Microeconomics Online Chapter 2 Study Problems

Front 1

The _____ question requires society to decide on the combination of resources to produce output.

Back 1

How

Front 2

In a _____ system, consumers and producers make economic decisions acting in their own self interest.

Back 2

market

Front 3

By definition, _____ is a system in which the resources are publicly owned.

Back 3

socialism

Front 4

How income is distributed amongst the members of society answers the ______ question.

Back 4

for whom

Front 5

An _____ is what is given up in order to gain something else.

Back 5

opportunity cost

Front 6

_____ explains why the production possibilities curve is not a straight line.

Back 6

The law of increasing costs

Front 7

_____ is illustrated by an outward shift of a production possibilities curve which means that an economic system is able to produce more output.

Back 7

Economic growth

Front 8

By definition, _____ is a system in which th resources are privately owned.

Back 8

capitalism

Front 9

The _____ question asks which goods are to be produced in what quantities.

Back 9

what

Front 10

In addition to more land, labor, and capital, an economy can realize economic growth from _____ with other countries and _____.

Back 10

trade, technology.

Front 11

A _____ illustrates the opportunity costs faced by a consumer.

Back 11

budget line model

Front 12

A country has a _____ and gains the most output from its resources when it specializes in producing an output in which it has a low opportunity cost and trades for an output that has a high opportunity cost.

Back 12

comparative advantage

Front 13

A model that illustrates the opportunity costs faced by a producer is called a _____.

Back 13

production possibilites curve

Front 14

Th purpose of an _____ is to allocate a society's limited resources.

Back 14

economic system

Front 15

T/F Under socialism, economic decisions must be made according to a plan.

Back 15

F

Front 16

T/F Compared to a market system, resources are more efficiently allocated in a planned system.

Back 16

F

Front 17

T/F There are no opportunity costs if something is free.

Back 17

F

Front 18

T/F The production possibilities curve is concave because resources lose productivity when switched to another production.

Back 18

T

Front 19

T/F An inward shift of the production possibilities curve means that an economy is experiencing an enefficient use of resources.

Back 19

F

Front 20

T/F A country can gain output or grow if it trades with other countries for an output it has a low opportunity cost in producing.

Back 20

F

Front 21

T/F The WHAT question is answered in a market system by the amount of income each person has.

Back 21

F

Front 22

T/F The opportunity costs of a producer become greater as more of an alternative output is produced.

Back 22

T

Front 23

An opportunity cost

a)does not exist if something is free.
b)only counts if the lost opportuntiy has monetary value.
c)includes time not devoted to an alternative use.
d)decreases when resources are switched from another output.

Back 23

c

Front 24

A planned system

a)enables producers to answer the HOW question.
b)is more efficient than a market system.
c)can be used with capitalism.
d)is being adopted by more countries every year.

Back 24

c

Front 25

The amount of income (affordability) consumers earn in a market system answers the

a)WHAT question
b)HOW question
c)WHY question
d)FOR WHOM question

Back 25

d

Front 26

a

Back 26

Which of the point movements represents an opportunity cost or an increase in entertainment for less clothing?

a)B to C
b)G to F
c)C to B
d)D to C

Front 27

b

Back 27

An increase in movie prices while clothin prices do not change would be represented by a point movement from

a)A to B
b)F to G
c)F to E
d)C to B

Front 28

d

Back 28

A movement from point D to point C would represent

a)an opportunity cost of less clothing.
b)a decrease in entertainment prices.
c)an impossibility.
d)spending all of the money available for clothing and entertainment.

Front 29

a

Back 29

Which of the points on the model represent an enefficient use of resources?

a)A
b)B
c)C
d)D

Front 30

b

Back 30

Which of the point movements on the model represent an opportunity cost?

a)A to B
b)B to C
c)C to D
d)D to B

Front 31

d

Back 31

In order for an economy to reach point D, or realize economic growth, it must

a)lower the unemployment rate (not at full-employment).
b)use resources that have been idle or unemployed.
c)decrease trade with other countries.
d)experience an increase in resources.

Front 32

Term for the expenditure or borrowing to purchase capital.

Back 32

Investment

Front 33

The economic question for which goods and services to produce.

Back 33

What

Front 34

The economic question for which goods and services to produce.

Back 34

What

Front 35

The cost of the next best alternative.

Back 35

Opportunity Cost

Front 36

One of the factors that promotes economic growth. (10 letters)

Back 36

Technology

Front 37

An outward shift of the production possibilities curve.

Back 37

Economic Growth

Front 38

The _____ shows the combination of two outputs that can be produced given limited outputs.

Back 38

Production Possibilities Curve

Front 39

The basic economic question of who recieves goods and services.

Back 39

For Whom

Front 40

Analysis used by economists to determine the effect or outcome of producing or consuming more than one unit.

Back 40

Marginal

Front 41

Calculate the opportunity costs of producing shoes and televisions for Japan and Thailand.

Back 41

^Solution^

Front 42

Determine the gains from trade if each country specializes in producing the output that it has a comparative advantage in.

Back 42

^Solution^