ECON 1B03 Lecture Notes - Lecture 3: Opportunity Cost
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Related Questions
A bowed out PPF reflects which of the following ideas?
i.increasing opportunity cost
ii. resources are not equally productive in all activities
iii. prices of goods increase over time
Ā | Ā |
I only |
Ā | Ā |
I and iii |
Ā | Ā |
ii and iii |
Ā | Ā |
I and ii |
1 point
QUESTION 2
With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.
Ā | Ā |
can; cannot |
Ā | Ā |
cannot; can |
Ā | Ā |
cannot; cannot |
Ā | Ā |
can; can |
1 point
QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
Ā | Ā |
the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
Ā | Ā |
opportunity cost is not a ratio. |
Ā | Ā |
increasing opportunity costs. |
Ā | Ā |
resources are equally productive in both goods. |
1 point
QUESTION 4
As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
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It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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It decreases. |
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It increases. |
Ā | Ā |
It remains constant. |
1 point
QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
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more of a good than another person. |
Ā | Ā |
a good for a lower dollar cost than another person. |
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a good for a lower opportunity cost than another person. |
Ā | Ā |
more of all goods than another person. |
1 point
QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
Ā | Ā |
increases. |
Ā | Ā |
decreases. |
Ā | Ā |
might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
Ā | Ā |
remains constant. |
1 point
QUESTION 7
A bowed out production possibility frontier shows that the
Ā | Ā |
opportunity cost relationship is linear. |
Ā | Ā |
the opportunity cost of a good is constant as more of the good is produced. |
Ā | Ā |
the opportunity cost of a good increase as more of the good is produced. |
Ā | Ā |
the opportunity cost of a good decrease as more of the good is produced. |
1 point
QUESTION 8
Which of the following statements is correct?
Ā | Ā |
The production possibilities frontier shows that there are no limits to production. |
Ā | Ā |
Any point on or within the PPF is production efficient. |
Ā | Ā |
If capital is idle, the economy is producing at its full potential. |
Ā | Ā |
A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
1 point
QUESTION 9
A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
Ā | Ā |
A tradeoff would occur to replace the resources and goods destroyed. |
Ā | Ā |
It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
Ā | Ā |
It would shift outward because unemployment would be reduced. |
Ā | Ā |
Nothing would happen because the nation would still have the same capabilities. |
1 point
QUESTION 10
When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods
Ā | Ā |
must increase. |
Ā | Ā |
must decrease. |
Ā | Ā |
must remain the same. |
Ā | Ā |
must change but they might increase or decrease. |
1 point
QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
Ā | Ā |
unemployment increases as a country produce more and more of one good. |
Ā | Ā |
unemployment decreases as a country produces more and more of one good. |
Ā | Ā |
some resources are better suited for producing one good rather than the other. |
Ā | Ā |
technology declines as a country produce more and more of one good. |
1 point
QUESTION 12
A reason the production possibilities frontier exists is
Ā | Ā |
scarcity of resources and unlimited technology. |
Ā | Ā |
unemployment. |
Ā | Ā |
scarcity of resources. |
Ā | Ā |
unlimited resources and technology. |
1 point
QUESTION 13
Moving from one point to another on a production possibilities frontier implies
Ā | Ā |
increasing the production of one good and decreasing the production of another. |
Ā | Ā |
increasing the production of both goods. |
Ā | Ā |
decreasing the production of both goods. |
Ā | Ā |
holding the production levels of both goods constant. |
1 point
QUESTION 14
Specialization and trade make a country better off because with trade the country can consume at a point
Ā | Ā |
outside its production possibilities frontier. |
Ā | Ā |
on its trading partner's production possibilities frontier. |
Ā | Ā |
inside its production possibilities frontier. |
Ā | Ā |
on its production possibilities frontier. |
1 point
QUESTION 15
The production possibilities frontier is the
Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
Ā | Ā |
the minimum output that can be produced when resources are used inefficiently. |
Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
Ā | Ā |
maximum output that can be produced at an opportunity cost of zero. |
1 point
QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
Ā | Ā |
decreased current consumption; decreased future consumption |
Ā | Ā |
decreased current consumption; increased future consumption |
Ā | Ā |
increased current consumption; increased future consumption |
Ā | Ā |
increased current consumption; decreased future consumption |
1 point
QUESTION 17
In terms of a nation's production possibilities frontier, what impact does international trade have?
Ā | Ā |
International trade shifts the nation's production possibilities frontier outward. |
Ā | Ā |
International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
Ā | Ā |
International trade shifts the nation's production possibilities frontier inward. |
Ā | Ā |
International trade allows the nation to consume at a point outside its production possibilities frontier. |
1 point
QUESTION 18
The production possibilities frontier illustrates the
Ā | Ā |
goods and services that people want. |
Ā | Ā |
limits to people's wants. |
Ā | Ā |
resources the economy possesses, but not it is the level of technology. |
Ā | Ā |
maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
Ā | Ā |
the possibilities of tradeoffs diminish. |
Ā | Ā |
the production of one good increases as the production of the other good decreases. |
Ā | Ā |
more of both goods can be produced. |
Ā | Ā |
a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
Ā | Ā |
Eliminate scarcity |
Ā | Ā |
Land. |
Ā | Ā |
Capital goods. |
Ā | Ā |
Consumption of goods. |
1 point
QUESTION 21
Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
Ā | Ā |
ii only |
Ā | Ā |
iii only |
Ā | Ā |
I only |
Ā | Ā |
I and iii |
1 point
QUESTION 22
Does economic growth depend upon which of the following?
i. Increasing the quantity of labor.
ii. Lowering the prices of goods and services.
iii. Advancing technology.
Ā | Ā |
ii only. |
Ā | Ā |
I only. |
Ā | Ā |
I and iii. |
Ā | Ā |
iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
Ā | Ā |
the amount of money in the economy |
Ā | Ā |
the prices of goods and services |
Ā | Ā |
the quantity of the goods and services that are produced |
Ā | Ā |
the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
Ā | Ā |
encourage spending on goods and services. |
Ā | Ā |
increase in current consumption. |
Ā | Ā |
encourage education because that increases the quality of labor. |
Ā | Ā |
limit the number of people in college because they produce nothing. |
1 point
QUESTION 25
The opportunity cost of one more slice of pizza in terms of sodas is the
Ā | Ā |
some pizza slices we have to give up to get one extra soda. |
Ā | Ā |
the total number of sodas that we have divided by the total number of pizza slices that we have. |
Ā | Ā |
the total number of pizza slices that we have divided by the total number of sodas that we have. |
Ā | Ā |
the number of sodas we have to give up to get one extra pizza slice. |
1. Which of the following groups of countries are all advanced economies?
Ā | Ā |
Hong Kong, Japan, France, and the United Kingdom |
Ā | Ā |
Italy, the United States, China, and Russia |
Ā | Ā |
Singapore, Russia, France, and Chad |
Ā | Ā |
Australia, Brazil, and the United States |
QUESTION 2
1. The most people live in ________ economies and the fewest people live in ________ economies.
Ā | Ā |
developing; emerging market |
Ā | Ā |
advanced; emerging market |
Ā | Ā |
emerging market; developing |
Ā | Ā |
advanced; developing |
QUESTION 3
1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.
Ā | Ā |
goods; financial |
Ā | Ā |
government; goods |
Ā | Ā |
goods; factor |
Ā | Ā |
financial; factor |
QUESTION 4
1. As a factor of production, oil reserves are counted as
Ā | Ā |
labor. |
Ā | Ā |
capital. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
land. |
QUESTION 5
1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.
Ā | Ā |
Households are; the government determines |
Ā | Ā |
Firms are; households that determine |
Ā | Ā |
The government is; firms determine |
Ā | Ā |
Households are; firms that determine |
QUESTION 6
1. The emerging market economies are
Ā | Ā |
the nations that are currently agricultural in nature. |
Ā | Ā |
most of the nations of Western Europe. |
Ā | Ā |
the largest grouping including the nations of China and India. |
Ā | Ā |
in the transition from state-owned production to free markets. |
QUESTION 7
1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was
Ā | Ā |
consumption of goods and services. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
capital. |
Ā | Ā |
labor. |
QUESTION 8
1. Items bought by individuals to provide personal enjoyment are termed
Ā | Ā |
personal goods. |
Ā | Ā |
consumption of goods. |
Ā | Ā |
consumption or investment goods. |
Ā | Ā |
standard goods. |
QUESTION 9
1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment
Ā | Ā |
virtually all; none |
Ā | Ā |
some; some |
Ā | Ā |
virtually all; virtually all |
Ā | Ā |
virtually all; some |
QUESTION 10
1. The productive resource that includes all the "gifts of nature" is called
Ā | Ā |
land. |
Ā | Ā |
labor. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
capital. |
QUESTION 11
1. What would be an example of government good?
Ā | Ā |
Donald Trump purchases furniture for his office. |
Ā | Ā |
Antonio, the manager of the local Taco Hut, purchases a new deep fryer. |
Ā | Ā |
The local driver's license office purchases a new digital camera and printer. |
Ā | Ā |
Jake buys an iPhone. |
QUESTION 12
1. The world population is approximately ________ people.
Ā | Ā |
2 trillion |
Ā | Ā |
680 million |
Ā | Ā |
6.8 billion |
Ā | Ā |
6.8 million |
QUESTION 13
1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as
Ā | Ā |
U.S. exports of goods and services. |
Ā | Ā |
U.S. government goods and services. |
Ā | Ā |
foreign capital goods. |
Ā | Ā |
U.S. consumer goods and services. |
QUESTION 14
1. Of the following, the federal government obtains most revenue from
Ā | Ā |
corporate income taxes. |
Ā | Ā |
excise taxes. |
Ā | Ā |
sales taxes. |
Ā | Ā |
social security taxes. |
QUESTION 15
1. Items bought by businesses to help produce other goods and services are called
Ā | Ā |
capital goods. |
Ā | Ā |
government goods and services. |
Ā | Ā |
consumption of goods and services. |
Ā | Ā |
exports of goods and services. |
QUESTION 16
1. The majority of the income earned in the United States is paid in
Ā | Ā |
profit. |
Ā | Ā |
interest. |
Ā | Ā |
rent. |
Ā | Ā |
wages. |
QUESTION 17
1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market
Ā | Ā |
must include a written contract between buyers and sellers. |
Ā | Ā |
requires a physical location for buyers and sellers to get together. |
Ā | Ā |
is only a place to purchase groceries. |
Ā | Ā |
is an arrangement that brings buyers and sellers together. |
QUESTION 18
1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a
Ā | Ā |
highly skilled and educated labor force. |
Ā | Ā |
a large number of kind and generous humans. |
Ā | Ā |
a large number of people and a great deal of land. |
Ā | Ā |
a large amount of machinery and equipment. |
QUESTION 19
1. Which of the following correctly lists the categories of factors of production?
Ā | Ā |
labor, machines, buildings, capital, and entrepreneurship |
Ā | Ā |
land, buildings, capital, and entrepreneurship |
Ā | Ā |
land, labor, capital, and entrepreneurship |
Ā | Ā |
forests, fish, buildings, capital, and entrepreneurship |
QUESTION 20
1. Which of the following correctly lists the categories of factors of production?
Ā | Ā |
capital, money, and labor |
Ā | Ā |
hardware, software, land, and money |
Ā | Ā |
land, labor, capital, and entrepreneurship |
Ā | Ā |
machines, buildings, land, and money |
QUESTION 21
1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.
Ā | Ā |
10 |
Ā | Ā |
3 |
Ā | Ā |
15 |
Ā | Ā |
20 |
QUESTION 22
1. What would be an example of a consumption service?
Ā | Ā |
Jake buys an iPhone. |
Ā | Ā |
The local driver's license office purchases a new digital camera and printer. |
Ā | Ā |
Antonio, the manager of the local Taco Hut, purchases a new deep fryer. |
Ā | Ā |
Rhianna gets a haircut. |
QUESTION 23
1. The total value of capital in the United States is around
Ā | Ā |
$47 trillion. |
Ā | Ā |
$10 trillion. |
Ā | Ā |
$100 trillion. |
Ā | Ā |
$79 trillion. |
QUESTION 24
1. An export good is a good produced
Ā | Ā |
by foreigners in the United States and purchased by U.S. households. |
Ā | Ā |
in another country and purchased by U.S. residents. |
Ā | Ā |
in the United States and sold to foreigners living in the United States. |
Ā | Ā |
in the United States and sold in other countries. |
QUESTION 25
1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.
Ā | Ā |
Interest is; wages are; profit is |
Ā | Ā |
Rent is; wages are; interest is |
Ā | Ā |
Rent is; interest is; wages are |
Ā | Ā |
Mortgages are; interest is; wages are |
1. Which of the following groups of countries are all advanced economies?
Ā | Ā |
Hong Kong, Japan, France, and the United Kingdom |
Ā | Ā |
Italy, the United States, China, and Russia |
Ā | Ā |
Singapore, Russia, France, and Chad |
Ā | Ā |
Australia, Brazil, and the United States |
QUESTION 2
1. The most people live in ________ economies and the fewest people live in ________ economies.
Ā | Ā |
developing; emerging market |
Ā | Ā |
advanced; emerging market |
Ā | Ā |
emerging market; developing |
Ā | Ā |
advanced; developing |
QUESTION 3
1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.
Ā | Ā |
goods; financial |
Ā | Ā |
government; goods |
Ā | Ā |
goods; factor |
Ā | Ā |
financial; factor |
QUESTION 4
1. As a factor of production, oil reserves are counted as
Ā | Ā |
labor. |
Ā | Ā |
capital. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
land. |
QUESTION 5
1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.
Ā | Ā |
Households are; the government determines |
Ā | Ā |
Firms are; households determine |
Ā | Ā |
The government is; firms determine |
Ā | Ā |
Households are; firms determine |
QUESTION 6
1. The emerging market economies are
Ā | Ā |
the nations that are currently agricultural in nature. |
Ā | Ā |
most of the nations of Western Europe. |
Ā | Ā |
the largest grouping including the nations of China and India. |
Ā | Ā |
in the transition from state-owned production to free markets. |
QUESTION 7
1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was
Ā | Ā |
consumption of goods and services. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
capital. |
Ā | Ā |
labor. |
QUESTION 8
1. Items bought by individuals to provide personal enjoyment are termed
Ā | Ā |
personal goods. |
Ā | Ā |
consumption of goods. |
Ā | Ā |
consumption or investment goods. |
Ā | Ā |
standard goods. |
QUESTION 9
1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment
Ā | Ā |
virtually all; none |
Ā | Ā |
some; some |
Ā | Ā |
virtually all; virtually all |
Ā | Ā |
virtually all; some |
QUESTION 10
1. The productive resource that includes all the "gifts of nature" is called
Ā | Ā |
land. |
Ā | Ā |
labor. |
Ā | Ā |
entrepreneurship. |
Ā | Ā |
capital. |
QUESTION 11
1. What would be an example of government good?
Ā | Ā |
Donald Trump purchases furniture for his office. |
Ā | Ā |
Antonio, the manager of the local Taco Hut, purchases a new deep fryer. |
Ā | Ā |
The local driver's license office purchases a new digital camera and printer. |
Ā | Ā |
Jake buys an iPhone. |
QUESTION 12
1. The world population is approximately ________ people.
Ā | Ā |
2 trillion |
Ā | Ā |
680 million |
Ā | Ā |
6.8 billion |
Ā | Ā |
6.8 million |
QUESTION 13
1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as
Ā | Ā |
U.S. exports of goods and services. |
Ā | Ā |
U.S. government goods and services. |
Ā | Ā |
foreign capital goods. |
Ā | Ā |
U.S. consumer goods and services. |
QUESTION 14
1. Of the following, the federal government obtains most revenue from
Ā | Ā |
corporate income taxes. |
Ā | Ā |
excise taxes. |
Ā | Ā |
sales taxes. |
Ā | Ā |
social security taxes. |
QUESTION 15
1. Items bought by businesses to help produce other goods and services are called
Ā | Ā |
capital goods. |
Ā | Ā |
government goods and services. |
Ā | Ā |
consumption of goods and services. |
Ā | Ā |
exports of goods and services. |
QUESTION 16
1. The majority of the income earned in the United States is paid in
Ā | Ā |
profit. |
Ā | Ā |
interest. |
Ā | Ā |
rent. |
Ā | Ā |
wages. |
QUESTION 17
1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market
Ā | Ā |
must include a written contract between buyers and sellers. |
Ā | Ā |
requires a physical location for buyers and sellers to get together. |
Ā | Ā |
is only a place to purchase groceries. |
Ā | Ā |
is an arrangement that brings buyers and sellers together. |
QUESTION 18
1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a
Ā | Ā |
highly skilled and educated labor force. |
Ā | Ā |
a large number of kind and generous humans. |
Ā | Ā |
a large number of people and a great deal of land. |
Ā | Ā |
a large amount of machinery and equipment. |
QUESTION 19
1. Which of the following correctly lists the categories of factors of production?
Ā | Ā |
labor, machines, buildings, capital, and entrepreneurship |
Ā | Ā |
land, buildings, capital, and entrepreneurship |
Ā | Ā |
land, labor, capital, and entrepreneurship |
Ā | Ā |
forests, fish, buildings, capital, and entrepreneurship |
QUESTION 20
1. Which of the following correctly lists the categories of factors of production?
Ā | Ā |
capital, money, and labor |
Ā | Ā |
hardware, software, land, and money |
Ā | Ā |
land, labor, capital, and entrepreneurship |
Ā | Ā |
machines, buildings, land, and money |
QUESTION 21
1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.
Ā | Ā |
10 |
Ā | Ā |
3 |
Ā | Ā |
15 |
Ā | Ā |
20 |
QUESTION 22
1. What would be an example of a consumption service?
Ā | Ā |
Jake buys an iPhone. |
Ā | Ā |
The local driver's license office purchases a new digital camera and printer. |
Ā | Ā |
Antonio, the manager of the local Taco Hut, purchases a new deep fryer. |
Ā | Ā |
Rhianna gets a haircut. |
QUESTION 23
1. The total value of capital in the United States is around
Ā | Ā |
$47 trillion. |
Ā | Ā |
$10 trillion. |
Ā | Ā |
$100 trillion. |
Ā | Ā |
$79 trillion. |
QUESTION 24
1. An export good is a good produced
Ā | Ā |
by foreigners in the United States and purchased by U.S. households. |
Ā | Ā |
in another country and purchased by U.S. residents. |
Ā | Ā |
in the United States and sold to foreigners living in the United States. |
Ā | Ā |
in the United States and sold in other countries. |
QUESTION 25
1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.
Ā | Ā |
Interest is; wages are; profit is |
Ā | Ā |
Rent is; wages are; interest is |
Ā | Ā |
Rent is; interest is; wages are |
Ā | Ā |
Mortgages are; interest is; wages are |