Microeconomics Chapter 2 Test Questions – Flashcards
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The table below represents the output of Poems or TV Commercials per day by two authors: Krystal or Mark: Krystal Mark Writing Poems 8 12 Writing TV Commercials 2 4 For Krystal, the opportunity cost of writing one TV commercial is
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4 poems.
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Refer to the information provided in the figure at right to answer the question that follows. The best point for society would be
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indeterminate from this information, as we don't have any information about the society's desires.
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A law is passed that makes community college tuition free for all U.S. citizens.
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The PPC shifts up and to the right
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An unexpectedly mild spring results in a bumper crop of citrus fruit in both Florida and California.
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The PPC shifts up and to the right
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A change in immigration laws significantly increases the number of immigrant workers entering the country.
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The PPC shifts up and to the right
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The amount of time that unemployed workers can collect unemployment insurance is increased from 26 weeks to 96 weeks during a recession, resulting in workers remaining unemployed for a longer period of time.
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This does not shift the PPC.
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An innovation in desalinization technology allows for the more efficient conversion of salt water to fresh water
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The PPC shifts up and to the right
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A radiation leak at a nuclear power plant results in the long-term evacuation of a 10,000 square-mile area, which significantly reduces the nation's productive capacity.
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The PPC shifts down and to the left
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A command economy is one in which:
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the basic economic questions are answered by a central government
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Do any economic systems in the world reflect the purest forms of command or laissez-faire economies?
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No, in most economies either the government plays a major role or there is some government involvement.
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If a ppf has a negative slope and is bowed out, we experience ________ opportunity costs as we continue to move down and to the right along the curve.
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increasing
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On a production possibility frontier, economic growth is represented by
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a shift of the ppf up and to the right.
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Which of the following would an economist classify as capital?
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a guitar used by a musician
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Inefficient production of meat and fish:
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a
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productive efficiency:
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c
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An inefficient mix of output:
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b
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d. Technological advances in the production of meat and fish:
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e
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e. An impossible combination of meat and fish:
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d
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A command economy is an economy in which households and businesses dictate what products and services will be produced and how much to charge for those products and services.
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False
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In economics, investment refers to the creation of capital.
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True
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If Davey can produce candles at a lower opportunity cost than Rebecca then Davey definitely has ________ in producing candles relative to Rebecca.
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a comparative advantage
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Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to minus−10. A graph of this society's production possibility frontier will be represented by Panel
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C
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The shape of Macroland's production possibility frontier shows
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increasing opportunity costs.
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When two people trade
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they both expect to be made better off by the exchange.
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The law of _____ opportunity costs is best depicted by the production possibilities frontier in panel A.
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increasing
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The process of converting inputs into useful output is called production . These inputs are also known as the factors of production. Which of the following is not included in this list of inputs?
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Energy
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For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be produced, production of LCD televisions would have to be reduced by
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Exactly 60
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According to the figure, a decrease in unemployment may be represented by the movement from
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C to D.
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The economy moves from Point A to Point D. This could be explained by
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a change in society's preferences for motorcycles versus hybrid cars.
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Point B represents a situation of
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both full resource employment and production efficiency.
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Microland is currently operating at Point B. You correctly deduce that
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in Microland all resources are fully employed and there are no production inefficiencies.
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What do you suggest Betty Lou do to make the most efficient use of her resources?
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Betty Lou should raise the price of car detailing or concentrate on washing cars.
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For Mark, the opportunity cost of writing one TV commercial is
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3 poems.
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According to the theory of comparative advantage, specialization and free trade will benefit
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all trading parties, even when some are absolutely more efficient producers than others.
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The marginal rate of transformation is the
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slope of the production possibility frontier.
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Which of the following describes the economic system in the United States?
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Mixed economy.
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To maximize total production,
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Mark should specialize in writing TV commercials and Krystal should specialize in writing poems.
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At the end of the 2014 NFL regular season, the Louisiana Lottery allowed customers to enter their non-winning New Orleans Saints scratch-off lottery game tickets in a final second-chance drawing, with a chance to win the 2015 Saints Season Prize Package Experience. This package includes 4 Plaza Sideline tickets and field passes to every 2015 Saints home game, a season parking pass, and overnight accommodations for each home game. Suppose you entered this second-chance drawing and won this Season Prize Package Experience for the Saints' 2015 season. Would there be a cost to you to attend the Saints' games during the 2015 season?
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Yes, there would be an opportunity cost each time you went to a game.
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The marginal rate of transformation in moving from Point A to Point B is
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-1.5.
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According to the figure, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles,
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increases
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Which of the following does not constitute an act of "investment" as economists use the term?
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A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.
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Because resources are scarce, the opportunity cost of investment in capital is
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forgone present consumption.
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Which of the following statements is true?
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Mark has a comparative advantage in writing TV commercials and Krystal has a comparative advantage in writing poems.
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An improvement in technology may be represented by a
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shift from ppf 1ppf1 to ppf 2ppf2.
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Macroland is currently operating at Point A. The best explanation for this is that
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the economy's resources are being used inefficiently.
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1.) Using the multipoint curve drawing tool, plot the six points that make up the PPF given in the table above (with carpet on the vertical axis). Properly label your curve. Carefully follow the instructions above and only draw the required object. .
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The principle of "increasing opportunity cost" holds in this nation
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If Macroland's economy is at Point A, it could produce more consumer goods
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without sacrificing any capital goods.
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What is the opportunity cost of spending 2 hours studying for a biology exam?
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Time spent studying for one of your other classes.
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