ECON EXAM REVIEW

A popular bakery has only a few ingredients left to make their products.  They could bake muffins or cookies, but they can’t make both.  The bakers decide to make cookies for their customers.  What is the opportunity cost of their decision?

• muffins 
• cookies 

The opportunity cost of Australian households moving away from coal-powered energy to solar-powered energy includes (i) the loss of jobs in the coal industry, (ii) a cleaner environment, (iii) reduced coal production.

• (i), (ii) and (iii)

• (ii) and (iii)

• (iii) only

• (i) and (iii)

A firm operating at 'X' produces 70 whips and 60 saddles. It changes production to 'Y' producing 20 whips and 90 saddles. The opportunity cost of this production change is

• 20 whips

• 30 saddles

• 50 whips

• 60 saddles

In terms of the production possibility curve, a decrease in unemployment would be best shown by

• a movement along the curve.

• an outward shift of the curve.

• a movement from a point inside the curve to a point closer to the curve.

• an inward shift of the curve.

You made a good decision if:

• Marginal cost is greater then marginal benefit

• Marginal cost is less than marginal benefit

• Marginal benefit is greater then marginal cost

• Marginal benefit is less then marginal cost

What does point B represent?

• Production at greater than the country's minimum potential
• Production is less than the country's minimum potential
• Production is greater than the country's maximum potential
• Production at the country's maximum potential

Suppose there is a production possibilities frontier (PPF) for wine and cheese. Which of the following situations would shift the PPF inward (toward the origin)?

• A. A severe weather event that destroys much of the economy’s productive capacity.
• B. Improved education of the work force.
• C.  Discovery of a new, cheaper source of milk for making cheese.
• D.  Increased popularity of wine, as compared with cheese.

  Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?

• the vertical distance between point x and point y
• the horizontal distance between point y and point z
• the horizontal distance between point z and point E
• the vertical distance from point A to point x

In this production possibilities frontier, what could cause production to move from point a to point e?

• factories that are available but idle
• increased productivity
• the availability of additional resources
• economic growth

Which item would provide you with the least marginal utility?

• a second copy of the daily newspaper.
• a second large glass of water
• a second hamburger
• a second car.