Exam 2: The Economic Problem: Scarcity and Choice

Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the question(s) that follow. Figure 2.1 -Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows

When an economy is producing inside its production possibility frontier,

Some economists advocate government intervention in a market economy when resource costs for a private producer ________ to society.

Refer to the information provided in Figure 2.4 below to answer the question(s) that follow. Figure 2.4 -According to Figure 2.4, Point F

According to the theory of comparative advantage, trade and specialization ________ productivity by ________ opportunity costs.

Which of the following statements is false?

Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to capital. All other things equal, which of the following statements is most likely true?

Refer to the information provided in Figure 2.4 below to answer the question(s) that follow. Figure 2.4 -Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow. Figure 2.6 -Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf¹ to ppf²?

If an economy begins to use its resources more efficiently, it will move

Assume a society can produce either olives or grapes. If the marginal rate of transformation of bushels of olives into bushels of grapes is 0.2, then the opportunity cost of olives is

Related to the Economics in Practice on page 36: In the survey conducted by Esther Duflo and Abhijit Banerjee, the extremely poor were found to consume ________ of their budgets on food compared to people in the United States.

A society's production possibility frontier is bowed out from the origin because some resources are better suited for producing one good as opposed to the other.

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow. Figure 2.6 -Refer to Figure 2.6. A shift from ppf^{1 to ppf2 may be caused by}

In a ________, the amount of output that any one household gets depends on its income and wealth.

The notion that buyers determine what will be produced by choosing what they purchase is called consumer sovereignty.

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow. Figure 2.6 -Refer to Figure 2.6. If the economy is at ppf^{1, a change in consumer preferences would be shown by a}

If someone can produce a good at a lower opportunity cost, she ________ in producing that good.

Which of the following statements is true?

Because resources are scarce, the opportunity cost of investment in capital is