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Homework answers / question archive / Chapter 2 1)Opportunity cost is defined as the:   2 Suppose you have an hour before your next class starts

Chapter 2 1)Opportunity cost is defined as the:   2 Suppose you have an hour before your next class starts

Economics

Chapter 2

1)Opportunity cost is defined as the:

 

2 Suppose you have an hour before your next class starts. You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is:

 

3 The term opportunity cost suggests that:

 

4 If you enjoy playing golf, the opportunity cost of cleaning your room:

 

5 A test is scheduled for Monday morning, and you went to a party on Sunday night. If you hadn't attended the party, you could have studied for the test or gone to a movie. Which of the following is true of your opportunity cost?

6 Opportunity costs exist because:

 

7 Suppose you have a choice of working full-time during the summer or going to summer school full-time. Summer tuition and books cost $2,200. If you worked, you could earn $7,000. Your rent for the summer is $1,000 irrespective of your choice. If these are the only relevant costs to consider, the opportunity cost of going to summer school is:

 

 

 

 

8 The opportunity cost of an activity is best measured:

 

9 The opportunity cost of an activity:

 

10 Sunk costs:

 

11 Melissa is a self-employed lawyer who chooses a higher-priced restaurant that is 2 miles away from her home over a cheaper restaurant that is 15 miles away from her home. Which of the following is the most likely explanation for her behavior?

 

12 Suppose you have purchased a nonrefundable plane ticket. However, at the last moment, you cannot take the trip. You can, however, sell the ticket. The cost of sending the ticket to someone through overnight mail is $20, and you have to spend $10 on a courier to get the ticket to the post office for overnight delivery. If you paid $700 for the ticket, which of the following is the minimum amount you should accept for the ticket?

 

13 The opportunity cost of choosing a particular activity:

 

14 The opportunity cost of an activity is best measured:

 

15 Opportunity costs exist because:

 

2-2

16 Bill trades a ginger snap for a chocolate chip cookie. This is an example of:

 

17 John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

 

18 Which of the following is not a gain from the division of labor?

 

19 The division of labor facilitates productivity increases for all of the following reasons, except one. Which of the following is the exception?

 

20 In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Which of the following is correct?

 

21 In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Mohammed's opportunity cost of knitting one sweater is:

 

22 In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Aisha's opportunity cost of baking one cookie is:

 

23  In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Mohammed's opportunity cost of baking one cookie is:

 

24 In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Mohammed and Aisha would produce the maximum quantities of both cookies and sweaters if:

 

25 In economics, specialization means:

 

26 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Maria's opportunity cost of doing one load of laundry is:

 

27 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. In any given amount of time, _____.

 

28 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Maria's opportunity cost of typing one page is:

 

30 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Hans and Maria would both be better off if:

 

31 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Hans's opportunity cost of doing one load of laundry is:

 

32 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Hans's opportunity cost of typing one page is:

 

33 Janis mows a lawn in 1 hour and types a paper in 1 hour. Kristen mows a lawn in 2 hours and types a paper in 1 hour. Which of the following statements is true?

 

34 Which of the following provides the best evidence of the specialization of labor?

 

35 Money facilitates trade because:

 

36 If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, which of the following is true?

 

37 If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, Josh's opportunity cost of baking one cake is:

 

38 If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, Helen's opportunity cost of baking one cake is equal to:

 

39 The law of comparative advantage says that a person should produce a good if he or she:

 

40 If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning, then:

 

41 If one person has an absolute advantage in producing two goods, then that person:

 

42 The law of comparative advantage states that:

 

43 Comparative advantage refers to:

 

44 If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then:

 

45 The division of labor:

 

46 A medium of exchange must be:

 

 

47. When drawing a production possibilities frontier for two goods, all of the following are usually assumed, except one. Which of the following is the exception?

 

48.  Which of the following would cause an outward shift of the production possibilities frontier?

 

49.  A straight-line possibilities frontier indicates that _____. 

 

50.  The figure given below shows the production possibilities frontier for Good A and Good B. In the figure given below, when moving from point f to point g, the production of:

 

 

Figure 2.2

 ANS:      Good B increases and the production of Good A decreases. (At point f, resources are used inefficiently to produce both goods. At point g, all resources are used efficiently to produce only Good B)

 

51 Along a bowed-out production possibilities frontier, as more of one good is produced, _____.

 

 

 

 

52 The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that:

 

53 Which of the following would not shift the production possibilities frontier?

 

54 The figure given below shows the production possibilities frontier for Good A and Good B. In the figure given below, which of the following points represents an inefficient use of the economy's resources?

 

 

 

55  An outward shift of the production possibilities frontier:

 

56 A production possibilities frontier will be bowed out if:

 

 

 

57 The production possibilities frontier will shift if there is a change in:

 

58 The figure given below shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

 

Figure 2.4

 

59 On the production possibilities frontier, the opportunity cost of producing one more unit of a commodity per period is measured by the:

 

60 The following figure has four graphs that show the production possibilities frontier for capital goods and consumer goods. Suppose an influx of immigrants benefits the production of both consumer goods and capital goods. In this case, which of the graphs given below best illustrates the impact on the production possibilities frontier?

 

Figure 2.5

 

61 The figure given below has four graphs that show the production possibilities frontier for capital goods and consumer goods. Which of the graphs given below best illustrates the impact on the production possibilities frontier of a decrease in unemployment?

 

Figure 2.5

 

 

62 The figure given below shows the production possibilities frontier for capital goods and consumption goods. Identify the correct statement. 

 

Figure 2.7

 

63 The figure given below shows the production possibilities frontier for education and food. The opportunity cost of moving from point c to point b is _____. 

 

Figure 2.3

ANS: units of education (The opportunity cost of producing more of one good is the amount of the other good that must be sacrificed)

 

64 As resources are not perfectly adaptable to the production of both Good A and Good B, _____.

 

65 The figure given below shows the production possibilities frontier for mufflers and socks. The opportunity cost of moving from point b to d is:

 

Figure 2.4

 

66 The figure given below shows the production possibilities frontier for Good A and Good B. In the figure given below, if resources are used fully and efficiently, then the economy can produce at point(s):

 

Figure 2.2

 

67 The production possibilities frontier of an economy can shift inward if there is:

 

68 A point outside the production possibilities frontier:

 

69 Efficiency involves:

 

70 The following figure shows the production possibilities frontier for Good A and Good B. In the figure given below, point f represents:

 

Figure 2.2

 

71 A straight-line production possibilities frontier indicates that: 

 

72 Which of the following is measured along an axis of the production possibilities frontier diagram?

 

73 An improvement in technology, all other things remaining constant, _____. 

 

74 A downward-sloping straight-line production possibilities frontier indicates:

 

75 If an economy is operating at a point inside the production possibilities frontier, then:

 

76 An improvement in the technology used to produce goods would:

 

 

2-4

77 Recognizing the incentive power of property rights and markets, some of the most die-hard central planners are now allowing:

 

78 The set of mechanisms and institutions that resolve the questions of what, how, and for whom goods are produced is called the:

 

79 A major distinguishing feature between capitalist and socialist (or command) economies is that:

 

80 Which of the following economic questions does the decision to give all of the butter an economy produces to the homeless answer?

 

81 The economic question of what will be produced is:

 

82 Which of the following is not a characteristic of pure capitalism?

 

83 Adam Smith believed that people's pursuit of their own self-interests:

 

84 If dairy farmers use automatic milking machines instead of milking by hand, which of the following economic questions does their decision answer?

 

 

 

 

85 According to Adam Smith, "invisible hand" refers to:

 

86 In a command economy, _____.

 

87 Every economy must answer each of the following questions, except one. Which of the following is the exception?

 

88 An economic system:

 

89 Which of the following is a characteristic of a pure command economy?

 

90 Pure capitalism and a pure command system are:

 

91 The U.S. economy is best characterized as a _____.

 

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