Microeconomics Chapter 2 Test Questions – Flashcards

Unlock all answers in this set

Unlock answers
question
The economic problem can best be stated as
answer
Given scarce‚Äč resources, how exactly do societies go about deciding what to‚Äč produce, how to produce‚Äč it, and for whom to‚Äč produce?
question
The data shows that Billabong experiences increasing opportunity costs because‚Äč ____________.
answer
for every surfboard it‚Äč produces, it must give up increasing amounts of kayaks
question
Refer to the information provided in the figure at right to answer the question that follows. According to the‚Äč figure, the point where only motorcycles are produced is
answer
E.
question
Assume a society can produce either olives or grapes. If the marginal rate of transformation of bushels of olives into bushels of grapes is‚Äč 0.2, then the opportunity cost of grapes is
answer
the 0.2 bushels of olives that must be forgone.
question
The table below represents the output of Poems or TV Commercials per day by two‚Äč authors: Krystal or‚Äč Mark: Krystal Mark Writing Poems 8 12 Writing TV Commercials 2 4 For‚Äč Krystal, the opportunity cost of writing one TV commercial is
answer
4 poems.
question
Refer to the information provided in the figure at right to answer the question that follows. The best point for society would be
answer
indeterminate from this‚Äč information, as we‚Äč don't have any information about the‚Äč society's desires.
question
A law is passed that makes community college tuition free for all U.S. citizens.
answer
The PPC shifts up and to the right
question
An unexpectedly mild spring results in a bumper crop of citrus fruit in both Florida and California.
answer
The PPC shifts up and to the right
question
A change in immigration laws significantly increases the number of immigrant workers entering the country.
answer
The PPC shifts up and to the right
question
The amount of time that unemployed workers can collect unemployment insurance is increased from 26 weeks to 96 weeks during a‚Äč recession, resulting in workers remaining unemployed for a longer period of time.
answer
This does not shift the PPC.
question
An innovation in desalinization technology allows for the more efficient conversion of salt water to fresh water
answer
The PPC shifts up and to the right
question
A radiation leak at a nuclear power plant results in the‚Äč long-term evacuation of a‚Äč 10,000 square-mile‚Äč area, which significantly reduces the‚Äč nation's productive capacity.
answer
The PPC shifts down and to the left
question
A command economy is one in‚Äč which:
answer
the basic economic questions are answered by a central government
question
Do any economic systems in the world reflect the purest forms of command or‚Äč laissez-faire economies?
answer
No, in most economies either the government plays a major role or there is some government involvement.
question
If a ppf has a negative slope and is bowed‚Äč out, we experience‚Äč ________ opportunity costs as we continue to move down and to the right along the curve.
answer
increasing
question
On a production possibility‚Äč frontier, economic growth is represented by
answer
a shift of the ppf up and to the right.
question
Which of the following would an economist classify as‚Äč capital?
answer
a guitar used by a musician
question
Inefficient production of meat and‚Äč fish:
answer
a
question
productive‚Äč efficiency:
answer
c
question
An inefficient mix of‚Äč output:
answer
b
question
d. Technological advances in the production of meat and‚Äč fish:
answer
e
question
e. An impossible combination of meat and‚Äč fish:
answer
d
question
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.
answer
False
question
In‚Äč economics, investment refers to the creation of capital.
answer
True
question
If Davey can produce candles at a lower opportunity cost than Rebecca then Davey definitely has‚Äč ________ in producing candles relative to Rebecca.
answer
a comparative advantage
question
Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to minus‚ąí10. A graph of this‚Äč society's production possibility frontier will be represented by Panel
answer
C
question
The shape of‚Äč Macroland's production possibility frontier shows
answer
increasing opportunity costs.
question
When two people trade
answer
they both expect to be made better off by the exchange.
question
The law of‚Äč _____ opportunity costs is best depicted by the production possibilities frontier in panel A.
answer
increasing
question
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‚Äč inputs?
answer
Energy
question
For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be‚Äč produced, production of LCD televisions would have to be reduced by
answer
Exactly 60
question
According to the‚Äč figure, a decrease in unemployment may be represented by the movement from
answer
C to D.
question
The economy moves from Point A to Point D. This could be explained by
answer
a change in‚Äč society's preferences for motorcycles versus hybrid cars.
question
Point B represents a situation of
answer
both full resource employment and production efficiency.
question
Microland is currently operating at Point B. You correctly deduce that
answer
in Microland all resources are fully employed and there are no production inefficiencies.
question
What do you suggest Betty Lou do to make the most efficient use of her‚Äč resources?
answer
Betty Lou should raise the price of car detailing or concentrate on washing cars.
question
For‚Äč Mark, the opportunity cost of writing one TV commercial is
answer
3 poems.
question
According to the theory of comparative‚Äč advantage, specialization and free trade will benefit
answer
all trading‚Äč parties, even when some are absolutely more efficient producers than others.
question
The marginal rate of transformation is the
answer
slope of the production possibility frontier.
question
Which of the following describes the economic system in the United‚Äč States?
answer
Mixed economy.
question
To maximize total‚Äč production,
answer
Mark should specialize in writing TV commercials and Krystal should specialize in writing poems.
question
At the end of the 2014 NFL regular‚Äč season, the Louisiana Lottery allowed customers to enter their‚Äč non-winning New Orleans Saints‚Äč scratch-off lottery game tickets in a final‚Äč 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‚Äč game, a season parking‚Äč pass, and overnight accommodations for each home game. Suppose you entered this‚Äč second-chance drawing and won this Season Prize Package Experience for the‚Äč Saints' 2015 season. Would there be a cost to you to attend the‚Äč Saints' games during the 2015‚Äč season?
answer
‚ÄčYes, there would be an opportunity cost each time you went to a game.
question
The marginal rate of transformation in moving from Point A to Point B is
answer
-1.5.
question
According to the‚Äč figure, as the economy moves from Point E to Point A‚Äč, the opportunity cost of hybrid‚Äč cars, measured in terms of‚Äč motorcycles,
answer
increases
question
Which of the following does not constitute an act of‚Äč "investment" as economists use the‚Äč term?
answer
A retiree buys 50 shares of stock at‚Äč $10 a share and then sells the stock at a profit for‚Äč $20 a share.
question
Because resources are‚Äč scarce, the opportunity cost of investment in capital is
answer
forgone present consumption.
question
Which of the following statements is true‚Äč?
answer
Mark has a comparative advantage in writing TV commercials and Krystal has a comparative advantage in writing poems.
question
An improvement in technology may be represented by a
answer
shift from ppf 1ppf1 to ppf 2ppf2.
question
Macroland is currently operating at Point A. The best explanation for this is that
answer
the‚Äč economy's resources are being used inefficiently.
question
‚Äč1.) Using the multipoint curve drawing‚Äč tool, plot the six points that make up the PPF given in the table above‚Äč (with carpet on the vertical‚Äč axis). Properly label your curve. Carefully follow the instructions above and only draw the required object. .
answer
The principle of‚Äč "increasing opportunity‚Äč cost" holds in this nation
question
If‚Äč Macroland's economy is at Point‚Äč A, it could produce more consumer goods
answer
without sacrificing any capital goods.
question
What is the opportunity cost of spending 2 hours studying for a biology‚Äč exam?
answer
Time spent studying for one of your other classes.
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New