Econ HW 1 – Flashcard

In economics, choices must be made because we live in a world of A. unemployment. B. scarcity. C. greed. D. unlimited

Where do economic agents such as individuals, firms and nations, interact with each other? A. in public locations monitored by the government B. in any arena that brings together buyers and sellers C. in any physical location people where people can physically get together for selling goods, such as shopping malls D. in any location where transactions can be monitored by consumer groups and taxed by the government

Economists reason that the optimal decision is to continue any activity up to the point where the A. marginal benefit is zero. B. marginal benefit is greater than the marginal cost. C. marginal cost is zero. D. marginal benefit equals the marginal cost.

If the marginal cost of keeping a doctor's office open one additional hour per day is $200, then the doctor should keep the office open for one extra hour A. only if the marginal benefit she receives is greater than $200 plus an acceptable profit margin. B. as long as the marginal benefit she receives is just equal to or greater than $200. C. as long as the marginal cost does not rise. D. until the marginal benefit she receives reaches zero.

Which of the following is not an example of an economic trade-off that a firm has to make? A. whether it is cheaper to produce with more machines or with more workers B. whether it is to outsource the production of a good or service C. whether or not consumers will buy its products D. whether it should produce more of its product

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino? A. 2 1/2 Russian tea cakes B. 2/5 of a Russian tea cake C. $2.50 D. $1.00

Productive efficiency is achieved when A. firms add a low profit margin to the goods and services they produce. B. firms produce the goods and services that consumers value most. C. firms produce goods and services at the lowest cost. D. there are no shortages or surpluses in the market.

Which of the following statements about positive economic analysis is false? Pts Earned: 0.5 A. Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. B. There is much more disagreement among economists over normative economic analysis than over positive economic analysis. C. There is much more disagreement among economists over positive economic analysis than over normative economic analysis. D. Unlike normative economic analysis, positive economic analysis can be tested.

The production possibilities frontier model shows that Pts Earned: 0.5 A. if consumers decide to buy more of a product its price will increase. B. a market economy is more efficient in producing goods and services than is a centrally planned economy. C. economic growth can only be achieved by free market economies. D. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

Increasing opportunity cost is represented by a ________ production possibilities frontier. Pts Earned: 0.5 A. linear B. bowed in C. bowed out D. vertical

An outward shift of a nation's production possibilities frontier represents Pts Earned: 0.5 A. economic growth. B. rising prices of the two goods on the production possibilities frontier model. C. an impossible situation. D. a situation in which a country produces more of one good and less of another.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except Pts Earned: 0.5 A. engage in mutually beneficial trade with other nations. B. increase the variety of products that it can consume with no increase in resources C. consume a combination of goods that lies outside its own production possibilities frontier. D. produce a combination of goods that lies outside its own production possibilities frontier.

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. Pts Earned: 0.5 A. market B. trade-off C. variable D. model

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit. Pts Earned: 0.5 A. True B. False

One desirable outcome of a market economy is that it leads to a more equitable distribution of income. Pts Earned: 0.5 A. True B. False

Consider a country that produces only two goods: kayaks and coconuts. Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts. In this case, its current output combination is efficient. Pts Earned: 0.5 A. True B. False

If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods. Pts Earned: 0.5 A. True B. False