Which is considered a factor of production?
an auto plant
A nation can increase its production possibilities by:
Improving labor productivity
A point on the frontier of the production possibilities curve is:
Attainable and resources are fully employed
Which of the following would be a positive economic statement?
Bankers are now charging higher interest rates on credit cards to cover the increased cost of loaning funds to consumers
Economic growth may be represented by a:
Rightward shift of the production possibilities curve
Which expression is another way of saying "marginal cost"?
Rational behavior implies that people will make different choices because their circumstances and available information differ
When an economist says that there is "too much of a good thing," the economist is suggesting that:
The marginal benefit of the thing is less than the marginal cost
Microeconomics is the study of economics from the standpoint of:
Specific economic units which make up our economic system
From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:
Marginal cost of waiting is greater than the marginal benefit of being served
Which is an illustration of a microeconomic question?
Will a new type of television set increase the number of buyers?
What is a major opportunity cost of going to college on a full-time basis?
The foregone income that could be earned working full-time job
Microeconomics focuses on:
The individual units that make up the whole of the economy
Refer to the above graph. The total opportunity cost of nine drill presses is
3 Units of bread
Economists would classify all of the following as land except:
A hydroelectric dam
You should decide to go to a movie:
if the marginal benefit of the movie exceeds its marginal cost
Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. The movement from curve (a) to curve (b) suggests:
An improvement in capital goods technology but not in consumer goods technology
Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is
4 units of drill presses
The term scarcity in economics refers to the fact that:
No country can produce enough products to satisfy everybody's economic wants
Which one of the following would be a normative economic statement?
The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy
Economic theory involves the logical development of hypotheses which are then tested against actual outcomes
Which situation would most likely cause a nation's production possibilities curve to shift inward?
The destruction from bombing and warfare in a losing military conflict
Which of the following would be a normative economic statement?
The government should raise taxes to bring in $10 billion more in revenue next year
The general concern of economics is with the study of the:
Optimal use of limited productive resources to satisfy economic wants
Which is not a factor of production?
A schedule or curve that shows the various combinations of two products a consumer can purchase with a specific amount of money income is:
A budget line
Which would be considered a macroeconomic study? A study of the effect of:
Government spending to increase employment
Points C, D, E, and H on the above graph show:
Possible combinations of food and clothing
What is the best economic explanation for why a person would drop out of college to take a job or start a business?
If the expected future benefits from starting a business are greater than the costs
Economics is a social science concerned with:
The best use of scarce resources to achieve the maximum satisfaction of economic wants
As a student of economics, when you speak of scarcity, you are referring to the ability of society to:
Satisfy economic wants given limited resources
An economic model is:
built using theory
The production possibilities curve represents:
Maximum combinations of products available with fixed resources and technology
After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. But, instead of going to college, Ron could take a full-time job paying $20,000. If Ron decides to go to college, what is his opportunity cost for attending for one year?
A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?
It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve
Which question is an illustration of a macroeconomic question?
How does a cut in the business tax rate increase business investment in the economy?
A point inside the production possibilities curve is
Attainable, but the economy is inefficient
Which is not considered to be an economic resource?
The law of increasing opportunity costs says that:
Along a production possibilities curve, increases in the production of one type of good require larger and larger sacrifices of the other type of good
The combination of food and clothing shown by point F on the above graph:
Is attainable but involves the unemployment and inefficient use of some of society's resources
The effect of specialization and international trade will:
Cause a rightward shift in a nation's production possibilities curve
Clara states that "there is a high correlation between the level of people's education and the level of their income." Ellie replies that the correlation occurs because "more education is the best way to earn more income in this country."
Clara's statement is positive and Ellie's statement is normative
Which expression is another way of saying "marginal benefit"?
The statement that "the unemployment rate will increase as the economy moves into a recession" is an example of:
The role of the entrepreneur in society is to:
Bring the factors of production together and take the risks of producing
Assume that a consumer has $12 in income and she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75.
If the consumer spent all of her money on either apples or bananas, how many apples or how many bananas would she be able to buy?
8 apples and 16 bananas
The production possibilities curve for two products is concave because:
As the production of a good increases, there is an increase in opportunity cost
A point outside the production possibilities curve is:
Unattainable because of limited resources
Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Given production possibilities curve (a), point N suggests that the economy is
Attaining both full employment and full production
If opportunity costs were constant, then the production possibilities curve would be:
A straight line
Refer to the above graph. Which point on the production possibilities curve would indicate that there is unemployment in this economy?
The economizing problem for individuals is that:
Economic wants are greater than economic means
Macroeconomics focuses on:
Total output and the general level of prices in the economy
The concept of "rational behavior" suggests that:
People make different choices because their circumstances and information differ
Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to the concert is:
Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if:
The marginal benefit of the book is greater than its marginal cost
The combination of food and clothing shown by point G on the above graph:
Is not attainable, given society's available resources and technology
The comment that "social security taxes must be reduced if there are to be adequate incentives to work" is an example of a normative economic statement.
Opportunity cost is best defined as:
The value of the best foregone alternative