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12. Which situation deals more with equity than efficiency?

12. Which situation deals more with equity than efficiency? 

Due to the lack of customers, Jamie's Pizza reduced the number of pepperoni slides on each pizza.

Howard's Realty offers his sales staff a bonus incentive if the annual sales goal is reached.

The Red Sox signs a star player for $35 million a year, which is over 10 times the average salary of the rest of the team.

Mike's Auto Shop invests in a new hydraulic lift that makes it easier to change oil and rotate tires.


13. Which question would be considered a normative question? 

When and where are the major obstacle races held?

How many people participated in obstacle course racing last year?

Should obstacle races be regulated to ensure the safety of its participants?

How much does an entry into an obstacle course race cost?


14. Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in? 

the actual enjoyment of lying in bed instead of sitting in class

the value of attending the class he decided to miss

the level of pain he endured from the stomachache

the improvement in how he feels by getting more rest


15. Which topic is a macroeconomic topic? 

the study of the business cycle

labor market for computer analysts

price of a pair of Nike shoes

total sales for GE in 2009


16. A society that is able to produce goods and services at the lowest possible cost is experiencing: 

allocative efficiency.

scarcity.

opportunity costs.

production efficiency.


17. The main focus of efficiency is for: 

consumers to get the goods and services they want at the lowest possible resource cost.

consumers to pay high prices.

firms to charge high prices for their goods.

firms to earn the largest profits.


18. The opportunity cost of buying a ticket to a major league baseball game and then going to the game is: 

all other alternative activities that could have been undertaken.

the next best alternative that could have been undertaken.

the time spent at the game.

the price of the ticket.


19. Opportunity costs exist because: 

using resources for one activity means that their use elsewhere must be given up.

there are opportunities to find ways to reduce costs.

buyers always have an opportunity to go to another seller.

sellers are unwilling to give up their product without a price.


20. Suppose that a store sells candy bars for $0.89 for one and $1.50 for two. The marginal cost of the second candy bar is: 

$0.75.

$0.89.

$1.50.

$0.61.


24. Which of these would be least likely to increase economic growth? 

Protecting intellectual property rights (such as patents) to provide incentives for innovation.

An expansion of financial aid options to college students.

An increase in tariffs to protect domestic industries from foreign competition.

An increase in investment in infrastructure such as new roads and rail lines.


25. The main reason why a production possibilities frontier would have a concave shape is: 

because of decreasing opportunity costs

because the rate at which one good can be substituted for another is fixed.

because consumers face diminishing marginal returns in consumption.

because as a country specializes in one product, it must give up more of the other.


26. For a country to have a comparative advantage in a good, it must have: 

more labor to produce that good

an ability to produce more of that good than another country has

more capital to produce that good

a lower opportunity cost of producing that good


27. Which of the following is not possible for two countries who trade computers and automobiles with one another? 

One country does not have an absolute advantage in either product but has a comparative advantage in one product.

One country has an absolute advantage in one product and a comparative advantage in the other product.

One of the countries has an absolute advantage in the production of both products.

One of the countries has a comparative advantage in the production of both products.


29. Which of these is NOT an economic factor of production? 

land

entrepreneurial ability

money

labor


30. If a farmer can grow 100 tubs of grapefruit or 250 tubs of oranges per acre of land, what is the opportunity cost of growing one orange? 

2.5 grapefruits

2.5 oranges

0.4 of a grapefruit

0.4 of an orange


31. Suppose that Costa Rica is able to produce 50,000 pounds of coffee or 10,000 medical devices per day; Vietnam is able to produce 40,000 pounds of coffee or 5,000 medical devices per day. Which statement is TRUE? 

Costa Rica has a comparative advantage in the production of medical devices, while Vietnam has a comparative advantage in coffee production.

Costa Rica has an absolute advantage in medical device production, while Vietnam has an absolute advantage in coffee production.

Costa Rica has a comparative advantage in the production of both coffee and medical devices.

Costa Rica has a comparative advantage in coffee production, while Vietnam has a comparative advantage in the production of medical devices.


32. _____ occurs when goods and services are produced with as few resources as possible, while _____ occurs when the mix of goods and services produced is the most desired by society. 

Allocative efficiency; production efficiency

Allocative efficiency; social efficiency

Production efficiency; social efficiency

Production efficiency; allocative efficiency


33. Production levels to the left of the production possibilities frontier are: 

unattainable and inefficient.

unattainable and efficient.

attainable but inefficient.

attainable but efficient.


34. A country operating inside of its production possibilities frontier (PPF) is operating: 

inefficiently but in an area that can be attained.

efficiently.

inefficiently and at an unattainable level.

in the unattainable region.


35. A production possibilities frontier that is a straight line is the result of: 

underemployment of resources.

increasing opportunity costs.

constant opportunity costs.

scarcity.


36. A lawyer can argue a case in court for one hour and make $300. She could alternatively use that hour of time to type a legal brief in her office. What is the opportunity cost of her typing the legal brief? 

There is not enough information in this problem to be able to answer the question.

nothing, since she would always hire an administrative assistant to type for her

nothing, since she would never type a legal brief

$300, since that is the amount she could have made by arguing a case in court


37. If the total expenses of being a full-time college student for one year adds up $17,000, and that student could have earned $20,000 working full time during the same year, then the student's opportunity cost for the year of college would be: 

$20,000.

$17,000.

$3,000.

$37,000.


47. Which of these can lead to a decrease (leftward shift) in the production possibilities frontier? 

tax breaks on the adoption of more efficient technologies

a policy that encourages entrepreneurship

a policy encouraging more immigration

banning a technology due to its adverse environmental effects


49. The introduction of the tablet computer to the U.S. economy would BEST be represented with a production possibilities frontier (PPF) as a: 

a movement from a point on the PPF to a point inside the PPF.

a movement from inside the PPF onto the PPF.

inward shift of the PPF.

outward shift of the PPF.

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