UO Microeconomics 201: Ch.1-2 – Flashcards
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Scarcity refers to the __________ nature of society's resources.
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limited
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Economics is the study of how people allocate their ________ resources to satisfy their nearly _________ wants.
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limited; unlimited
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Incentives can be classified as
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Both of these are true (positive/negative & direct/indirect)
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Which of the following statements refers to a macroeconomic issue?
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The national unemployment rate is currently 7.7%
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Think about a country where most economic production comes from factories that create air pollution. What could be a possible trade-off of lower levels of pollution?
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lower income
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Opportunity cost is the ______________ alternative that must be sacrificed in order to get something else.
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highest-valued
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The opportunity cost of attending college is likely to be highest for a high school graduate
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who is capable of playing a well-paid professional sport
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udy spent eight hours studying for an exam. Normally, she would have spent that time watching TV instead of studying. She figures she could have made a "B" after only studying four hours, but she really wanted an "A." What is Judy's marginal cost in terms of TV viewing to improve her grade from a "B" to an "A"?
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four hours
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Jewell attends a wedding reception where dinner is served. For her entrée, she has the option of steak, chicken, or pasta. If she chooses the pasta, then her opportunity cost is
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either the chicken or the steak- whichever would have been her second choice to pasta
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The concept of scarcity in economics refers to
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limited resources and unlimited wants
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A physician who hires a plumber is an example of
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comparative advantage
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What is the term for the voluntary exchange of goods and services between two or more parties?
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trade
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The difference between the study of microeconomics and the study of macroeconomics is a difference between
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the study of individual economic units and the study of aspects of the economy as a whole
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The concept of _________________ refers to weighing the costs and benefits of an action.
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marginal thinking
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You order a $20 Seattle Mariners sweatshirt online for a Father's Day gift. There's a standard shipping charge of $10, but you see that orders $25 or more ship for free. You could also order a $5 Mariners sticker, but you're not sure your father would like it. You decide to order the sticker. This is an example of
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incentives
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You have to decide between going on a cruise with friends or going on a service trip with Alternative Spring Break; both of which cost the same amount. You could also work over the break and earn some extra money, but this would be less valuable to you than either experience. If you choose the cruise, what is your opportunity cost?
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Alternative Spring Break
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Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant.
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one variable
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Which of the following statements is normative?
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Microeconomics is a great class
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Which of the following is an example of normative analysis?
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The multimillion dollar B-1 bombers are a waste of tax money.
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Which of the following statements is normative?
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There should be unemployment benefits for farmers who loose their farms
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What would we have to assume before constructing a society's production possibilities frontier?
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Both A and B are true
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Which point on the graph below is unattainable because the economy does not have enough resources to produce it?
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point E
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Which point on the graph below represents an inefficient use of society's resources?
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point F
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Based on the figure below, what would be the opportunity cost in terms of wings when producing 20 more pizzas if the economy is efficiently producing 150 wings and 50 pizzas?
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60 wings
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The graph below illustrates the effect on the production possibilities frontier if the population grows, making more workers available. This new production possibilities frontier reflects the ability of society to
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produce more wings and more pizza
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The table below shows the daily production potential of two workers, if they devote all their time to making either pizza or wings. Who has the absolute advantage at producing wings?
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Debra Winger
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Assume that Debra and Mike, without trading with each other, will produce and consume the following number of pizzas and wings; Now, assume that both Debra and Mike decide to specialize, and then Debra trades 19 pizzas to Mike for 47 wings. This outcome is shown in the table below. Compared to the result without trade, what are the gains from trade that Debra experiences when she and Mike specialize and trade?
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1 pizza and 7 wings
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Based on the table below, which of the following statements is true?
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Mike has a comparative advantage in producing wings, while Debra has a comparative advantage in producing pizzas.
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Examine the two figures below. Which illustrates a society that produces more capital goods than consumer goods?
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Figure B
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Which of these is an exogenous factor?
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yearly rainfall
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Suppose that a politician tells you about a plan to create two expensive but necessary programs to build more production facilities for solar power and wind power. At the same time, the politician is unwilling to cut any other programs. Assuming the resources are already being efficiently used in other programs, where would the point the politician is trying to reach be on the production possibilities frontier?
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an impossible point
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Suppose that in a time of crisis everyone pitches in and works works more than full-time. How is this represented by a production possibilities frontier?
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The entire PPF shifts out
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Where would you plot unemployment on a production possibilities frontier?
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a point inside the PPF
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Where would you plot full employment on a production possibilities frontier?
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a point on the PPF
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You are thinking about traveling to visit friends in Atlanta. You can fly or take the bus. A round-trip plane ticket costs $300, and it takes three hours to get from your house to your friend's house if you fly. A round-trip bus ticket costs $150 and it takes 10 hours to get door-to-door using the bus. What is the minimum value of your time necessary to induce you to buy the plane ticket instead of taking the bus?
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$10.71/ hour
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Austin, Jensen, Matthew, and Walker can all produce matches, brushes, cans, and shirts. The table below identifies how many of each good they can make in a day if they devote themselves to producing only that good. Who has the absolute advantage in brushes?
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Walker
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Which of the following describes Jonathan having a comparative advantage in producing apples?
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giving up less production of other goods when producing an apple
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Your friend Matthew is a very busy guy who is becoming concerned with his weight and health. Because he is so busy, he often stops to grab a fast-food dinner. When you tell him that fast-food meals are not conducive to losing weight, he replies that "it's just this one burger." What advice would you give him?
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Matthew needs to think about long-term trade-offs. There are short run trade-offs between time and money for meal preparation but long-term trade-offs between diet and health. A fast-food meal would be OK if it really was an occasional thing but not if it is a regular occurrence.
