Deck 2: Economics: Eight Powerful Ideas

Question 1

Scarcity is a problem faced by all but the wealthiest of citizens.

Answer 1

False

Question 2

Marginal cost is the additional cost incurred as a result of an economic decision.

Answer 2

True

Question 3

A country has a comparative advantage in the production of DVD players if it can produce DVD players at a lower opportunity cost than others.

Answer 3

True

Question 4

The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.

Question 5

Economists would predict that if salaries increased for engineers and decreased for MBAs that fewer people would go to graduate school in business and more would go in engineering,ceteris paribus.

Question 6

Government price controls make communication of information between buyers and sellers more effective.

Question 7

The opportunity cost of a decision is the value of the best foregone alternative.

Question 8

Everyone faces scarcity.

Question 9

When considering whether or not to consume a second slice of cake,an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

Question 10

Since it is possible to grow coffee in the United States,we should clearly create a U.S.coffee industry and no longer import coffee from Brazil.

Question 11

An entrepreneur organizes the other factors of production and bears the business risk.

Question 12

The opportunity cost of attending college is likely higher for a high school graduate who leaves a job grilling hamburgers than it is for a high school dropout who leaves a job working as a computer network administrator.

Question 13

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g.,the imposition of a price control).

Question 14

Human capital consists of computers,tools,and equipment owned by private individuals.

Question 15

A permanent change to a much higher price of gasoline would lead us to expect fewer gas guzzlers on the road,ceteris paribus.

Question 16

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time,his foregone income is part of the opportunity cost of going to college.

Question 17

Scarcity applies to our needs but does not apply to our wants.

Question 18

The market mechanism assures full employment and stable prices

Question 19

Small,developing countries must first become self-sufficient before they can benefit from international trade.

Question 20

Tractors,shovels,copy machines,and computer programming expertise are all examples of scarce resources.

Question 21

Unemployment can be caused by downswings in the business cycle,people changing jobs,different skills needed by employers,or seasonal fluctuations in demand.

Question 22

Scarcity:

A) is only a problem in communist countries.
B) is a problem in both communist and socialist countries, but not in market economies.
C) does not exist in wealthy countries.
D) will never be eradicated because humans develop new wants as productive capabilities improve.

Question 23

Which of the following will not directly add to improvements in human capital?

A) increases in take home pay
B) a low-level manager is sent back to college to acquire an MBA degree
C) improved job training programs offered to employees
D) an increase in the computer-proficiency requirements of all high school graduates

Question 24

Economic choices or tradeoffs are the result of:

A) basic human greed.
B) scarcity.
C) poverty.
D) private ownership of resources.

Question 25

Which of the following is not a resource?

A) cash
B) entrepreneurship
C) land
D) labor

Question 26

Which of the following is not a resource?

A) capital
B) entrepreneurship
C) legal institutions
D) labor

Question 27

Scarcity applies to:

A) only the poor.
B) the value of our time.
C) both the rich and poor.
D) both (b) and (c)

Question 28

Additions to human capital can be made through:

A) increases in pension benefits
B) monthly deposits into a savings account.
C) improved education and on-the-job training.
D) the purchase of tools and equipment by workers.

Question 29

An increase in population,ceteris paribus,will raise the standard of living.

Question 30

Economic resources are also known as:

A) elements.
B) financial capital.
C) factors of production.
D) building blocks.

Question 31

Which of the following is an example of a resource?

A) land
B) capital
C) entrepreneurship
D) All of the above

Question 32

The market mechanism assures full employment and stable prices

Question 33

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Question 34

Which of the following is an example of a resource?

A) a river
B) a John Deere tractor
C) the chef at the city's best café
D) all of the above are resources

Question 35

Scarcity:

A) exists in command economies.
B) exists in market economies.
C) exists only in economies in which there is poverty.
D) (a) and (b) above are correct

Question 36

Because of scarcity:

A) we must sacrifice valuable alternatives to obtain more goods and services we desire.
B) the opportunity cost of consumption is zero.
C) we can obtain more of a desirable good without sacrificing other goods and services.
D) shortages of goods prevail at current market prices.

Question 37

Inflation is an increase in the overall price level in the economy.

Question 38

Scarcity implies that:

A) consumers are too poor to afford the goods and services available.
B) at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce.
C) it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
D) consumers would be willing to purchase the same quantity of a good at a higher price.

Question 39

An economy's resources:

A) consist of land, labor, capital, and entrepreneurial skills.
B) are unlimited in a country like the United States.
C) are always efficiently utilized in wealthy nations.
D) consist of land, labor, and entrepreneurial skills but not capital.

Question 40

Scarcity means that:

A) human desires are limited.
B) resources are insufficient to satisfy all human desires.
C) choices are unnecessary.
D) all but the very wealthy must face choices.

Question 41

Which of the following observations regarding economic goods is incorrect?

A) They are limited in supply.
B) They are desirable.
C) They are solely low-priced essential goods.
D) They are scarce goods created from scarce resources

Question 42

An example of physical capital is:

A) a $100 bill.
B) a stock certificate.
C) a chainsaw.
D) a cheeseburger.

Question 43

All of the following are intangible except:

A) health.
B) love.
C) computer programming expertise.
D) All of the above are intangible goods.

Question 44

Which of the following is an example of a capital resource?

A) an unskilled worker
B) a large coal deposit
C) a fishing boat
D) yellow-fin tuna

Question 45

Human capital is:

A) the same as labor.
B) a term describing the tools and equipment owned by households.
C) a worker's physical effort when working with machines.
D) the expertise or knowledge possessed by workers.

Question 46

The expression,"There's no such thing as a free lunch" implies that:

A) everyone has to pay for his/her own lunch.
B) the person consuming a good must always pay for it.
C) costs are incurred when resources are used to produce goods and services.
D) no one has time for a good lunch anymore.

Question 47

Human capital is:

A) machinery owned by firms, but not by individuals.
B) machinery owned by individuals, but not by firms.
C) machinery owned by individuals or firms, but not by the government.
D) the skill or knowledge of individuals.

Question 48

An example of an intangible good is:

A) an automobile.
B) a new house.
C) a snowplow.
D) friendship.

Question 49

Which of the following would be categorized as capital resources for a college or university?

A) water, trees, and the acreage a campus rests on
B) chalkboards, overhead projectors, and the expertise of professors
C) exams, fuel oil (which heats the buildings), and electricity
D) the work effort of registrars, clerical assistants, and teaching assistants

Question 50

The function of an entrepreneur is to:

A) bear the business risks.
B) organize the other factors of production.
C) innovate.
D) do all of the above.

Question 51

Which of the following is not an example of a resource?

A) an office building
B) a product's price
C) the land plowed by a farmer in order to grow corn
D) the chief executive officer of a large corporation

Question 52

Entrepreneurship is:

A) human capital.
B) another word for the financial capital that can be used to start a business.
C) the resource that organizes the other factors of production in order to produce goods and/or services.
D) another word for physical capital that is used to produce goods and services.

Question 53

Every time an individual decides to try out new equipment,or finds better ways to manage money,he or she is exhibiting traits of:

A) money management.
B) entrepreneurship.
C) strategic management.
D) capital management.

Question 54

The similarity between all goods and services,whether tangible or intangible,is that they:

A) are not subject to economic analysis.
B) require technical expertise.
C) have no price tags.
D) are made from scarce resources and are subject to economic analysis.

Question 55

All of the following are tangible goods except:

A) a skateboard.
B) a desk.
C) a train locomotive.
D) fairness.

Question 56

Which of the following is not an example of a capital resource?

A) the expertise of a computer programmer
B) a pitch fork
C) a commercial sewing machine
D) 100 acres of farmland in central California

Question 57

Which of the following is an example of a capital resource?

A) redwood trees
B) unskilled labor
C) stocks and bonds
D) an oil rig

Question 58

An example of a capital resource is:

A) stock in a computer software company.
B) a bond issued by a company selling electric generators.
C) a dump truck.
D) an employee of a moving company.

Question 59

Economic goods are:

A) only those commodities priced in monetary terms.
B) scarce products that are created from scarce resources.
C) the opposite of normative economic goods.
D) not subject to scarcity.

Question 60

Land as a resource can include all of the following except:

A) trees.
B) a sawmill.
C) a water body.
D) a limestone deposit.

Question 61

Opportunity cost includes

A) monetary costs only.
B) non-monetary costs only.
C) both monetary and non-monetary costs.
D) neither monetary nor non-monetary costs.

Question 62

Exhibit 2-1 Refer to Exhibit 2-1.A student has only a few hours to prepare for two different exams tomorrow morning.The above table shows alternative possible exam outcomes with three alternative uses of the student's time.The opportunity cost of scoring an 84 on the history exam rather than 76 is:

A) 10 points on the economics exam.
B) 7 points on the economics exam.
C) 8 points on the history exam.
D) 12 points on the economics exam.

Question 63

The opportunity cost of an action is equal to:

A) only the monetary payment the action required.
B) the total time spent by all parties in carrying out the action.
C) the highest valued opportunity that must be sacrificed in order to take the action.
D) the value of all of the alternative actions that could have been taken.

Question 64

Trent decides to spend an hour playing basketball rather than studying.His opportunity cost is:

A) nothing because he enjoys playing basketball more than studying.
B) the benefit to his grades from studying for an hour.
C) the increase in skill he obtains from playing basketball for that hour.
D) nothing because he had a free pass into the sports complex to play basketball.

Question 65

The opportunity cost of going to college includes:

A) both tuition and the value of the student's time.
B) tuition, but not the value of the student's time, which is a monetary cost.
C) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future.
D) neither tuition nor the value of the student's time, at least at state-supported universities and colleges.

Question 66

The opportunity cost of an item is:

A) greater during periods of inflation and lower during periods of deflation.
B) the highest valued alternative you give up to get that item.
C) the value of all available alternatives you sacrifice to get that item.
D) always equal to the dollar value of the item.

Question 67

Opportunity costs:

A) only include explicit costs paid out-of-pocket.
B) never involve costs paid out-of-pocket.
C) may or may not involve costs paid out-of-pocket.
D) are always measured in time units.

Question 68

A student has a chance to see Taylor Swift in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

A) she may receive a lower grade on the economics exam.
B) the opportunity cost of the concert is the value of the time spent studying.
C) the decision involves a tradeoff.
D) all of the above are correct.

Question 69

Which of the following statements is true?

A) The opportunity cost of a decision is equal to the explicit cost in monetary terms.
B) The opportunity cost of a decision is the value of the best foregone alternative.
C) Some economic decisions have zero opportunity cost.
D) The opportunity cost of attending college is the same for all students at the same university but may differ among students at different universities.

Question 70

Exhibit 2-1 Refer to Exhibit 2-1.A student has only a few hours to prepare for two different exams this afternoon.The above table shows alternative possible exam scores with three alternative uses of the student's time.The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

A) 8 points on the history exam.
B) 15 points on the history exam.
C) 76 points on the history exam.
D) 91 points on the history exam.

Question 71

"Opportunity cost" refers to:

A) the dollar price paid for a good.
B) the value of the best foregone alternative.
C) the finder's fee paid to a job placement agency for locating employment for workers.
D) the membership fee paid to join a health club.

Question 72

The opportunity cost of attending college is likely to include all except which of the following?

A) the cost of required textbooks
B) tuition fees
C) the income you forego in order to attend classes
D) the cost of haircuts received during the school term

Question 73

The opportunity cost of attending a university for a year is measured by:

A) the tuition fees incurred.
B) the size of the student loans the student becomes responsible for.
C) the sum of all expenditures on rent, food, books, and tuition incurred during the school year.
D) the value of the best opportunity or opportunities foregone in order to enroll for the year.

Question 74

The opportunity cost of an action:

A) can be objectively determined only by economists.
B) is a subjective valuation that can only be determined by the individual who chooses the action.
C) can be determined by adding up the bills incurred as a result of the action.
D) can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.

Question 75

The opportunity cost of an airplane flight:

A) differs across passengers only to the extent that each traveler pays a different airfare.
B) is identical for all passengers and equal to the number of hours a particular flight takes.
C) differs across passengers to the extent that both the airfare paid and the highest valued use of travel time vary.
D) is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.

Question 76

The opportunity cost of attending a college basketball game is:

A) price of the admission to the game.
B) the sum of the value of all the alternative uses of your time while at the game.
C) the value of the highest alternative use of your time and money sacrificed as a result of attending the game.
D) less if your favorite team wins.

Question 77

"If I didn't have class tonight,I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

A) $4.
B) $40.
C) $44.
D) $0.

Question 78

The opportunity cost of an action includes:

A) the monetary expenses incurred as a result of the action.
B) the highest valued alternative use of the time spent on the action.
C) the benefits received as a result of the action.
D) only a. and b.

Question 79

Jamie and Danny both attend the same college and incur the same expenses for tuition,books,and school supplies.Jamie gave up a lucrative modeling job in Paris to attend school full-time and Danny gave up a part-time job as a sales clerk in a department store.It follows that:

A) the opportunity cost of attending college is the same for both since they are enrolled at the same academic institution.
B) the opportunity cost of attending college is likely greater for Jamie than for Danny.
C) the opportunity cost of attending college is likely greater for Danny than for Jamie.
D) the opportunity cost is minimal for both since college graduates are paid much higher than high school graduates on average.

Question 80

The opportunity cost of an action is equal to:

A) the monetary expense incurred as a result of the action.
B) the value of any alternative use of the time expended on the action.
C) the highest valued alternative sacrificed as a result of the action.
D) the sum of the benefits received as a result of the action.