Quiz 2

A  the opportunity cost of consumer wants satisfied is diminishing.

B  the greater is the opportunity cost of consumer wants satisfied.

C  every additional missile will reduce consumer goods production by more and more.

A  some land or labor is more productive in one use than another.

B  the opportunity cost of producing more of something will remain constant.

C  technology can advance.

A  some resources are specialized to (more productive in) one use than another.

B  with rational resource allocation decisions, the opportunity cost of producing more will rise.

C  technology can advance.

A  since otherwise resources are idle.

B  since otherwise output may go to where it is less valued.

C  since it would be impossible to produce more of one thing without producing less of another.

A  of diminishing returns.

B  the opportunity cost of producing more of something will fall.

C  production of different types will compete for limited resources.

A  the budget constraint demonstrates diminishing returns.

B  the production possibilities model demonstrates diminishing returns.

C  the budget constraint depicts an inverse relationship, or a trade-off.

A  the tastes and preferences of the decision-maker.

B  the relative prices of the two goods competing to satisfy wants.

C  the size of the budget.

A  it is best to shut down the bed & breakfast since it is taking a loss.

B  it is best to ignore sunk cost and keep the bed & breakfast operating.

C  it is best to keep the bed & breakfast operating because it is profitable.

A  monetary costs.

B  opportunity costs.

C  sunk costs.

A  how much utility one more unit of a good will provide.

B  the prices of the items purchased.

C  the limitation of the budget.

A  zero monetary cost but a $1000 per month opportunity cost.

B  $1000 per month monetary and opportunity cost.

C  $500 per month monetary cost but a $1500 per month opportunity cost.

A  Investing in electricity with photovoltaic cells is a growing trend.

B  Installing solar will provide a rate of return on investment of 5%.

C  Installing solar will be worth the investment.

A  Social security benefits are not taxed.

B  There is a limit to the income each year to which the FICA tax applies, but that is fair, since there is a limit to social security benefits.

C  I am absolutely positive that there is a better way.

A  a value judgement.

B  based upon what can be demonstrated to be true.

C  can be shown to be correct or incorrect.

A  continue with the project provided that the additional electricity is worth more than $20 million.

B  continue with the project provided that the additional electricity is worth more than $12 million.

C  continue with the project provided that the additional electricity is worth more than $32 million.

A  Are the benefits of cleaner water greater than the additional costs of the new filtration system?

B  Is it worth paying twice as much for the same amount of water?

C  Are the total benefits of having a city water supply greater than the total cost?

A  strangers.

B  humankind as a whole.

C  close friends and family.

A  weighing prospective marginal benefits and marginal costs to oneself.

B  always considering the long-run.

C  considering all other people.

A  implies that people will always know exactly what they are buying

B  is an assumption that economists make to have a useful model for how decisions are made.

C  assumes that people will always attempt to act in their own self-interest.

A  The money will be spent efficiently to cure cancer.

B  The money spent is worth the boost it gives to corporate image.

C  The funds dedicated to this purpose represent a very small share of profits.