CHAPTER 1- MC Practice

Term
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An economy is

the geographical boundaries of a nation.
the group of individuals who lead a society.
the political organization of a nation.
the system society uses to coordinate productive activities.
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Terms in this set (22)
An economy is

the geographical boundaries of a nation.
the group of individuals who lead a society.
the political organization of a nation.
the system society uses to coordinate productive activities.
the system society uses to coordinate productive activities.
Determine which economic principle is illustrated by each scenario.

The owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and closes shop until the temperature warms back up near summertime.

specialization
equilibrium
government intervention
market efficiency
market efficiency
Determine which economic principle is illustrated by each scenario.

The local river has so much pollution that three-eyed fish are forming. The government responds by regulating the amount of chemicals that can be dumped into the river.

specialization
equilibrium
government intervention
market efficiency
government intervention
Determine which economic principle is illustrated by each scenario.

At a high-end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station, and one chef, who has an artistic eye, plate the food she is given. The result is increased service speed, and the kitchen is able to serve more customers in an evening.

specialization
equilibrium
government intervention
market efficiency
specialization
Determine which economic principle is illustrated by each scenario.

During the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to compensate for the surplus and consumers enjoy the fruits of the farmers' labor.

specialization
equilibrium
government intervention
market efficiency
equilibrium
Please select the economic term that is best described by each statement below.

There are limited resources to satisfy all of society's wants.

trade-off
margins
recession
business cycle
scarcity
entrepreneurship
scarcity
Please select the economic term that is best described by each statement below.

Comparing the benefits and costs of engaging in an activity.

margins
trade-off
financial capital
resources
recession
scarcity
trade-off
Which is NOT an example of a resource?

human capital
firms
labor
machinery
land
firms
Economics is the

study of political organization.

study of the distribution of unlimited resources to satisfy limited wants.

study of the consumption, production, and distribution of goods and services.

exclusive study of financial markets and instruments.
study of the consumption, production, and distribution of goods and services.
The $15 Kelly's Big Burger gift card that your friend gave you for your birthday expires today. You can either use the gift card to buy yourself dinner at Kelly's Big Burger, or you can stay home and eat a delicious home-cooked meal.

What is the opportunity cost of eating the home-cooked meal?


The time it takes to eat your home-cooked meal, and the value of a $15 meal at Kelly's Big Burger

The value of a $15 meal at Kelly's Big Burger.

There is no opportunity cost since you did not pay for the gift card.

The value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at Kelly's Big Burger.

The value of the ingredients that go into the home-cooked meal.
The value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at Kelly's Big Burger.
Which is NOT an example of a behavior exhibited in a market economy? Despite the advice of its business partners, Puna discontinues its most popular lines of clothing, and chooses instead to produce retro jean jackets and purple sweatpants, thinking that jean jackets and sweatpants are bound to make a fashion comeback. Nettoyer decides to introduce a soap scent, Pomegranate, in response to Schoon's new soap scent, Blood Orange, and Sauber's award-winning scent, Tangerine. For their wedding, Alex and Erika choose Matte Photography instead of Pro Finish Photography, since Matte Photography is cheaper. The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.You and other college students are deciding whether to major in music or engineering. You learn that there is a shortage of engineers, making it easy for engineering graduates to find employment, while there is a glut of musicians for whom finding a job is difficult. As a result, you and many other college students decide to major in engineering. Which economic principle does this illustrate? Changes in incentives are unlikely to change the decisions people make. Individuals do not normally take into account the decisions of other individuals. Markets tend to move towards equilibrium as individuals respond to incentives. Government intervention can improve efficiency when there is a market failure. Specialization leads to economic efficiency.Markets tend to move towards equilibrium as individuals respond to incentives.Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He provides income and jobs to local suppliers. He also provides his community with a place to buy delicious baked goods. This is an example of the invisible hand. a recession. a command economy. market failure.the invisible hand.For which of the following decisions is marginal analysis least beneficial? deciding how fast to go on the freeway deciding whether to take a lunch break or knock on another door as a door-to-door salesperson deciding whether to do more sit-ups at the gym deciding which college to attend deciding between watching another episode of your favorite TV series and going to beddeciding which college to attendWhich demonstrates a scenario with no opportunity cost? It's Friday night and you stay up late talking and hanging out with your friends. The chemistry club is giving out free pizza for lunch to all who come to their table to get it. Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook. Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous. All of these scenarios have an opportunity cost.All of these scenarios have an opportunity cost.For the following scenario identify the correct term. Suppose you are a freshman in college and you have not declared a major. One reason you enrolled at your respective college was the school's vibrant social life. At the same time, you want to balance your academic life because you know that your grades will matter for graduate school or job applications. You decide to forgo partying for two hours to study for an upcoming economics exam. a. To make that decision you weighed your efficiency. equity. opportunity cost(s). market failure. specialization. equilibrium.opportunity cost(s).For the following scenario identify the correct term. You start a part-time job as a package handler at a large delivery company. After training, you start your first shift and your supervisor tells you to unload packages from a single truck. Unfortunately, he tells 5 other people to do the same which causes most of you to stand around and wait for your co-workers to get out of the way. There are several other trucks already on the dock waiting to be unloaded. b. Which of the following terms best describes what your supervisor has failed at? equity efficiency market failure incentive(s)efficiencyFor the following scenario identify the correct term. Your economics professor is attempting to recruit more students to major in economics. She presents data showing that economics majors develop skills valuable in private industry, government, and research. She also argues that they earn a relatively higher income than other majors. c. Your professor is presenting you with to major in economics. specializations the opportunity costs incentives efficiencyincentivesFor the following scenario identify the correct term. You are assigned a final group project for your economics course. One member of your group is really good at finding resources for the project, one is really good at proofreading and editing, and you are really good at making a presentation. d. Based on this, you know that via you can complete the project more efficiently than if you all did each part together. equity discounting specialization equilibriumspecializationSuppose that Georgiania was a thriving empire in its golden age. Business was booming and it was the center of international trade under the leadership of Emperor Raphael III. His empire's pride and joy was the trading of green and black tea, and he decreed that their entire economy should be built around it. However, in the mid 1800s, Georgiania experienced a severe economic downturn when the other nations of the world created an embargo on tea from Georgiania, which led to civil strife due to thousands of workers being laid off. A downward fluctuation in the economy like this is known as economic growth. a recession. the invisible hand. market failure. The correct term is a key component of microeconomics. both microeconomics and macroeconomics. macroeconomics.a recession. macroeconomicsFergie, Jewel, Les, and Sheila are trying to form a band. They each have some basic skills on most instruments, so their current plan is for each of them to rotate among vocals, guitar, bass, and drums. After a year of practice and rehearsals the band still sounds awful. Fergie cannot keep a steady beat when on bass or drums, Les sounds terrible on everything except the bass, nobody except Jewel can remember all the chords on guitar, and even Sheila's own mother thinks her singing sounds like a dying cow. At their current rate, they expect it will be several years before they are good enough to land their first paid performance. None of them have enough money saved up to last that long. They all know you are taking economics and ask your advice. What would you say to them? 1. Continue with the current plan, as economies of scale should eventually kick in. 2. Change the rotation to be random rather than equal to take advantage of heteroskedasticity. 3. Abandon the band, as continued practice is doomed to suffer diminishing marginal returns. 4. Invest their remaining savings in new instruments, as they are at a point where the marginal product of capital exceeds the marginal product of labor. 5. Have each member specialize in the role that they are best in to take advantage of benefits from specialization.5. Have each member specialize in the role that they are best in to take advantage of benefits from specialization.For each scenario, determine whether or not government intevention will improve society's well-being. Options are: Consumers are beginning to demand more smartphones than traditional cell phones A local energy company releases pollutants into the regional water reservoir The coastal town of Willowby could prevent many shipwrecks by building a lighthouse. however no individual resident is willing to pay for the lighthouse because they could never recoup the costs from ships that benefit from the lighthouse. A manufacturing company In Texas is switching from producing coats to producing T-Shirts in anticipation for warm weather.1. Government intervention will improve society's well-being. - A local energy company releases pollutants into the regional water reservoir - The coastal town of Willowby could prevent many shipwrecks by building a lighthouse. however no individual resident is willing to pay for the lighthouse because they could never recoup the costs from ships that benefit from the lighthouse. 2. Government intervention will not improve society's well-being. - Consumers are beginning to demand more smartphones than traditional cell phones - A manufacturing company In Texas is switching from producing coats to producing T-Shirts in anticipation for warm weather.