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Terms in this set (16)
Attending college is a case where the _____ exceeds the monetary cost.
Opportunity cost
Scarcity exists because of:
Unlimited wants and limited resources
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:
The benefit to his grades from studying for an hour
The opportunity cost of attending university is likely to include all except which of the following?
The cost of haircuts received during the school term
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display ______.
Allocative efficiency
Marginal thinking is best demonstrated by:
Choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time
The marginal benefit of a slice of pizza is the:
Maximum amount that a consumer is willing to pay for the slice
The lesson of ______ is to forget about the money that's irretrievably gone and instead focus on the marginal costs and benefits of future options.
Sunk costs
Philosophers draw a distinction between _______, which describe the world as it is, and normative statements, which describe how the world should be.
Positive statements
The law of ______ explains why people and societies rarely make all-or-nothing choices.
Diminishing marginal utility
Which of the following would most likely shift the production possibilities curve inward?
A decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time
The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:
Either the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve or the production possibilities frontier shifts outward due to an improvement in technology but not as a result of the economy moves along the production possibilities in the direction of a greater quantity of defense
The opportunity cost of an action:
Is a subjective valuation that can be determined only by the individual who chooses the action
In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income.
Utility
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _____, diagram which shows what choices are possible.
Opportunity set
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve ______, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
Marginal analysis
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Verified questions
ECONOMICS
Compare the U.S. free enterprise system with other economic systems you have read about in this chapter
Verified answer
ECONOMICS
How do prices in the free market lead to efficient resource allocation? Describe an example from your experience.
Verified answer
ECONOMICS
If the transit system was regulated to provide the most allocatively efficient quantity of output, what output would it supply and what price would it charge? What subsidy would be necessary to insure this efficient provision of transit services? $$ \begin{array}{|c|c|c|c|c|c|c|c|c|c|c|c|}\hline \text { Demand: } & {\text { Quantity }} & {1} & {2} & {3} & {4} & {5} & {6} & {7} & {8} & {9} & {10} \\ \hline &{}\text { Price } & {10} & {9} & {8} & {7} & {6} & {5} & {4} & {3} & {2} & {1} \\ \hline\end{array} $$ $$ \begin{array}{|c|c|c|c|c|c|c|c|c|c|c|c|}\hline \text { } & \text { Marginal Revenue } & {10} & {8} & {6} & {4} & {2} & {0} & {-2} & {-4} & {-6} & {-8} \\ \hline \text { Costs:} & \text { Marginal cost } & {9} & {6} & {5} & {3} & {2} & {3} & {4} & {5} & {7} & {10}\\ \hline \text { } & \text { Average cost } & {9} & {7.5} & {6.7} & {5.8} & {5} & {4.7}& {4.6} & {4.6} & {4.9} & {5.4} \\ \hline\end{array} $$
Verified answer
ECONOMICS
What is the impact of underutilization of resources?
Verified answer
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