Micro chapters 1-2

In considering how to allocate its scarce resources among its various members, a household considers a. each member's abilities. b. each member's efforts. c. each member's desires. d. All of the above are correct.

Fundamentally, economics deals with a. scarcity. b. money. c. poverty. d. banking.

The phenomenon of scarcity stems from the fact that a. most economies' production methods are not very good. b. in most economies, wealthy people consume disproportionate quantities of goods and services. c. governments restrict production of too many goods and services. d. resources are limited.

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a. goods are scarce. b. people face tradeoffs. c. income must be earned. d. households face many decisions.

. Guns and butter are used to represent the classic societal tradeoff between spending on a. durable and nondurable goods. b. imports and exports. c. national defense and consumer goods. d. law enforcement and agriculture.

When society gets the most it can from its scarce resources, then the outcome is called a. equitable. b. efficient. c. normal. d. efficacious.

Government policies designed to equalize the distribution of economic well-being include (i) the welfare system (ii) Unemployment insurance (iii) progressive income tax a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)

The term "productivity" a. means the same thing as "efficiency." b. is seldom used by economists, as its meaning is not precise. c. refers to the quantity of goods and services produced from each unit of labor input. d. refers to the variety of goods and services from which households can choose when they shop.

9. The mainstream view among economists is that a. society faces a tradeoff between unemployment and inflation, but only in the short run. b. society faces a tradeoff between unemployment and inflation, but only in the long run. c. society faces a tradeoff between unemployment and inflation, both in the short run and in the long run. d. no tradeoff exists between unemployment and inflation, either in the short run or in the long run.

It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true? a. This loss of jobs has been detrimental to our economy. b. The government should provide subsidies to encourage more people to become farmers. c. The reduction in the number of farmers explains the increase in the price of food. d. This is progress because freed-up labor is used to produce other goods.

Economists face an obstacle that many other scientists do not face. What is that obstacle? a. It is often difficult to formulate theories in economics. b. It is often impractical to perform experiments in economics. c. Economics cannot be addressed objectively; it must be addressed subjectively. d. The scientific method cannot be applied to the study of economics.

For economists, substitutes for laboratory experiments often come in the form of a. natural experiments offered by history. b. untested theories. c. "rules of thumb" and other such conveniences. d. reliance upon the wisdom of elders in the economics profession.

A circular-flow diagram is a model that a. helps to explain how participants in the economy interact with one another. b. helps to explain how the economy is organized. c. incorporates all aspects of the real economy. d. Both (a) and (b) are correct.

Factors of production are a. the mathematical calculations firms make in determining their optimal production levels. b. social and political conditions that affect production. c. the physical relationships between economic inputs and outputs. d. inputs into the production process.

. Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Where can an economy not produce

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

On a bowed production possibilities frontier, as you move down along the curve a. more of one good must be given up to receive one unit of the other good. b. the available production technology does not change. c. the opportunity cost increases. d. All of the above are correct.

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change? a. This month, the economy reduced the unemployment of its resources. b. This month, the economy experienced an improvement in technology. c. This month, the economy experienced an increase in resources d. All of the above are correct.

Microeconomics is the study of

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

When can two countries gain from trading two goods?

A production possibilities frontier is bowed outward when

A production possibilities frontier is a straight line when

The most obvious benefit of specialization and trade is that they allow us to

The opportunity cost of an item is

If Shawn can produce donuts at a lower opportunity cost than Sue, then

Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn? a. $99 b. $49 c. $29 d. Alexis would always mow her own lawn because she can do it faster.

Adam Smith asserted that a person should never attempt to make at home