Chapter 1 Limits, Alternatives, and Choices Flashcards
Economics is primarily the study of:
A)how scarcity can be eliminated
B)how firms manipulate prices
C)how government influences resource allocation decisions
D)the problem of scarce resources relative to human wants
D )the problem of scarce resources relative to human wants
Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video:
A)increases as more videos are purchased
B)is $1.00
C)is constant and equal to ½ song
D)is constant and equal to 2 songs
D )is constant and equal to 2 songs
You should decide to study an extra hour tonight
A)if the marginal cost of studying an extra hour exceeds its marginal benefit
B)if the marginal benefit of studying an extra hour exceeds its marginal cost
C)if you got a lower than expected grade on your last exam
D)because studying harder will improve your test scores
B) if the marginal benefit of studying an extra hour exceeds its marginal cost
Answer the next question on the basis of the data given in the following production possibilities table:The data in the table indicate that increasing production of capital goods requires:
A)increasing sacrifices of consumer goods
B)decreasing sacrifices of consumer goods
C)constant sacrifices of consumer goods
D)no sacrifices of consumer goods
A) increasing sacrifices of consumer goods
Consider the problem Marsha faces of how to allocate her weekly allowance between books and videos. An increase in Marsha’s allowance will:
A)shift her budget line to the right
B)shift her budget line to the left
C)rotate her budget line, allowing her to buy more books but not more videos
D)rotate her budget line, allowing her to buy more videos but not more books
A) shift her budget line to the right
The negative slope of the production possibilities curve illustrates that:
A)some resources are always unemployed
B)when resources are fully employed, an economy can produce more of one thing only by producing less of something else
C)opportunity costs are constant
D)businesses can sell more goods when their prices are low
B) when resources are fully employed, an economy can produce more of one thing only by producing less of something else
A microeconomist would most likely study:
A)how consumers respond to a change in gasoline prices
B)the effects of an income tax reduction on the size of the national budget deficit
C)the effects of aggregate consumer debt on overall consumption spending
D)the relationship between the size of the money supply and the rate of inflation
A) how consumers respond to a change in gasoline prices
Refer to the following production possibilities diagram:Production of which of the points in the diagram is currently unattainable given the economy’s resources?
A)Point A
B)Point B
C)Point C
D)Point D
D) Point D
The fundamental problem of economics implies that:
A)governments must be relied upon to supply essential goods and services
B)inflation and unemployment are unavoidable
C)growing populations will deplete natural resources
D)individuals and communities must make choices among competing alternatives
D) individuals and communities must make choices among competing alternatives
Margaret decides to stay home and study for her exam rather than going out to a movie with her friends. Her dilemma is an example of:
A)the economic perspective
B)marginal analysis
C)opportunity cost
D)allocative efficiency
C) opportunity cost
