Module 2 Quiz

A  The production possibilities model demonstrates diminishing returns.

B  The budget constraint model demonstrates diminishing returns.

C  The production possibilities model depicts purchase choices.

A  since it would be impossible to produce more of one thing without producing less of another.

B  since otherwise output may go to where it is less valued.

C  since otherwise resources are idle.

A  technology can advance.

B  the opportunity cost of producing more of something will remain constant.

C  some land or labor is more productive in one use than another.

A  the budget constraint demonstrates diminishing returns.

B  the production possibilities model demonstrates diminishing returns.

C  the budget constraint depicts an inverse relationship, or a trade-off.

A  how much one item costs compared to the cost of the other item.

B  the tastes and preferences of the decision-maker.

C  how effectively one more of each of the two competing goods satisfies wants.

A  utility.

B  the prices of the goods that we may purchase.

C  income (budget) limitations.

A  $1000 per month monetary and opportunity cost.

B  $500 per month monetary cost but a $1500 per month opportunity cost.

C  zero monetary cost but a $1000 per month opportunity cost.

A  zero monetary cost but a $1000 per month opportunity cost.

B  $1000 per month monetary and $1000 per month opportunity cost.

C  $1000 per month monetary cost but a $2000 per month opportunity cost.

A  Retired professionals spend less that working professionals.

B  Retired professionals are generous tippers.

C  Retired professionals should work less and get out more.

A  devoid of value judgements.

B  correct.

C  based upon what ought to be.

A  value judgements.

B  conjecture.

C  facts.

A  Social security benefits are not taxed.

B  There is a limit to the income each year to which the FICA tax applies, but that is fair, since there is a limit to social security benefits.

C  I am absolutely positive that there is a better way.

A  continue with the project provided that the additional solar electricity is worth more than $22 million.

B  continue with the project provided that the additional solar electricity is worth more than $32 million.

C  continue with the project provided that the additional solar electricity is worth more than $10 million.

A  the total benefits from all crop-dustings is greater than the the total cost of all crop-dustings.

B  the marginal benefit is greater than the marginal cost of an additional crop-dusting.

C  the additional crops grown from one more crop-dusting (the marginal product) is rising.

A  continue with the project provided that the additional electricity is worth more than $32 million.

B  continue with the project provided that the additional electricity is worth more than $12 million.

C  continue with the project provided that the additional electricity is worth more than $20 million.

A  total benefit.

B  marginal benefit.

C  opportunity cost.

A  strangers.

B  close friends and family.

C  humankind as a whole.

A  is an assumption that economists make to have a useful model for how decisions are made.

B  implies that people will always know exactly what they are buying

C  assumes that people will always attempt to act in their own self-interest.

A  The money spent is worth the boost it gives to corporate image.

B  The money will be spent efficiently to cure cancer.

C  The funds dedicated to this purpose represent a very small share of profits.

A  always considering the long-run.

B  considering all prospective marginal benefits and marginal costs to oneself.

C  equal consideration for your own and others’ welfare