Macro Homework 1-2

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Economics is the study of the ________ people make to attain their goals, given their ________ resources.
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choices; scarce
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Economists assume that rational people
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respond to economic incentives.
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Eva Bakery Question
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4 hours
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Every society faces economic trade-offs. This means
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producing more of one good means less of another good can be produced.
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In a market economy, who decides what goods and services will be produced?
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consumers and producers
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When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.
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allocative efficiency
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Which of the following is part of an economic model?
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assumptions
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Which of the following is a normative economic statement?
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Tobacco products should be banned in all public spaces.
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The processes used to produce goods and services describes
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technology.
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triangle A.
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$3.15 million
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The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called
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microeconomics.
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Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that
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people respond to economic incentives.
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Marginal cost is the ________ associated with a particular increase in an activity.
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additional cost
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What does the term “marginal” mean in economics?
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an additional or extra
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The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
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4 machine-made cigars
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In a market economy, those who are willing and able to buy what is produced
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receive the most of what is produced.
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The ________ production points on a production possibilities frontier are the points along and inside the production possibilities frontier.
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attainable
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If the production possibilities frontier is linear, then
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opportunity costs are constant as more of one good is produced.
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Increasing marginal opportunity cost implies that
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the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity INCREASES by progressively smaller amounts.
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An outward shift of a nation’s production possibilities frontier can occur due to
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an increase in the labor force.
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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?
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Switzerland has the comparative advantage in watches.
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Guatemala and Costa Rica
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Guatemala
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Estonia and Finland
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Finland
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If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the
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factor market.
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Circle Graph w/ Letters
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households
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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.
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invisible hand
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A critical function of the government in facilitating the operation of a market economy is
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setting up and enforcing private property rights.
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Which of the following countries does not come close to the free market benchmark?
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Cuba
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The circular flow model demonstrates
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the roles played by households and firms in the market system.
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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?
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consume a combination of goods that lies outside its own production possibilities frontier
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If a country produces only two goods, it is possible to have an absolute advantage in the production of both goods
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True
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A welding machine is an example of a factor of production if it is being used to produce automobiles.
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True

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