Pt. 1 Flashcards
(39 cards)
Suppose that you own a house. What is the opportunity cost of living in the house?
A: There is no opportunity cost because you own the house.
B: There is no opportunity cost unless you could set up a business in the house.
C: The opportunity cost is the rent you could have received from a tenant if you didn’t live there.
The opportunity cost is the cost of your monthly mortgage payment plus bills.
The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity, is known as the:
A: marginal principle.
B: principle of opportunity cost.
C: principle of diminishing returns.
marginal principle.
Chris currently produces 29 units of output per day. He can sell as many units of output as he can make for $5 per unit. His total costs, including his fixed costs, are $200 to produce the 29 units of output. The marginal cost of producing the 29th unit is $5 and the marginal cost of the 30th unit is $6. In the short run, the marginal principle says he should:
A: produce 31 units per day.
B: produce 30 units per day.
C: produce 29 units per day.
produce 29 units per day.
Microeconomics is best described as
A: the study of the choices made by individual households, firms and governments, and their interaction in markets
B: the study of the nation’s economy as a whole
C: the study of how markets interact in the aggregate economy
the study of the choices made by individual households, firms and governments, and their interaction in markets
The production possibility curve is negatively sloped due to:
A: the principle of diminishing returns.
B: the principle of opportunity cost.
C: the marginal principle.
the principle of opportunity cost.
The opportunity cost of producing an additional unit of a product increases as we move down the production possibilities curve because:
A: society has fixed amounts of productive resources
B: it is more aesthetically pleasing to draw a curved shape
C: the curve is negatively sloped
D: resources are not perfectly adaptable
C: the curve is negatively sloped
Point D on the graph is:
A: Possible
B: Impossible
C: Efficient
Possible
Which of the following is not assumed to be held fixed on a production possibilities curve?
A: the amount of labor available
B: the amount of capital available
C: the level of technology
D: All of the above are fixed on the production possibilities curve.
All of the above are fixed on the production possibilities curve.
Which of the following points on the graph are efficient? A: Point A B: Point B C: Point C D: Point D
Point B
Which of the points are attainable and are points where it is impossible for the society to produce more of both goods? A: Point A B: Point B C: Point C D: Point D
Point C
Mike has his own business driving clients to airports and other destinations in a limousine which he owns. Which of the following is an example of an implicit cost in his business?
A: purchases of gasoline
B: tolls and parking fees
C: car insurance
Car Insurance
The principle of diminishing returns implies that if all but one factor of production are held constant, if that one factor is doubled then eventually output will most likely:
A: double too.
B: less than double.
C: more than double.
less than double.
Diminishing returns occurs: A: Between the first and second worker B: Between the second and third worker C: Between the third and fourth worker D: Between the fourth and fifth worker E: Between the fifth and sixth worker
Between the fourth and fifth worker
The period of time over which all factors of production can be change is: A: the period of diminishing returns B: the period of marginal costs C: the short run D: the long run
the long run
The principle of diminishing returns cannot occur:
A: in the long run.
B: in the short run.
C: either in the short run or the long run.
in the long run.
When one person or nation can produce a good at a lower opportunity cost than another, it is said to have
A: a market advantage
B: a comparative advantage
C: an absolute advantage
a comparative advantage
An individual or country that has a comparative advantage in the production of one good
A: must have an absolute advantage in the good’s production
B: must not have an absolute advantage in the good’s production
C: may or may not have an absolute advantage in the good’s production
D: must have a comparative advantage in the production of all goods
must have an absolute advantage in the good’s production
The two markets where exchanges occur in the simple circular flow model are
A: the labor market and the capital market
B: the input/factor market and the output market
C: the input/factor market and the capital market
D: the labor market and the output market
the input/factor market and the output market
In the circular flow model, households
A: translate payment for inputs into payment for products
B: translate inputs supplied into products demanded
C: translate inputs for production into products supplied
translate payment for inputs into payment for products
In the circular flow model, firms
A: translate payment for inputs into payment for products
B: translate inputs supplied into products demanded
C: translate inputs for production into products supplied
D: translate monetary costs into revenue from selling products
translate inputs supplied into products demanded
Which country has the comparative advantage in producing toys and which country has the comparative advantage in producing ships?
A: Country A has the comparative advantage in producing both toys and ships.
B: Country B has the comparative advantage in producing both toys and ships.
C: Country A has the comparative advantage in producing toys and country B has the comparative advantage in producing ships.
D: Country B has the comparative advantage in producing toys and country A has the comparative advantage in producing ships.
Country A has the comparative advantage in producing toys and country B has the comparative advantage in producing ships. [Possibly Incorrect]
Consider two individuals, Hamilton and Charlie, who produce peaches and cream. Hamilton and Charlie’s hourly productivity are as follows:
Which of the following is true?
A: Charlie has an absolute advantage in producing peaches but not cream.
B: Charlie has an absolute advantage in producing cream but not peaches.
C: Charlie has an absolute advantage in producing both goods.
Charlie has an absolute advantage in producing peaches but not cream.
Consider two individuals, Hamilton and Charlie, who produce peaches and cream. Hamilton and Charlie’s hourly productivity are as follows:
A: 2/3 unit of cream.
B: 1/7 units of cream.
C: 7 units of cream.
1/7 units of cream.
Consider two individuals, Hamilton and Charlie, who produce peaches and cream. Hamilton and Charlie’s hourly productivity are as follows:
A: 7 Peache
B: 3 Peaches
C: 2/3 Peach
7 peaches.
