Opportunity Cost, PPCs and Marginal Analysis (REVIEW)

Based on the table above, what is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

• 150 burgers

• 225 burgers

• 300 burgers

• 450 burgers

The production possibilities curve (PPC) is a graph that shows the various combinations of output that an economy

• should produce

• demands

• can produce

Production Possibilities Curves (PPCs) are usually bowed outward. This is because...

• the more resources a society uses to produce one good, the fewer resources it has available to produce another good.

• the opportunity cost of producing a good decreases as more and more of that good is produced

• of the effects of technological change

• resources are specialized; that is, some are better at producing particular goods rather than other goods. (Apples & Carrots example)

What is the opportunity cost to Footville of increasing production of shoes from 400 to 600?

• 400 socks

• 300 socks

• 200 socks

• 100 socks

Which of the following points on the PPC above represents a combination of Steel & Wheat that this economy could NOT produce?

• A

• G

• D

• F

Humphery Flobart is trying to decide whether to take a job as the manager at the local Wendy's (making $25,000/year) OR attend college. He cannot do both. For Humphery, the opportunity cost of attending college includes...

• The money he will spend on food whether or not he attends college.

• The money he will spend on dates with his girlfriend, whether or not he attends college.

• The $25,000 Humphery could make managing the local Wendy's next year if he didn't go to college.

• The cost that Humphery's college, Boptown University, just paid to construct a new International Studies building.

Timmy the Eskimo currently makes $20,000/year working as an igloo salesman. He's considering taking a new job as a polar bear preservation guard, where he would be $25,000/year. He can only work one of the two jobs. Which of the following is an opportunity cost of taking the Polar Bear Guard job?

• The self-esteem boost Timmy will get when the Polar Bears compliment him on his attentiveness to their security

• The excitement of working as a Polar Bear Guard

• The $20,000/year he could be making as an igloo salesman

• The money Timmy pays for his new coffee maker

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only 3 choices, what is the opportunity cost of reading?

• Watching TV AND Listening to Music

• Watching TV

• Listening to Music

• The Price of the book

Generally, each successive unit of a good consumed will cause marginal utility to...

• Increase at an increasing rate

• Increase at a decreasing rate

• Decrease (or "diminish")

• Who knows? Life's a gamble!

According to economists, a consumer will maximize their total utility when...

• Marginal Utility/Price is equal for all the goods/services they purchase

• Marginal Utility is equal for all goods

• Price/Marginal Utility is equal for all the goods/services they purchase

• Marginal Utility is as high as possible for all the goods they purchase.