Chapter 2 Homework

Question 1

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

Answer 1

impossible to determine because the most preferred alternative is not known

Question 2

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

Answer 2

is greater on sunny days than it is on rainy days

Question 3

The opportunity cost of a particular activity

Answer 3

varies from person to person

Question 4

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

Answer 4

central planning

Question 5

In economics, specialization means

Answer 5

focusing efforts on a particular product or a single task

Question 6

Which of the following is an example of division of labor?

Answer 6

dividing an assembly process into separate steps

Question 7

Points inside the production possibilities frontier represent

Answer 7

inefficiency or unemployment (or both)

Question 8

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

Answer 8

The higher monetary cost of the more expensive restaurant is offset by the higher opportunity cost of the lower-priced restaurant.

Question 9

Inefficiency is a flaw of a command economy because there is less incentive for resources to flow to their highest-valued uses.

Answer 9

True

Question 10

Because resources are not perfectly adaptable to the production of both good A and good B,

Answer 10

the opportunity cost of A increases as production of A increases

Question 11

Which of the following provide the best evidence of specialization?

Answer 11

physician that practices in a specialty area such as cardiology or orthopedic surgery

Question 12

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

Answer 12

$30 because the $700 is a sunk cost

Question 13

The “rules of the game,” the set of conditions that shape individual incentives and constraints, are determined by

Answer 13

laws about resource ownership and the role of government

Question 14

Which of the following is a characteristic of pure capitalism?

Answer 14

the price system is used to guide resources to their highest-valued uses