Economics Today The Macro View Ch.2 Homework

Which of the following is not generally considered to be a resource (factor of production)?

A U.S. Treasury Bond

Which of the following best demonstrates the concept of scarcity?

Stephanie has to choose between playing basketball and swimming after school (time is a scarcity)

Each individual must make choices because

resources are limited and therefore cannot satisfy one’s many competing wants

If you receive a free ticket to a concert, what, if anything, is your opportunity cost of attending the concert?

The next best activity that can’t be done while attending the concert

Jennie is buying something for dinner. She can choose between chicken, steak, and salmon. She doesn’t like the salmon, and after some thought, she chooses the chicken. What is the opportunity cost of this choice?

The steak

Opportunity cost is defined as

The highest-valued, next-best alternative that must be given up to obtain something

According to the law of increasing additional cost, the opportunity cost of producing

corn is likely to increase as society tries to produce more corn

Current production of capital goods mean that

the production possibilities curve can be expected to shift outward in the future

Elizabeth can make 5 dozen cupcakes or 1 chocolate cake in one hour. Steven can make 3 dozen cupcakes or 1 chocolate cake in one hour. Based on this information, which of the following is a true statement?

Elizabeth has a comparative advantage in making cupcakes

Japan and Singapore are countries that trade with each other. If Japan has a comparative advantage in televisions and Singapore has a comparative advantage in clothing, which of the following is a correct statement about the effects of trade between these nations?

Both countries are likely to be better off, and world production will increase

Kyla is buying clothes . She can choose between a red dress ​, a blue sweater ​, and black jeans . She​ doesn’t like black jeans ​, and after some​ thought, she chooses a red dress . What is the opportunity cost of this​ choice?

The a blue sweater

According to the law of increasing additional​ cost, the opportunity cost of producing

A. wheat is likely to increase as society tries to produce more lemons.
B. wheat is likely to remain constant as society tries to produce more wheat.
C. wheat is likely to increase as society tries to produce more wheat.
D. wheat is likely to decrease as society tries to produce more lemons.
E. wheat is likely to decrease as society tries to produce more wheat.

C. wheat is likely to increase as society tries to produce more wheat.

Current production of capital goods means that
A. more resources are being​ exhausted, so total production will decrease.
B. the production possibilities curve will shift outward now.
C. the production possibilities curve can be expected to shift outward in the future.
D. more consumption goods can be produced​ now, since there are more production facilities.

C. the production possibilities curve can be expected to shift outward in the future.

Country A and country B produce the same consumption goods and capital goods and currently have identical production possibilities curves. They also have the same resources at​ present, and they have access to the same technology.

At​ present, does either country have a comparative advantage in producing capital​ goods?
Yes or No

​Currently, country A has chosen to produce more consumption​ goods, compared with country B. Other things being​ equal, which country will experience the larger outward shift of its PPC during the next​ year?
Country A or Country B

No; Country B

Stefanie can make 7 dozen cookies or 1 peach tart in one hour. Curtis can make 4 dozen cookies or 1 peach tart in one hour. Based on this​ information, which of the following is a true​ statement?

A. Stefanie has a comparative advantage in making cookies.
B. Curtis has a comparative advantage in making cookies.
C. Stefanie has a comparative advantage in making peach tarts.
D. Curtis has an absolute advantage in making cookies.

A. Stefanie has a comparative advantage in making cookies.

In 2​ hours, Vanessa can make 5 quarts of ice cream or 2 cherry cobblers. Her​ friend, Sonia, can make 9 quarts of ice cream or 1 cherry cobbler.

a) If Vanessa specializes in ice cream and Sonia specializes in cherry cobblers​, total production of ice cream will be ___ quarts of ice cream​, and total production of cherry cobblers will be ___ cherry cobbler.

b) If Vanessa specializes in cherry cobblers and Sonia specializes in ice cream​, total production of ice cream will be ___ quarts of ice cream​, and total production of cherry cobblers will be ___ cherry cobblers.

Thus Vanessa has a comparative advantage in _____
_____ ​, and Sonia has a comparative advantage in ____ _____ .

a) 5; 1 b) 9; 2 cherry cobblers; ice cream

France and India are countries that trade with each other. If France has a comparative advantage in computers and India has a comparative advantage in shirts​, which of the following is a correct statement about the effects of trade between these​ nations?
A. France will lose jobs in the computer industry.
B. Both countries will lose jobs through trade and be worse off.
C. Both countries are likely to be better​ off, and world production will increase.
D. There will be a net loss of employment in India.

C. Both countries are likely to be better​ off, and world production will increase.

The production possibilities curve will shift outward​ (upward, and​ or, to the​ right) when

economic growth occurs

Specialization of labor and trade yield greater economic efficiency when applied to interstate​ trade,

and when applied to international trade

Farmer McDonald has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn or some combination of both. The accompanying figure refers to farmer McDonald’s

production possibilities curve

If a country devotes more resources toward the production of capital goods and less toward consumer goods then

that country will experience greater economic growth

Which of the following is not a factor of production?
A. human capital.
B. entrepreneurship.
C. money.
D. land.

C. money.

Economic growth can be pictured in the accompanying diagram by

shifting the PPC upward and outward

A production possibilities curve that is bowed outward​ (from the​ origin) represents the concept that
A. greater quantities of one good can be produced without reducing the production of other goods.
B. production of additional units of one good requires that increasing quantities of the other good be given up.
C. resources are not scarce.
D. opportunity costs are constant.

B. production of additional units of one good requires that increasing quantities of the other good be given up.

Does the richest person in the world face the problem of​ scarcity?

Yes, because even if you have money you will never be able to satisfy all of your wants and must therefore make choices.

_____ results from unlimited wants coupled with limited resources.

Scarcity

The existence of scarcity requires

that people must make choices and face​ trade-offs in using their resources.

Any activity that results in the conversion of resources into products that can be used in consumption is called

production.

Factors of production include

​land, labor, physical​ capital, human capital and entrepreneurship.

Tim goes to a design academy to become a toy designer. This is an example of

an investment in human capital.

Economic goods are

goods that are scarce.

Why do economists avoid making the distinction between wants and needs​?

The term need is subjective making it difficult to distinguish between something someone wants and something they need.

Many state governments claim a shortage of funds because there are​ "unmet needs." This claim is

false because of scarcity

Each individual must make choices because

resources are limited and therefore cannot satisfy​ one’s many competing wants.

When an individual proclaims the need for a new​ car, the person typically means

they want something they currently do not have.

Scarcity is the same as a shortage.

False

Entrepreneurship is the component of human resources that performs the functions of​ organizing, managing, and assembling the other factors of production to create and operate business ventures.

True

The factor of production that consists of factories and equipment used in​ production, as well as improvements to natural​ resources, is called _____ _____.

Physical Capital

Economic goods are goods for which the quantity demanded exceeds the quantity supplied at a zero price.

True

People have​ ________ wants and​ ________ resources to deal with those wants.

unlimited; limited

________ is the situation in which human wants always exceed what can be produced with the limited resources and time that nature makes available.

Scarcity

We use scarce​ resources, such​ as__________, __________,​ __________ and​ __________ capital, and​ __________, to produce economic goods- goods that are desired but are not directly obtainable from nature to the extent demanded or desired at a zero price.

​land; labor;​ physical; human; entrepreneurship

_________ are unlimited. They include all material desires and all nonmaterial​ desires, such as​ love, affection,​ power, and prestige.

Wants

The concept of ______ is difficult to define objectively for every person.​ Consequently, we simply consider every​ person’s wants to be unlimited. In a world of ​scarcity, satisfaction of one wants necessarily means nonsatisfaction of one or more other wants.

need

Greater economic growth is shown as

moves outwards