B. Most decisions involve changes from the present situation, B. the marginal benefit of the movie exceeds its marginal costs, A. the decision to engage in one activity means forgoing some other activity, The assertion that "there is no free lunch" means that. Which of the following is not correct? D. North Cantina has better technology than South Cantina in producing consumer goods but not capital goods. Other things equal, the more capital goods a nation produces, the greater will be its future growth rate. A. the various combinations of two goods that can be produced when society employs all of its scarce resources. In that regard, your explicit opportunity cost is … According to the law of increasing costs, what will happen? C. can produce more of both consumer goods and capital goods by using resources that are currently idle. B. all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant. b. the law of comparative advantage is working. B. A.Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole. If Kelly is using the scientific method to better understand ice cream buying habits, her next step. In simple terms, the law of increasing opportunity cost states that when you have a limited amount of a certain resource, your opportunity cost will increase as you pour each additional unit of said resource in to one activity. What does the economic concept of "guns or butter" mean? If the output of product X is such that marginal benefit equals marginal cost. When an economy uses fewer production resources than it would at maximum production, it is called _______. Uses its resources to make the most goods and services. Points A, B, C, D, and E show. A factory building is an example of which factor of production? This happens when all the factors of production are at maximum output. Assume an economy is incurring unemployment. Refer to the diagram. You want a vacation in Cuba but your time is limited. D. autos owned by a car rental firm, computers at the car rental agency, vans used to shuttle rental customers to and from the airport, Money isn't and economic resource because, A. D. the opportunity costs of both bread and tractors increase as more of each is produced. Some neighbors accept Alex's offer and others refuse. As it relates to production possibilities analysis, the law of increasing opportunity cost is reflected in curve. This occurs because the producer reallocates resources to make that product. C. is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced, Any point inside the production possibilities indicates, D. that more output could be produced with the available resources, Refer to the diagram. In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following so economists consider to be capital? The basic difference between consumer goods and capital goods is that. A typical production possibilities curve. Suppose that Duckistan and Herbania are each producing 14 units of civilian goods and 2 units of military goods. Refer to the table. Which of the following people is an entrepreneur? People weigh costs and benefits to make decisions, Economies involves marginal analysis because, A. Inside: Inefficient Outside: Unobtainable On: Efficient 40.How does allocative efficiency and productive efficiency relate to a PPF? Which of he following terms implies the GREATEST degree of confidence in and economic generalization? Its economic adjustment from peacetime to wartime can best be described by the movement from point, Refer to the production possibilities curve. Physical capital refers to human-made items used to make other goods.saws and drills. B. reduced if marginal costs exceed marginal benefits. B. a detailed examination of specific economic units that make up the economic system. What is the reason for the law of increasing opportunity costs… In which of the graphs is the opportunity cost of a pint of beer the lowest? Then. What line on a production possibilities curve shows the amounts of goods produced? Study of large aggregates of the economy or the economy as a whole. Which of the following terms implies the LEAST degree of confidence in an economic generalization? If the economy is producing at production alternative C, the opportunity cost of the 10th unit of consumer goods will be, Refer to the table. Refer to the diagram for athletic shoes. a line that shows how much can be made so resources are best used. Look for and pursue opportunities to increase their utility, According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." We can conclude that. C) a constant opportunity cost between the two goods. This reality illustrates. B. the production possibilities curves of such nations have shifted inward. D. can improve its allocation by producing more of both goods. D. the opportunity cost of shelter is greater in Alpha than it is in Beta. If the production possibilities curve is a straight line, B. economic resources are perfectly substitutable between the production of the two goods, A production possibilities curve illustrates. 1. We can conclude that. If the consumer's money income is $50, the, D. Price of C is $10 and the price of D is $5, Refer to the budget line shown in the diagram. The law of increasing opportunity costs says that, as we produce more of a particular good, the opportunity cost of producing that good increases. What does this mean? Which of the following will not produce an outward shift of the production possibilities curve? C. use the observed data to form a hypothesis about ice cream buying behavior. Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. In which of the graphs is the opportunity cost of a pint of beer equal to one slice of pizza? Why? Even if a country has unemployed resources, it can still be … B. each good is produced at a level where marginal benefits equal marginal costs. The law of increasing opportunity cost is a concept that is often employed in business and economic circles. Unlike shortages, which are temporary, scarcity always exists. Also assume that money income is $60. In deciding whether to study for an economic quiz or go to a concert, one is confronted by the idea of. B. may or may not be free to individuals but are never free to society. Physical capital. Macroeconomics approaches the stud of economics from the viewpoint of. The combination of computers and bicycles shown by point F. B. is attainable but implies that the economy is not using all its resources. Law Increasing Opportunity Cost As production of a good increases, the opportunity cost of producing an additional unit rises. A. allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. The law of increasing opportunity cost says that as you increase the production of one good, the opportunity cost to create a subsequent good is increased. The process by which economists test hypotheses against facts to develop theories, principles, and models is called. A. society should produce fewer shoes to achieve the optimal allocation of resources. The output of digital music players should be. The absolute value of the slope of the budget line is: A. The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. Which of the following is a land resource? Money, as such, does not produce anything. A. expand its resources or improve its technology. Specifically, if it raises production of one product, the opportunity cost of making the next unit rises. Entrepreneurs are people who decide how to create new goods and services. The law of increasing costs says that as production increases, it eventually becomes less efficient. The law of increasing opportunity costs states that as production of a product increases, the cost to produce an additional unit of that product increases as well. Resources used to produce them are limited. D) no opportunity cost between the two goods. What is the difference between a shortage and scarcity? Shifts the individual's budget line rightward because she can now purchase more of both products. Refer to the diagram. He offers to provide the service in exchange for a wage of $20 per hour. This economy will experience unemployment if it produces at point. To earn the most pay, what is the trade-off? The movement down the production possibilities curve from point A to point E suggests that the production of. The law of increasing costs states that when production increases so do costs. This statement is, Ben says that "an increase in the tax on beer will raise its price." Opportunity cost goes up. An efficient economy uses resources in such a way as to maximize the output of goods and services. The slope of the budget line reflects the, Suppose Elroy's budget line is as shown on the diagram. A. rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. 41) A point outside a society’s production possibilities curve is one which is. Refer to the diagram. Technological advance that is useful in producing consumer goods but not in producing capital goods is shown by the shift of the production possibilities curve from AB to, 171. Which of the following will shift the production possibilities curve to the right? According to the law of increasing costs, as production shifts from making one item to another, more and more resources are necessary to increase production of the second item. Which of the following is a capital resource? All other things equal, curve C. C. is a more desirable production possibilities curve for an economy than curve A. pay for employees' education. Microeconomics Topic 1: “Explain the concept of opportunity cost and explain why accounting profits and economic profits are not the same.” Reference: Gregory Mankiw’s Principles of Microeconomics, 2nd edition, Chapter 1 (p. 3-6) and Chapter 13 (p. 270-2). The optimal point on a production possibilities curve is achieved where. Strawberries are becoming more popular. C. a downsloping line that is bowed out from the origin. B. You bought two new CDs with the last $30 in your checking account, and your next payday is on Monday. costs of production increases and then decreases. In the diagram, the prices of Coke and popcorn, respectively, are, Other things equal, an increase in a consumer's money income. Which one of the following would shift the production possibilities curve from PP1 to PP2? Education increases skills, and therefore increases human capital. If fewer resources are used than are available, they are underutilized and so fewer goods are produced. e. efficiency is measured by the monetary cost of an activity. A. is a reality that underlies economic behavior. Assume that pizza is measured in slices and beer in pints. Scarcity exists because all resources are limited. Efficiency implies that it is impossible to get more of one good without getting less of another. Scarcity requires that people make trade-offs because. They decide to increase quality of their build to make the competition look and feel comparatively cheap. The law of increasing opportunity cost a. A. shift the production possibilities curve from PP1 to PP2. C. are generalizations based on hypotheses tested and supported with observed facts. We can conclude that. D. Focuses on facts, descriptions and theoretical relationships. States that as more of a good is produced, its opportunity cost increases c. Implies that the more resources the economy uses, the greater their cost Implies that the more of good X that is produced, the more costly are the resources. d cannot be compared for the two curves without more information. The concept of opportunity cost occupies an important place in economic theory. Based on her actions, economists would conclude that Kara. ⟵ Bernsen Law Firm A Supply Curve That Illustrates The Law Of Supply​ ⟶ Refer to the diagram for athletic shoes. Any two categories of goods. c.) along a production possibilities curve, increases in the production of one good … Suppose that technology and the quality of resources are the same in both countries. law of increasing opportunity cost: The proposition that opportunity cost, the value of foregone production, increases as the quantity of a good produced increases. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature, and has observed a positive relationship between temperature and the number of customers. The production possibilities curve illustrates the basic principle that. The need to make choices because economic wants exceed economic means, The economizing problem is one of deciding how to make the best use of, B. limited resources o satisfy virtually unlimited wants, B. In terms of costs, the law of increasing returns means the lowering of the marginal costs as successive units of variable factors are employed. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles, Refer to the diagram. Which of the following closely relates to the idea of opportunity costs? D. Herbania is technologically superior to Duckistan in producing civilian goods. In economics, the pleasure, happiness, or satisfaction received from a product is called, When economists say that people act rationally in their self-interest, they mean that individuals, A. Let's take an example. The combination of computers and bicycles shown by point G is. We can conclude that. The opportunity cost of growing strawberries will increase. The concave shape of each production possibilities curve indicates that. Refer to the tables. Resources to make goods and services are always limited. Which one of the following expressions best states the idea of opportunity cost? iThe law of increasing opportunity cost is an economic theory that states that opportunity cost increases as the quantity of a good produced increases. C. can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods. D. downsloping because successive units of a specific product yield less and less extra benefit. The law of increasing opportunity cost says that as you pour more and more of a limited resource into an activity, your opportunity cost gets larger for each additional "unit" of the resource. A. Duckistan is fully employing its resources, but Herbania is not. C. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. A nation's production possibilities curve might shift to the left (inward) as a result of. B. advancements in technology that make labor more productive, (Consider This) Free products offered by firms. The night out with your friends that you miss because you can't afford it now. This example illustrates. Essentially, this law states that, as additional units of a good are manufactured, the opportunity cost associated with that production will also increase. The slope of the typical production possibilities curve. The opportunity cost of something measures the price, whereas the return is measuring how much your payment of inputs is worth, so if the ppf is showing that rabbits get more expensive in terms of lost berries the more rabbits you have, that's equivalently a diminishing marginal return on the input (potential berries given up) and an increased opportunity cost on the output (expensive rabbits). Investopedia defines opportunity cost as the cost of an action not taken in order to pursue a particular course of action. A. the economy was not employing all of its resources before the policy change. c. resources are scarce but wants are unlimited. D. used by economists and other social scientists, as well as by physical scientists and life scientists, to formulate and test hypotheses. Economists contend the most economic decisions are, Alex sees that his neighbors' lawns all need mowing. The law of increasing costs states that as production shifts from making one good to another, more resources are needed to increase production of the second good. The production possibilities frontier shows the maximum combination of two types of goods that can be produced using all resources. B. to produce more of one product, we must do with less of another. If the current output of shoes is Q1, then. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature. A farm grows corn and alfalfa. Human-made objects used to create other goods and services are physical capital. Opportunity costs of producing military goods are, Refer to the tables. The law of increasing costs holds that the opportunity cost: a. of a good decreases as the quantity of the good produced increases b. of a good is proportional to the resources used in its production c. of a good increases as more of the good is produced d. of a good does not change with the resources used in … B. 39.What does it mean to be operating INSIDE, OUTSIDE, or ON the PPF ? An improvement in technology will. D. a technological advance that allows farmers to produce more output from given inputs. Figuring out what you will give up and what you will gain by hiring a new worker. A. society would consider additional units of shoes to be more valuable than alternative uses of those resources. D. more consumer goods can only be produced at the cost of fewer capital goods. The man function of the entrepreneur is to, Which of the following is NOT a main function of the entrepreneur, The process of producing and accumulating capital goods is called, Which of the following is NOT considered by economists to be and economic resource. What happens as production of one item switches to the production of another item? Which of the following is a labor resource. Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events. A(n) ______ is a visual way of examining opportunity costs. We can conclude that, "Macroeconomics is the part of economics concerned with individual units, such as a person, a household, a firm, or an industry." Which of the following is an example of changing physical capital? Which of the following would not be classified as an economic resource by economists? If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should. Therefore, the opportunity cost increases. B. increases as one moves southeast along the curve. Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods? d. the value of lost opportunities varies from person to person. Other things equal, which of the following would shift an economy's production possibilities curve to the left? C. an increase in the average skill level of all occupational groups. Suppose that the amount and quality of resources are the same in both countries. All possible combination of two goods that can be purchased, given money income and the prices of the goods. 1. D) Greater production leads to greater inefficiency. Point C is superior to point B because it is important to enhance the future of society. A. tend to generate a more rapid growth rate. The law of increasing opportunity costs assumes that all people have the same ability to produce goods. The curve usually seen in a production possibilities frontier can be explained by the _______. According to the law of increasing opportunity costs: A) Higher opportunity costs induce higher output per unit of input. Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. Riverton decides to grow more strawberries and make fewer tires. Joe sold gold coins for $1,000 that he bought a year ago for $1,000. Shifts the consumer's budget line to the right, The shift of the budget line from cd to ab in the figure is consistent with, Any combination of goods lying outside of the budget line, D. is unattainable, given the consumer's income, Suppose you have a money income of $10, all of which you spend on Coke and popcorn. And finally, the curved line of the frontier illustrates the law of increasing opportunity cost meaning that an increase in the production of one good brings about increasing losses of the other good because resources are not suited for all tasks. When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because, Assume that a change in government policy results in greater production of both consumer goods and investment goods. The physical capital used by a woodworker to make furniture would include. C. society would consider additional units of shoes to be less valuable than alternative products. Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. He says, "At least I didn't lose any money on my financial investment." D. The good was produced to the point when its marginal benefit exceeded its marginal cost. A) unattainable given the resources of the society. B. specializing and engaging in international trade. Refer to the diagram. Which of the following is a positive statement? A person should consume more of something when its marginal, B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity, The study of economics is primarily concerned with, C. Choices that are made in seeking the best use of resources, B. What kinds of goods can be compared on a production possibilities curve? The absolute value of the slope of the resulting budget line is. This fundamental economic principles can be seen in the production possibilities schedule and is illustrated graphically through the slope of the production possibilities curve. The law of increasing costs, a commonly held economic principle, states that an operation running at peak efficiency and fully utilizing its fixed-cost resources, will experience a higher cost of production and decreased profitability per output unit with further attempts at increasing production. Cost vs Quality A manufacturer of headphones is facing stiff competition from low cost products with similar designs to their own. Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs. The most desirable alternative somebody gives up as the result of a decision is the opportunity cost. What explains the bow shape of PPC? Technological advance that improves the ability to produce capital goods but not consumer goods is shown by the shift of the production possibilities curve from AB to, Refer to the diagram. A guns or butter issue. Which of the following is a positive statement? The law of increasing opportunity cost states that when a company continues raising production its opportunity cost increases. Scarcity exists because all resources are limited. Which is an example of an economic shortage? A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. Normative statements are concerned primarily with, A positive statement is concerned primarily with, "Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." Which of the following is a CORRECT statement. Land, labor, capital and entrepreneurial ability. Other things equal, which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of, Refer to the diagram. B. that society must choose among various attainable combinations of goods. A. production possibilities curve indicating constant opportunity costs. D. is illustrated by a point inside the production possibilities curve. The prices of both products and money income are assumed to be constant, A. B. produce at some point closer to its production possibilities curve. His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. B. B. decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. D. the combinations of two goods that can be produced with society's available resources. B. the sum of the costs of producing a particular good cannot rise above the current market price of that good. C. the depletion of its soil fertility due to overplanting and overgrazing. 2. This fact. What physical capital does a woodworker need? C. specifies how much of each product a society will want to produce. South Cantina is fully and efficiently using its resources, but North Cantina is not. There are not enough resources to make everything we want. C. 1/8, 1/6, 1/4, and 1/2 units of tractors. A graph that shows alternative ways to use an economy's productive resources is a _______. Through specialization and international trade, a nation. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia. B. international specialization and trade, Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. When you decide by thinking at the margin, you look at what you will give up and what you will gain. Its economic adjustment from peacetime to wartime can best be described by the movement from point. B. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. C. a law requiring mandatory retirement from the labor force at age 55, Refer to the diagram. Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy. The opportunity cost of producing the good on the vertical axis a is greater along curve I. b is greater along curve II. C. the maximum amounts of two goods that can be produced, assuming the full use of available resources. Rather, in its place they have substituted opportunity or alternative cost. This statement is, A. The opportunity cost of the fifth unit of capital goods. Which of the following is assumed in constructing a typical production possibilities curve? Provide an example of thinking at the margin? According to economists, "Want" exceeds "Have" because, According to economists, economic self-interest. What is the production possibilities frontier or curve? Scarcity requires people to make choices. B. an empirical investigation of the general price level and unemployment rates since 1990, The issues of inflation, unemployment, and business cycles are. Opportunity cost exists because: a. technology is fixed at any point in time. Underutilization is the use of fewer resources than an economy is capable of using. Refer to the tables. Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve? D. implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost. Therefore, if your production rises from, for example, 100 to 200 units a day, costs will increase. 21. The absolute value of the slope of the budget line is. The Law of Increasing Costs Which of the following is associated with macroeconomics? d. e. Contradicts the law … The law of increasing opportunity costs is reflected in a production possibilities curve that is, The point on the production possibilities curve that is most desirable can be found by. The law of increasing opportunity costs says that: a.) Based on. C. a number of relevant variables are assumed to be constant. If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her? B) a decreasing opportunity cost between the two goods. Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." Persists because economic wants exceeds available resources, The alternative combination of two goods that a consumer can purchase with a specific money income is shown by. We can conclude that. What information is needed to make a decision at the margin? If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be, Refer to the tables. Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. A person who starts an all-organic cleaning supplies business that employs others. Refer to the diagram. The opportunity cost of the new product design is increased cost and inability to compete on price. Refer to the tables. Opportunity cost goes up. If the current output of shoes is Q3, then. Refer to the diagram. Which of the following lists includes only capital resources (and therefore no labor or land resources)? c is the same along both curves. D. consumer goods satisfy wants directly, while capital goods satisfy wants indirectly. Refer to the tables. If all discrimination in the United States were eliminated, the economy would. D. resources are not equally suited for alternative uses. 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