Module 2 Quiz

A  The budget constraint model demonstrates diminishing returns.

B  The production possibilities model demonstrates diminishing returns.

C  The production possibilities model depicts purchase choices.

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

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

C  technology can advance.

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  how much one item costs compared to the cost of the other item.

B  how effectively one more of each of the two competing goods satisfies wants.

C  the tastes and preferences of the decision-maker.

A  income (budget) limitations.

B  utility.

C  the prices of the goods that we may purchase.

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

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

C  $1000 per month monetary and opportunity cost.

A  $1000 per month monetary and $1000 per month opportunity cost.

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

C  $1000 per month monetary cost but a $2000 per month opportunity cost.

A  Retired professionals should work less and get out more.

B  Retired professionals are generous tippers.

C  Retired professionals spend less that working professionals.

A  based upon what ought to be.

B  devoid of value judgements.

C  correct.

A  value judgements.

B  conjecture.

C  facts.

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

B  Social security benefits are not taxed.

C  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.

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

B  continue with the project provided that the additional solar electricity is worth more than $22 million.

C  continue with the project provided that the additional solar electricity is worth more than $10 million.

A  the total benefits from all crop-dustings is greater than the the total cost of all crop-dustings.

B  the additional crops grown from one more crop-dusting (the marginal product) is rising.

C  the marginal benefit is greater than the marginal cost of an additional crop-dusting.

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

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

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

A  opportunity cost.

B  marginal benefit.

C  total benefit.

A  close friends and family.

B  strangers.

C  humankind as a whole.

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

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

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

A  The money will be spent efficiently to cure cancer.

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

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

A  equal consideration for your own and others’ welfare

B  considering all prospective marginal benefits and marginal costs to oneself.

C  always considering the long-run.