Deck 2: Eight Powerful Ideas

Question 1

In order to not face tradeoffs, scarcity would have to be eliminated.

Answer 1

True

Question 2

The opportunity cost of a decision is the value of the best foregone alternative to the decision-maker.

Answer 2

True

Question 3

An entrepreneur organizes the other factors of production and bears the business risk.

Answer 3

True

Question 4

Resources are costly because they have alternative uses.

Question 5

A country has a comparative advantage in the production of DVD players if it can produce DVD players at a lower opportunity cost than others.

Question 6

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time, his foregone income is part of the opportunity cost of going to college.

Question 7

The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.

Question 8

When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.

Question 9

Garbage is scarce because it is abundant.​

Question 10

If you made a wish list of things you wanted but did not now have, they you became able to have the things on that list, scarcity would be eliminated.

Question 11

Scarcity is a problem faced by all but the wealthiest of citizens.

Question 12

Tractors, shovels, copy machines and computer programming expertise are all examples of scarce resources.

Question 13

Economists would predict that if salaries increased for engineers and decreased for MBAs, fewer people than before would go to graduate school in business and more than before would go in engineering, ceteris paribus.

Question 14

Since it is possible to grow coffee in the United States, the U.S. would gain by creating a domestic coffee industry rather than importing coffee from Brazil.​

Question 15

Every choice has a cost

Question 16

Everyone faces scarcity.​

Question 17

The opportunity cost of attending college is likely to be higher for a high school graduate who leaves a job grilling hamburgers than it is for a high school dropout who leaves a job working as a computer network administrator.​

Question 18

A permanent change to a much higher price of gasoline would lead us to expect fewer gas guzzlers on the road, ceteris paribus.

Question 19

Human capital consists of computers, tools and equipment owned by private individuals.​

Question 20

Marginal cost is the additional cost incurred as a result of making an economic decision.

Question 21

Unemployment can be caused by downswings in the business cycle, people changing jobs, different skills needed by employers, or seasonal fluctuations in demand.

Question 22

It is difficult to make the concept of need useful because it is difficult to define and compare "needs" among people.

Question 23

Small, developing countries must first become self-sufficient before they can benefit from international trade.​

Question 24

Sustained economic growth occurs when workers' productivity rises.

Question 25

Scarce goods are:​

A)​desirable and unlimited in amount.
B)​undesirable and unlimited in amount.
C)​desirable and limited in amount.
D)​undesirable and limited in amount.

Question 26

Scarcity applies to:​

A)​only the poor.
B)​the value of our time.
C)​both the rich and poor.
D)​both (b) and (c)

Question 27

Inflation is an increase in the overall price level in the economy.

Question 28

Scarcity:​

A)​is only a problem in communist countries.
B)​is a problem in both communist and socialist countries, but not in market economies.
C)​does not exist in wealthy countries.
D)​will never be eradicated because humans develop new wants as productive capabilities improve.

Question 29

Which of the following is false?

A)​A resource is anything that can be used to produce anything else we value.
B)​Resources are costly because they have alternative uses.
C)​Losses mean resources are not being used efficiently.
D)​None of the above is false; all are true.

Question 30

An economy's resources:

A)​include land, labor, capital, and entrepreneurial skills.
B)​are unlimited in a country like the United States.
C)​are always efficiently utilized in wealthy nations.
D)​consist of land, labor and capital, but not entrepreneurial skills.

Question 31

Market failure is a term used to describe what happens when market arrangements do not allocate resources efficiently.​

Question 32

Government price controls make communication of information between buyers and sellers more effective.

Question 33

Scarcity:​

A)​exists in command economies.
B)​exists in market economies.
C)​exists only for the poor in any type of economy.
D)​(a) and (b) above are correct

Question 34

Scarcity means that:

A)​human desires are limited.
B)​resources are insufficient to satisfy all human desires.
C)​choices are unnecessary.
D)​all but the very wealthy must face choices.

Question 35

Which of the following is false?

A)​Tangible goods are inherently more valuable than intangible goods.
B)​Scarcity forces people to compete.
C)​The elimination of a bad can be considered a good.
D)​None of the above is false; all are true.

Question 36

Almost everyone is affected directly or indirectly by high rates of employment or high and variable rates of inflation.

Question 37

Economic choices or tradeoffs are the result of:​

A)​human greed.
B)​scarcity.
C)​poverty.
D)​private ownership of resources.

Question 38

The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it produces.

Question 39

Which of the following is not a resource for a society?

A)​capital goods, like factories and machine tools
B)​entrepreneurship
C)​legal institutions
D)​labor

Question 40

The market mechanism assures full employment and stable prices

Question 41

Which of the following would be categorized as capital resources for a college or university?

A)​water, trees, and the acreage a campus rests on
B)​chalkboards, overhead projectors, and computers
C)​exams, fuel oil (which heats the buildings), and electricity
D)​the work effort of registrars, clerical assistants and teaching assistants

Question 42

Which of the following is an example of a resource?

A)​Land
B)​Capital
C)​Entrepreneurship
D)​All of the above are resources

Question 43

Economic goods are:

A)​only those commodities priced in monetary terms.
B)​scarce products that are created from scarce resources.
C)​the opposite of normative economic goods.
D)​not subject to scarcity.

Question 44

All of the following are tangible goods except:

A)​a skateboard.
B)​a desk.
C)​a train locomotive.
D)​fairness.

Question 45

Which of the following is an example of a resource?​

A)​a river
B)​a tractor
C)​the chef at a restaurant
D)​all of the above are resources

Question 46

Which of the following is an example of a capital resource?​

A)​an unskilled worker
B)​a large coal deposit
C)​a fishing boat
D)​yellow-fin tuna

Question 47

To economists, the resource category land includes all of the following except:

A)​trees.
B)​a sawmill.
C)​a water body.
D)​a limestone deposit.

Question 48

Which of the following is not an example of a resource?

A)​an office building
B)​a product's price
C)​the land plowed by a farmer in order to grow corn
D)​the chief executive officer of a large corporation

Question 49

All of the following are intangible except:

A)​health.
B)​love.
C)​computer programming expertise.
D)​All of the above are intangible goods.

Question 50

Which of the following observations regarding economic goods is incorrect?​

A)​They are limited in supply.
B)​They are desirable.
C)​They are solely low-priced essential goods.
D)​They are scarce goods created from scarce resources

Question 51

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting aspects of:​

A)​money management.
B)​entrepreneurship.
C)​strategic management.
D)​capital management.

Question 52

Resources are

A)​scarce for households but abundant for the whole economy
B)​abundant for households but scarce for the whole economy
C)​scarce for households and scarce for the whole economy.
D)​abundant for households and the whole economy.

Question 53

The function of an entrepreneur is to:​

A)​bear business risks.
B)​organize the other factors of production.
C)​innovate.
D)​do all of the above.

Question 54

An example of physical capital is:

A)​a $100 bill.
B)​a stock certificate.
C)​a chainsaw.
D)​a cheeseburger.

Question 55

An example of a capital resource is:​

A)​stock in a computer software company.
B)​a bond issued by a company selling electric generators.
C)​a dump truck.
D)​an employee of a moving company.

Question 56

Which of the following is not an example of a capital resource?

A)​a drill press machine
B)​a pitch fork
C)​a commercial sewing machine
D)​100 acres of farmland in central California

Question 57

Which of the following is an example of a capital resource?

A)​redwood trees
B)​unskilled labor
C)​stocks and bonds
D)​an oil rig

Question 58

Entrepreneurship is:​

A)​human capital.
B)​another word for the financial capital that can be used to start a business.
C)​the resource that organizes the other factors of production in order to produce goods and/or services.
D)​another word for physical capital that is used to produce goods and services.

Question 59

Which of the following is not a resource for a society?

A)​cash
B)​entrepreneurship
C)​land
D)​labor

Question 60

An example of an intangible good is:

A)​an automobile.
B)​a new house.
C)​a snowplow.
D)​friendship.

Question 61

The opportunity cost of an airplane flight:​

A)​differs across passengers only to the extent that each traveler pays a different airfare.
B)​is identical for all passengers and equal to the number of hours a particular flight takes.
C)​differs across passengers to the extent that both airfares paid and the highest valued use of travel time vary.
D)​is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.

Question 62

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

A)​$4.
B)​$40.
C)​$44.
D)​$0.

Question 63

The opportunity cost of an item is:

A)​greater during periods of inflation and lower during periods of deflation.
B)​the highest valued alternative you give up to get that item.
C)​the value of all available alternatives you sacrifice to get that item.
D)​always equal to the dollar value of the item.

Question 64

Jamie and Danny both attend the same college and incur the same expenses for tuition, books, and school supplies. Jamie gave up a lucrative modeling job in Paris to attend school full-time and Danny gave up a part-time job as a sales clerk in a department store. It follows that:​

A)​the opportunity cost of attending college is the same for both since they are enrolled at the same academic institution.
B)​the opportunity cost of attending college is likely greater for Jamie than for Danny.
C)​the opportunity cost of attending college is likely greater for Danny than for Jamie.
D)​the opportunity cost is minimal for both since college graduates are paid much higher than high school graduates on average.

Question 65

The opportunity cost of attending a university for a year is measured by:

A)​the tuition fees incurred.
B)​the size of the student loans the student becomes responsible for.
C)​the sum of all expenditures on rent, food, books, and tuition incurred during the school year.
D)​the value of the best opportunity or opportunities foregone in order to enroll for the year.

Question 66

The opportunity cost of an action is always equal to:

A)​the monetary expense incurred as a result of the action.
B)​the value of any alternative use of the time expended on the action.
C)​the highest valued alternatives sacrificed as a result of the action.
D)​the sum of the benefits received as a result of the action.

Question 67

"If I didn't go to class tonight, I would save the $2 campus parking fee and spend three hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

A)​$0.
B)​$2.
C)​$30.
D)​$32.

Question 68

The expression, "There's no such thing as a free lunch" implies that:

A)​everyone has to pay for his/her own lunch.
B)​the person consuming a good must always pay for it.
C)​costs must be incurred when resources are used to produce goods and services.
D)​no one has time for a good lunch anymore.

Question 69

The opportunity cost of going to college includes:

A)​both tuition and the value of the student's time.
B)​tuition, but not the value of the student's time, which is a non-monetary cost.
C)​neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future.
D)​neither tuition nor the value of the student's time, at least at state-supported universities and colleges.

Question 70

The opportunity cost of an action is equal to:

A)​only the monetary payment the action required.
B)​the total time spent by all parties in carrying out the action.
C)​the highest valued opportunity that must be sacrificed in order to take the action.
D)​the value of all of the alternative actions that could have been taken.

Question 71

The opportunity cost of an action:

A)​can be objectively determined only by economists.
B)​is a subjective valuation that can only be determined by the individual who chooses the action.
C)​can be determined by adding up the dollar costs incurred as a result of the action.
D)​can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.

Question 72

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:

A)​nothing because he enjoys playing basketball more than studying.
B)​the foregone benefit to his grades from studying for an hour.
C)​the increase in skill he obtains from playing basketball for that hour.
D)​nothing because he had a free pass into the sports complex to play basketball.

Question 73

Which of the following is true?

A)​Tangible goods are subject to economic analysis but intangible goods are not.
B)​Intangible goods are just an alternative term for services.
C)​Goods and services can be made costless by having the government give them away to citizens.
D)​All goods and services, whether tangible or intangible, are made from scarce resources and are subject to economic analysis.

Question 74

Which of the following is true"

A)​To choose is to lose.
B)​Scarcity forces us to compete, but not to choose.
C)​Scarcity forces us to choose, but not to compete.
D)​Economic principles would be irrelevant if scarcity was eliminated.

Question 75

Opportunity cost includes

A)​monetary costs only.
B)​non-monetary costs only.
C)​both monetary and non-monetary costs.
D)​neither monetary nor non-monetary costs.

Question 76

The opportunity cost of attending college is likely to include all except which of the following?

A)​the cost of required textbooks
B)​tuition fees
C)​the income you forego in order to attend classes
D)​the cost of haircuts received during the school term

Question 77

Opportunity costs:

A)​only include explicit costs paid out-of-pocket.
B)​never involve costs paid out-of-pocket.
C)​may or may not involve costs paid out-of-pocket.
D)​are always measured in terms of time.

Question 78

A student has a chance to see Taylor Swift in concert. The student also has a major economics exam in the morning. If the student goes to the concert:

A)​she may receive a lower grade on the economics exam.
B)​the opportunity cost of the concert includes the value of the time that would otherwise have been spent studying.
C)​the decision involves a tradeoff.
D)​all of the above are correct.

Question 79

Which of the following statements is true?

A)​The opportunity cost of a decision is equal to the explicit cost in monetary terms.
B)​The opportunity cost of a decision is the value of the best foregone alternative.
C)​Some economic decisions have zero opportunity cost.
D)​The opportunity cost of attending college is the same for all students at the same university but may differ among students at different universities.

Question 80

As student reasons that "If I didn't go to class tonight, I would spend three hours at work where I earn $10 per hour. In addition, my annual parking permit costs the equivalent of $2 per day." The opportunity cost to that student of attending that class this evening is:

A)​$0.
B)​$2.
C)​$30.
D)​$32.