Question 1

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

Accepted Answer

Scarcity is a fundamental economic problem faced by all societies, regardless of wealth, because it arises from unlimited wants and needs in the face of limited resources.

Question 2

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

Accepted Answer

Marginal cost is the cost incurred by producing one additional unit of product or service or making one additional decision. Therefore, it is the additional cost incurred due to an economic decision or an action.

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.

Accepted Answer

This is the definition of comparative advantage in the production of goods.

Question 4

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

Accepted Answer

The opportunity cost of a decision is the value of the next best alternative that was not chosen, not all of the available alternatives.

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.

Accepted Answer

The answer of Economists would predict that if salaries increased...

Question 6

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

Accepted Answer

Government price controls distort the natural market signals by artificially setting prices, which can lead to misallocation of resources and reduce the effectiveness of communication between buyers and sellers.

Question 7

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

Accepted Answer

The opportunity cost is the value of the best alternative that is given up in order to pursue a certain action. Therefore, the statement "the opportunity cost of a decision is the value of the best foregone alternative" is true.

Question 8

Everyone faces scarcity.

Accepted Answer

Scarcity is a fundamental economic concept that applies to all individuals, organizations, and governments. It refers to the condition of limited resources relative to unlimited wants and needs. As a result, everyone faces scarcity in some form or another, whether it's the scarcity of time, money, or natural resources.

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.

Accepted Answer

The answer of When considering whether or not to consume...

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.

Accepted Answer

While it is true that coffee can be grown in the United States, the climate in most areas is not suited for producing coffee on a large scale. Brazil is currently one of the largest producers of coffee in the world and has an established coffee industry. It would not be efficient or cost-effective to create a U.S. coffee industry and stop importing from Brazil.

Question 11

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

Accepted Answer

This is the basic definition of entrepreneurship. Entrepreneurs identify business opportunities and take the risk of creating a new venture by organizing the other factors of production, such as labor, capital, and natural resources.

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.

Accepted Answer

The opportunity cost is higher for the high school dropout working as a computer network administrator because they are likely earning a higher salary compared to the high school graduate grilling hamburgers.

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).

Accepted Answer

Market failure refers to the situation where the free market fails to allocate resources efficiently, resulting in a suboptimal allocation of goods and services. Government intervention may be necessary to correct market failures, not the cause of them.

Question 14

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

Accepted Answer

Human capital refers to the knowledge, skills, and abilities of individuals. It does not include physical assets such as computers, tools, and equipment. These are considered physical capital.

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.

Accepted Answer

A permanent change to a higher price of gasoline would increase the cost of using gas-guzzling vehicles and incentivize consumers to switch to more fuel-efficient vehicles or alternative modes of transportation. This would ultimately result in fewer gas guzzlers on the road, ceteris paribus (assuming all other factors remain constant).

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.

Accepted Answer

Opportunity cost refers to the foregone benefits of the next best alternative that must be sacrificed in order to pursue a certain action. In this case, Xavier's foregone income of $23,000 per year is the opportunity cost of going to college full time.

Question 17

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

Accepted Answer

Scarcity can apply to both our needs and wants. Scarcity refers to a lack of availability of resources to satisfy all the needs and wants of individuals or society. While needs are essential for survival and well-being, wants are desires and can be infinite. However, our ability to fulfill our wants is still limited by the availability of resources, so scarcity applies to both our needs and wants.

Question 18

The market mechanism assures full employment and stable prices

Accepted Answer

The market mechanism does not assure full employment and stable prices on its own. It operates on the principles of supply and demand, which can lead to fluctuations in employment levels and prices. Government policies and interventions are often needed to achieve full employment and price stability.

Question 19

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

Accepted Answer

Small, developing countries can benefit from international trade even if they are not self-sufficient. In fact, international trade can help them acquire the resources and goods they need to develop their economies. Additionally, participating in international trade can increase a country's export earnings and create jobs. However, it is important for these countries to have policies in place that protect their domestic industries and promote fair trade practices.

Question 20

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

Accepted Answer

Scarce resources are resources that are limited in supply and cannot be easily obtained. Tractors, shovels, copy machines, and computer programming expertise are all examples of resources that are not easily obtainable in large quantities, hence they fall under the category of scarce resources.

Quiz 2: Economics: Eight Powerful Ideas