UWG Macro Practice Problems 2 – Flashcards

Opportunity cost is defined: A. only in terms of money spent B. as the value of all alternatives not chosen C. as the value of the best alternative not chosen D. as the difference between the benefits from a choice and the benefits from the next best alternative E. as the difference between the benefits from a choice and the costs of that choice

The opportunity cost of an activity: A. depends on the individual's subjective values and opinions B. is the same for everyone C. must be calculated and known before undertaking that activity D. is irrelevant to decision making E. is not related to time

The opportunity cost of college is the same for all students who are receiving full-tuition scholarships. A. True B. False

Suppose you have a choice of working full-time during the summer or going full-time to summer school. Summer tuition and books are $2,200. If you worked, you could make $7,000. Your rent is $1,000 for the summer, regardless of your choice. The opportunity cost of going to summer school is, therefore: A. $2,200 B. $7,000 C. $8,000 D. $9,200 E. $10,200

Expenses for room and board: A. are opportunity costs of attending college, because they are subsidized by the government or by the college B. are opportunity costs of attending college since they involve cash expenditures C. are opportunity costs of attending college if you are on scholarship, but not otherwise D. are not usually part of the opportunity cost of attending college, because you would have to live somewhere and eat something even if you didn't attend college E. are not usually part of the opportunity cost of attending college, because they are already included in room and board charges, and we wish to avoid double counting

If you enjoy playing golf, the opportunity cost of cleaning your room: A. is the same on sunny days as it is on rainy days B. is greater on sunny days than it is on rainy days C. is smaller on sunny days than it is on rainy days D. does not change with the weather conditions E. is equal to the opportunity cost of any other chore you have to do that day

Suppose you have purchase d a non-refundable plane ticket and, at the last moment, you cannot take the trip. You can, however, sell the ticket. If you paid $700 for the ticket, the cost of sending the ticket to someone through overnight mail is $20, and you spend $10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket? A. $700 because that is what the ticket cost. B. $720 because that is the cost of the ticket and of getting it to the buyer. C. $730 because that is the total cost of the ticket and getting it to the buyer. D. More than $730, so that you can make a profit. E. $30 because the $700 is a sunk cost.

Comparative advantage is based on opportunity costs. A. True B. False

The law of comparative advantage says that a person should produce a good if she: A. has the greatest desire to consume that good B. has the lowest opportunity cost of producing that good C. has an absolute advantage in a related activity D. has a comparative advantage in a related activity E. is equally good at producing this good as someone else is

A person who can produce more of a good than another person is said to possess a comparative advantage. A. True B. False

Janis mows the lawn in 1 hour and types a paper in 1 hour. Kristen mows the lawn in 2 hours and types a paper in 1 hour. Which of the following statements is true? A. Kristen has an absolute advantage in typing and a comparative advantage in mowing. B. Janis has an absolute advantage in both activities and a comparative advantage in typing. C. Janis has an absolute advantage in both activities and a comparative advantage in mowing. D. The opportunity cost of mowing the lawn is greater for Kristen than it is for Janis. E. Neither Janis nor Kristen would gain from specialization.

A country has an absolute advantage in the production of a good if that country: A. can produce the good using fewer resources than another country would require B. has the lowest opportunity cost of producing the good and can produce it with the fewest resources C. has the lowest opportunity cost of producing the good regardless of whether it is produced with the fewest resources D. has the greatest opportunity cost of producing the good regardless of whether it is produced with the fewest resources

If Helen gives up the opportunity to bake 40 cakes for each room she paints and Josh can paint one room in the time it takes him to bake 60 cakes, which of the following is true? A. The opportunity cost of painting is higher for Helen. B. The opportunity cost of baking cakes is lower for Josh. C. The opportunity cost of painting one room is 1/40 of a cake for Helen. D. The opportunity cost of baking one cake is 60 rooms painted for Josh. E. The opportunity cost of cakes cannot be computed.

Specialization often leads to gains in productivity for society as a whole. A. True B. False

The production possibilities frontier represents all desirable combinations of outputs. A. True B. False

On a given production possibilities frontier, which of the following is not assumed to be fixed? A. the amount of labor available B. the amount of capital available C. the level of technology D. the amount of land and natural resources available E. production of each item

Society's production possibilities frontier: A. helps explain the immense complexity of the real economy B. demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole C. is based on unrealistic assumptions and therefore has no value as an economic tool D. is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth E. is based on the assumption that technology is constantly changing

Which of the following is most appropriately measured along one axis of the production possibilities frontier diagram? A. the quantity of a produced good B. the price of a produced good C. the quantity of natural resources D. the state of technology E. society's welfare and satisfaction

"Efficiency" refers to: A. producing output using the least amount of labor B. producing as far inside the production possibilities frontier as possible C. producing only one out of many possible commodities D. getting the maximum possible output from available resource

If all resources are used efficiently to produce goods and services, a nation will find itself producing: A. inside its production possibilities frontier B. somewhere on its production possibilities frontier C. outside of its production possibilities frontier D. at one extreme end of its production possibilities frontier E. more of one product with no decrease in the production of any other product