Straighterline Microeconomics Exam's
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the statement "there's no such thing as a free lunch" arises from the economic
concept of: - ANSWER✔✔ opportunity cost
economics deals with the ideas of NOT: - ANSWER✔✔ buying and selling
True or False. Choosing to spend resources on one item rather than on the next-
best option is an example of the concept of the invisible hand. - ANSWER✔✔
False
The production possibility curve relies on which of the following assumptions? -
ANSWER✔✔ all resources are fully utilized
True or false. In the production possibilities frontier model, the bowing of the
curve out from the origin is caused by limited resources. - ANSWER✔✔ False
True or false. An overall increase in available resources (for instance, growth in
the labor market) will cause the production possibilities frontier curve to shift
outward. - ANSWER✔✔ True
Investment in a business is an example of the factor of production known as: -
ANSWER✔✔ capital
,True or false. The form of income paid for entrepreneurship factor of production
is known as profit. - ANSWER✔✔ True
Scarcity requires all economic systems to answer three basic questions. One of
these questions is: - ANSWER✔✔ For whom are the outputs of production
produced?
A ____________ economy relies on incentives and the self-interested behavior of
individuals to direct production and consumption through "voting their dollars". -
ANSWER✔✔ market
True or false. A traditional economy relies on a centralized government authority
to guide and direct production and consumption decisions. - ANSWER✔✔ False
Assume Mexico and the United States have labor forces of equal size (for
simplicity), and operate in an environment of constant costs. Each nation can
produce beans and rice, but at different efficiency levels. Assume pre-
specialization levels as follows:
US: (pre specialization) 12 rice, 12 beans; (post-specialization) 24 beans, 0 rice
Mexico: (pre-specialization) 8 rice, 4 beans; (post-specialization) 16 rice, 0 beans.
In this case, what is Mexico's opportunity-cost ratio (R=rice, B=beans)? -
ANSWER✔✔ 2R = 1B
If the cost of an item to Producer A from Producer B is ___________ Producer A's
cost and greater than Producer B's cost, both parties will gain from trade. -
ANSWER✔✔ less than
, True or false. The presence of increasing opportunity costs suggests that the
production possibilities curve will be bowed outward from the origin. -
ANSWER✔✔ True
the statement "economics is driven by limited resources" is related to which
economic concept? - ANSWER✔✔ scarcity
choosing to spend resources on one item rather than on the next-best option is
an example of the concept of: - ANSWER✔✔ opportunity cost
True or false. The production possibility curve relies on the assumption that
technology is improving every day. - ANSWER✔✔ False
in the production possibilities frontier model, the bowing of the curve out from
the origin is caused by: - ANSWER✔✔ the law of increasing opportunity cost
An economic system in which custom and history direct what is produced, and
how it is produced, is known as a: - ANSWER✔✔ traditional economy
A ___________ economy relies in a strong centralized authority to determine
how goods are produced and distributed. - ANSWER✔✔ command
True or false. Comparative advantage between producers does not affect trade
occurs between trading parties. - ANSWER✔✔ False
If Producer A's cost of production is greater than producer B's cost of production,
Producer A will generally: - ANSWER✔✔ gain from trade with Producer B
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