guns and butter that society can produce using all of its factors efficiently C. Show that the opportunity cost of more guns increases but that of more butter decreases D. Indicate constant costs for guns and increasing costs for butter

(Figure: Guns and Butter) Suppose the economy produced 8 guns and 12 pounds of butter per period. A. Something must be done to reduce the amount of unemployment B. This is a possible choice but is inefficient C. This is an efficient choice D. There is full employment of resources

A production possibility frontier that is a straight line sloping down from left to right would suggest that: A. More of both goods could be produced along the frontier B. There are no opportunity costs C. The two products must have the same price D. The opportunity costs of the products are constant

The production possibility frontier illustrates that: A. If all resources of an economy are being used efficiently,more of one good can be produced only if less of another good is produced B. Economic production possibilities have no limit C. The economy will automatically end up at full employment D. An economy's productive capacity increases proportionally with its population

(Table: Coffee and Salmon Production Possibilities) The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good. The opportunity cost of producing 1 unit of coffee for Brazil is: A. 1 salmon B. 2 salmon C. 1/2 salmon D. 1/4 salmon

(Figure: Production Possibility Frontier for Tealand) In the figure, Tealand is producing at point C on its production possibility frontier. What is the opportunity cost in Tealand of increasing the production of tea from 20 million cups to 30 million cups? A. 10 million cups of tea B. 5 million scones C. The answer is impossible to determine from the information given D. 10 million scones

The best measure of the opportunity cost of any choice is: A. The monetary cost of that choice B. The cost associated with not taking full advantage of the opportunity offered by that choice C. Whatever you have given up to make that choice, even if no monetary costs are involved D. Your hourly wage

Which of the following is not a factor of production? A. Land B. Labor C. Money D. Capital

(Figure: Wine and Wheat) What is the opportunity cost of moving from only producing wheat to only producing wine? A. 15 tons of wheat B. 6 tons of wheat C. 9 tons of wheat D. 3 tons of wheat

You are analyzing a trade-off when you compare the ________and ________ of doing something. A. Marginal benefits; total benefits B. Costs; benefits C. Direct costs; opportunity costs D. Direct costs; total costs

Thinking in economic terms, when Mary Sweettooth is deciding whether to eat another brownie, she: A. Considers whether she can do so without anyone else noticing B. Considers only the price of the brownie C. Considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie D. Compares all of the benefits and costs of eating another brownie

The effect of a tremendous natural disaster can be shown by: A. A point inside of the production possibility frontier. B. A movement from one point to another along the production possibility frontier. C. An inward shift of the production possibility frontier. D. An outward shift of the production possibility frontier.

If in the country of Equitania, 20% of the population receives 80% of the income, and the remaining 80% of the population receives 20% of the income, then: A. Such a situation could never be either efficient or equitable. B. This situation is definitely efficient. C. This situation may be efficient. D. This situation cannot be economically efficient, since efficiency requires a more equal distribution of income.

In the simplest circular-flow model, households supply ________ and demand ________. A. Firms; markets B. Capital; barter C. Factors of production; goods and services D. Wages and income; capital markets

For an economist, the cost of something is: A. The amount of money you paid for it. B. What you gave up to get it. C. The quantity of resources used to produce it. D. Always equal to its market value.

(Figure: Strawberries and Submarines) As the economy moves from point A toward point D, it will find that the opportunity cost of each additional submarine: A. Falls. B. Remains unchanged. C. Doubles. D. Rises.

The current rate of unemployment of 9% is too high. This is a ________ statement. A. Vision B. Positive C. Marginal D. Normative