Microeconomics HW 1 & 2

The two broad fields that make up the subject of economics are: A) microeconomics and macroeconomics. B) fiscal policy and monetary policy. C) imports and exports. D) personal investments and business investments.

When we believe the best result will come from the decision we have made, we are
being: A) gullible. B) rational. C) short-sighted. D) considerate.

Scarcity can best be defined as a situation in which: A) people respond to incentives. B) consumers look for bargains. C) all wants cannot be satisfied due to resource constraints. D) producers are selfish with resources

"There is no such thing as a free lunch." This is an example of which economic concept? A) Income effect B) Trade-offs C) Maximization D) Basic necessities

Trade-offs are: A) do not exist if we receive something for free. B) can be avoided through economic planning. C) always result in market-failure. D) associated with every decision

Opportunity Cost: A) is never provided in dollar values. B) only includes explicit, out of pocket expenses. C) is the value/benefit of your next best alternative. D) would not include the wages lost from working when deciding to take a vacation.

If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny
places on sleeping represents his: A) marginal benefit. B) incentives. C) opportunity cost. D) sunk cost.

Your sister always brags about how savvy of a grocery shopper she is. She believes that
she saves lots of money by paying with coupons and making her grocery purchases at
multiple stores to get the lowest prices on all goods. She may overestimate her savings
because: A) she does not count the value of the time it took to sort and clip coupons as a cost. B)
she does not count the value of the extra time it takes to stand in multiple lines at
multiple stores and use multiple coupons compared to a trip to one store with no
coupons. C)
she does not count the cost of the gas used driving extra miles to multiple grocery
stores. D) All of these.

Cameron can spend the afternoon playing golf, driving his boat, or cleaning his house.
Although he enjoys golf, he sometimes becomes frustrated when playing. He decides to
enjoy a more relaxing afternoon on his boat. Cameron never thought about cleaning the
house but did give golf some serious consideration. Cameron's opportunity cost of taking
his boat out was: A) a dirty house and not playing golf. B) enjoying a relaxing day on the lake. C) a dirty house. D) the enjoyment he would have gotten from playing golf

A movie costs you and your friend $15 each. After one hour of watching the movie, you
have struggled to stay awake while your friend has been on Facebook and is also bored
with the movie. You suggest that you and your friend leave the movie and go to the park.
Your friend responds by stating that he is not going to waste his $15 that was previously
spent on the movie. Your friend is considering: A) depreciation. B) an opportunity cost of the movie. C) the marginal benefit. D) a sunk cost

An incentive is: A) the marginal cost of engaging in a course of action. B)
something that causes people to behave in a certain way by changing the trade-offs
they face. C) the marginal benefit of engaging in a course of action. D) rational behavior that involves thinking on the margin

Hardee's announces "buy one get one free" breakfast sandwiches. This is an example of: A) the use of incentives. B) hoarding scarce resources. C) a macroeconomic decision. D) this is not an example of any of these concepts

Households are vital to the circular flow model in what two ways? A) They facilitate exchange between consumers and firms. B) They vote for political officers and pay taxes. C) They supply factors of production, such as labor, and purchase goods and services. D) They export goods and services and import goods and services.

In order to understand when a model may not be accurate, it is important to: A) test the model. B) make sure assumptions made in the model are clear. C) identify what details were omitted when developing a model. D) All of these

A factual claim about how the world actually works is a ________ statement. A) positive B) marginal C) normative D) irrational

Which of the following is an example of a positive statement? A) Teachers should be allowed to carry guns into the classroom. B) Cats are better pets than dogs. C) An increase in minimum wage results in higher teenage unemployment. D) NCAA Football should have adopted a playoff system 10 years ago.

A production possibilities frontier is a line or curve that: A) shows what can be produced when all available resources are efficiently used. B) explains why societies make the choices they do. C)
shows all the possible combinations of outputs that can be produced using all
available resources. D)
shows the best combinations of outputs that can be produced using all available
resources.

An increase in productivity as a result of a new technology would cause the production
possibilities frontier to: A) shift out. B) shift in. C) not move until society chooses to move it. D) become more meaningful in policy decisions.

Trade: A) is a zero sum proposition. B) can benefit both parties. C) involves a winner and a loser. D) often hurts both parties in the long run.

If a country possesses the absolute advantage in the production of one good: A) it can produce more of that good given the same resources. B)
then it must also possess the comparative advantage in the production of the other
good. C) then it must also possess the absolute advantage in the production of the other good. D) then it must also possess the comparative advantage in the production of that good.

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. A
Canadian worker, on the other hand, can produce 10 pairs of shoes or grow 20 apples per
day. Which of the following statements is true? A)
The United States has an absolute advantage and a comparative advantage in the
production of apples. B)
The United States has an absolute advantage and a comparative advantage in the
production of shoes. C)
The United States has an absolute advantage in the production of both goods and a
comparative advantage in the production of neither good. D)
The United States has an absolute advantage in the production of both goods and a
comparative advantage in the production of both goods.

A country that specializes: A)
spends all of its resources producing those goods it has an absolute advantage in
producing. B) spends all of its resources producing a particular good. C) spends all of its resources producing only what other countries need. D) spends all of its resources producing what it can make more of than anyone else.

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.
Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or
10 tablets each year. Country B has 200 workers. Suppose Country B's population of
workers increased to 600. Which of the following statements is now true? A) Country B's production possibilities curve has shifted straight out. B) Country B's production possibilities curve has rotated out from the x-axis. C) Country B's production possibilities curve has shifted straight in. D) Country B's production possibilities are now more limited because of crowding