Question

Question 12 pts

If you must make a choice about consuming two apples, three oranges, or one candy bar, the opportunity cost of the two apples is the candy bar plus the three oranges.

True

False

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Question 22 pts

According to economic analysis, while making a decision, an individual compares the benefits expected from one option with the benefits expected from other options.

True

False

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Question 32 pts

Which of the following is not a limitation a person faces when shopping for clothes?

The selection of stores

The person's budget

The various styles that are available

The amount of time available to shop

The freedom to make rational choices

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Question 42 pts

Scarcity is a result of an unfair distribution of income.

True

False

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Question 52 pts

Economics is the study of the allocation of scarce resources and scarce time, and the ways in which people utilize those resources or that time.

True

False

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Question 62 pts

A world-renowned brain surgeon can type twice as fast as her secretarial assistant. Which of the following statements is true in this situation?

The surgeon should fire the assistant and work weekends and evenings to stay up on her typing.

The secretary has an absolute advantage in typing.

The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing.

The surgeon should do her own typing to save money.

The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the surgeon has a comparative advantage in typing.

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Question 72 pts

Which of the following actions is most likely to cause a rightward shift in a production possibilities curve [PPC]?

Increasing the technological know-how used in production

Shifting from the production of one product to the production of another product

Employing idle resources

Using fewer resources in production

Shifting all resources to the production of one product

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Question 82 pts

Consider a nation with an endowment of iron ore and petroleum. If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

on its production possibilities curve.

inside its production possibilities curve.

on the highest achievable production possibilities curve.

on the lowest production possibilities curve.

outside its production possibilities curve.

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Question 92 pts

Suppose a society begins by producing 3 units of X and 4 units of Y and then alters production to 4 units of X and 4 units of Y. If the quantity and quality of resources and the technology being used remain unchanged, then:

3 units of X and 4 units of Y are a combination best represented by a point inside the production possibilities curve [PPC].

we can conclude that resources were being efficiently utilized at 3 units of X and 4 units of Y.

we can conclude that resources were being fully utilized at 3 units of X and 4 units of Y.

3 units of X and 4 units of Y are a combination best represented by a point outside the PPC.

we can conclude that the society has moved along the PPC.

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Question 102 pts

The city of Austin can buy roads or light rail. If 10 miles of roads cost $1 million and 2 miles of light rail cost $10 million, what is the city’s opportunity cost of 1000 miles of roads?

$1,000 million

200 miles of light rail

2 miles of light rail

$100 million

$50 million

Answer 1

1) Solution: False

Explanation: Opportunity cost is candy bar and three oranges, whichever a person prefer

2) Solution: True

Explanation: The economic analysis states that while making a decision, a person makes a comparison of the benefits expected from one option with the benefits expected from other options

3) Solution: The freedom to make rational choices

Explanation: While shopping for clothes a person is not limited with freedom to make rational choices

4) Solution: False

Explanation: An unfair distribution of incomes is mainly due to the market failure

5) Solution: True

Explanation: Economics studies the allocation of scarce resources and scarce time

6) Solution: The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing.

Explanation: Since secretary has a comparative advantage in typing thus surgeon should focus on brain surgery and allow her secretary to do the typing