Macro_Chapter_2_study_guide_questions_13e - Macro Chapter 2...

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Macro Chapter 2 study guide questions Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The opportunity cost to the United States of placing a man on the moon was a. the loss of government revenues that were allocated to the mission. b. the cost of all production involved in the space program. c. the loss of utility from the highest valued bundle of products that had to be forgone because of the moon mission. d. less than zero, because the long-run benefit of the project will be greater than the cost. ____ 2. When Benjamin Franklin wrote, "Remember that time is money!" he understood a. the incentives created by property rights. b. the law of comparative advantage. c. the concept of opportunity cost. d. that watches cost money. ____ 3. Which of the following best describes the implications of the law of comparative advantage? If each person sells goods for which he or she has the greatest comparative advantage in production and buys those for which his or her comparative advantage is least, the a. total output available to each person can be expanded by specialization and exchange. b. total output will fall. c. buyers of goods will gain at the expense of sellers. d. sellers of goods will gain at the expense of buyers. ____ 4. Keri decided to sleep in today rather than attend her 9 a.m. economics class. According to economic analysis, her choice was a. irrational, because economic analysis suggests you should always attend classes that you have already paid for. b. irrational, because oversleeping is not in Keri's self-interest. c. rational if Keri has not missed any other classes. d. rational if Keri values sleep more highly than the benefit she expects to receive from attending the class. ____ 5. Which of the following is not one of the basic economic questions that all economies must answer? a. What will be produced? b. To whom will the goods produced be allocated? c. How will goods be produced? d. Which government agency will set the prices of the goods produced? ____ 6. The owners of private property will a. use their property for selfish ends, taking no account of the impact their behavior has on others. b. use their property in ways that others value because the market will generally reward them with profits (or a higher selling price) if they do so. c.
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Macro_Chapter_2_study_guide_questions_13e - Macro Chapter 2...

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