Economics Trade-Offs Opportunity Cost Scarcity Cost Benefit Analysis Thinking at the Margin Supply and Demand

Which of the following does Economics primarily study?

• how scarcity can be eliminated

• how firms manipulate prices

• how government influences resource allocation decisions

• the problem of scarce resources relative to human wants

If you decide to study an extra hour tonight, what would be the economic outcome?

• The marginal cost of studying an extra hour exceeds its marginal benefit.

• The marginal benefit of studying an extra hour exceeds its marginal cost.

• Studying harder will always improve your test scores.

• You will most likely get a lower than expected grade on your last exam.

What is best illustrated by the negative slope of the production possibilities curve?

• Some resources are always unemployed.

• Opportunity costs are constant.

• When resources are fully employed, an economy can produce more of one thing only by producing less of something else.

• Businesses can sell more goods when their prices are low.

Refer to the production possibilities diagram for the following Question.

Production of which of the points in the diagram is currently unattainable given the economy's resources?

• Point A

• Point B

• Point C

• Point D

What does the fundamental problem of economics imply?

• Governments must be relied upon to supply essential goods and services.

• Inflation and unemployment are unavoidable.

• Growing populations will deplete natural resources.

• Individuals and communities must make choices among competing alternatives.

Margaret decides to stay home and study for her exam rather than going out to a movie with her friends. Which of the following best reflects her dilemma?

• The economic perspective

• Marginal analysis

• Opportunity cost

• Allocative efficiency

What is the most likely the result of human specialization or the division of labor?

• It reduces output by dehumanizing workers

• It reduces output by discouraging workers from learning a wide variety of tasks

• It increases output by enabling workers to take advantage of differences in their skills

• It increases output by allowing workers to each perform a wide variety of tasks

At the birthday party of your best friend, you see Skylar help himself to a second piece of cake. For this individual, it must be the case that:

• The marginal benefit of the second piece of cake is less than the marginal cost
• The total benefit received from eating cake is falling
• Skylar is irrationally consuming too much cake
• The marginal benefit of the second piece of cake is greater than the marginal cost

Nancy has the choice to spend one hour studying for an exam, mowing the lawn for one hour at a wage of $9, or babysitting her niece for one hour at a wage of $11. If we know that Nancy has chosen to study for the exam, which of the following is true?

• The benefit received from studying is greater than the opportunity cost of $11
• The opportunity cost of studying is $20, which is less than the benefit received from studying
• Nancy is indifferent between studying and mowing the lawn
• Nancy's behavior is irrational since babysitting was clearly superior to all other options

Which point on the PPC is desirable but not attainable?

• A

• B

• D

• E