chapter 02 practice quiz Flashcards
the lesson of ___ is to forget about the money that’s irretrievably gone and instead to focus on the marginal costs and benefits of future options
sunk costs
the opportunity cost of an action:
is a subjective valuation that can be determined only by the individual who chooses the action.
why is there scarcity ?
because our unlimited wants exceed our limited resources.
as a person receives more of a good, the ___ from each additional unit of the good declines
marginal utility
the choice on a production possibilities set that is socially preferred, or the choice on an individual’s budget constraint that is personally preferred, will display ____.
allocative efficiency
as depicted in ____, it is necessary to give up some of one good to gain more of the other good.
the production possibilities frontier
more choices involve ____, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal analysis
the law of _____ explains why people and societies rarely make all-or-nothing choices.
diminishing marginal utility
scarcity exists because of:
unlimited wants and limited resources
the lesson of ____ is to forget about the money that’s irretrievably gone and instead to focus on the marginal costs and benefits of future options.
sunk costs
philosophers draw a distinction between _____, which describe the world as it is, and normative statements, which describe how the world should be.
positive statements
attending college is a case where the ___ exceeds the monetary cost.
opportunity cost
“if i didn’t have class tonight, i would save $4 campus parking fee and spend 4 hours at work where i earn $10 per hour”. the opportunity cost of attending class this evening is:
$44
economists refer to this pattern, ____, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.
law of diminishing marginal utility
the model that economists use for illustrating the process of individual choice in a situation of scarcity is the _____, sometimes also called the opportunity set, a diagram which shows what choices are possible.
budget constraint
the model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _____, a diagram which shows what choices are possible.
opportunity set
the opportunity cost of attending university is likely to include all except which of the following ?
the cost of haircuts received during the school term
the slope of the ____ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
budget constraint
in many cases, it’s reasonable to refer to the ____ as the price.
opportunity cost
the marginal benefit of a slice of pizza is the:
maximum amount that a consumer is willing to pay for the slice.
