question
Which of the following resources is scarce in a developed economy?
answer
"a. Labor b. Land c. Raw materials d. Tools All of these answers "
question
The following sentence is a good example of which kind of statement? The next Chairman of the Federal Reserve should be an economist.
answer
Normative because it expresses an opinion
question
The movement along a production possibilities frontier from points (2, 4) to (3, 1) represents which of the following?
answer
An opportunity cost of 3 for the second good while maintaining efficient production
question
What does the slope of the production possibilities curve represent?
answer
The marginal rate of transformation
question
Suppose you make the decision to volunteer for an event in school for an hour this week. This means that you would have to take an hour off from your summer job, for which you earn $10 per hour. You spend $3 in bus fare in order to get to school and $5 for lunch. If you went to work, you would have been able to walk to your job, and lunch would have been provided to you by the office. The opportunity cost of volunteering is:
answer
$18
question
Tom owns a bakery and decides to bake a few extra loaves of bread each morning. If he is making a decision "at the margin," it implies that he is comparing:
answer
The additional revenue earned to the additional cost of producing the extra loaves of bread.
question
Marginal Cost is the:
answer
Cost of a small increase in an activity.
question
Opportunity cost is best defined as:
answer
The value of the next best alternative that is given up in making a choice.
question
Suppose you work forty hours every week and earn $15 per hour. If you wish to work beyond forty hours, your employer agrees to pay you $17 for every extra hour that you work. Your Marginal Benefit from working each extra hour of overtime is:
answer
$17
question
When making a decision "at the margin," you will consider undertaking more of an activity if the Marginal Benefit from it is __________ the Marginal Cost.
answer
: Greater than or at least equal to
question
The table below shows the Marginal Cost and the Marginal Benefits from producing and consuming sodas (respectively):
answer
...
question
In the table above, Economic Efficiency occurs at how many cans of soda? Quantity Marginal Costs Marginal Benefits 1 6 20 2 8 15 3 10 10 4 12 8 5 145
answer
3 cans, because marginal cost equals marginal benefit at this point
question
A point on the production possibilities frontier indicates:
answer
That the point is efficient in the production of the two goods.
question
Refer to the figure above, which shows the production possibility for a bakery. If the bakery wants to move its production of bread from 4 units to 6, the opportunity cost of increasing bread production is:
answer
The loss in muffin production in moving from A to B
question
An example of a macroeconomic phenomenon is:
answer
a. The overall welfare (happiness) of a country. b. Income tax rates. c. Gross Domestic Product. d. The unemployment level. All of the above.
question
An example of a microeconomic phenomenon is:
answer
The total value of Apple's stock rises from $500 billion to $600 billion.
question
division of labor
answer
the way in which the work required to produce a good or service is divided into tasks performed by different workers
question
economics
answer
the study of how humans make choices under conditions of scarcity
question
economies of scale
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when the average cost of producing each individual unit declines as total output increases
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scarcity
answer
when human wants for goods and services exceed the available supply
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specialization
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when workers or firms focus on particular tasks for which they are well-suited within the overall production process
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fiscal policy
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economic policies that involve government spending and taxes
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macroeconomics
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the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.
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microeconomics
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the branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms
question
monetary policy
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policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing
question
circular flow diagram
answer
a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market
question
goods and services market
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a market in which firms are sellers of what they produce and households are buyers
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labor market
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the market in which households sell their labor as workers to business firms or other employers
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theory
answer
a representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation
question
command economy
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an economy where economic decisions are passed down from government authority and where resources are owned by the government
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exports
answer
products (goods and services) made domestically and sold abroad
question
globalization
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the trend in which buying and selling in markets have increasingly crossed national borders
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gross domestic product (GDP)
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measure of the size of total production in an economy
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imports
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products (goods and services) made abroad and then sold domestically
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market
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interaction between potential buyers and sellers; a combination of demand and supply
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market economy
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an economy where economic decisions are decentralized, resources are owned by private individuals, and businesses supply goods and services based on demand
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private enterprise
answer
system where the means of production (resources and businesses) are owned and operated by private individuals or groups of private individuals
question
traditional economy
answer
typically an agricultural economy where things are done the same as they have always been done
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underground economy
answer
a market where the buyers and sellers make transactions in violation of one or more government regulations
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