Exam 1: Economics: the Core Issues

When the invisible hand does not produce optimal outcomes for the economy,there is evidence of

Economics can be defined as the study of

Figure 1.8 suggests that

Refer to Figure 1.7.Which of the following points are unattainable,ceteris paribus?

Adam Smith's invisible hand is now called

The production possibilities curve illustrates

Government failure occurs when government intervention fails to improve economic outcomes or makes them worse.

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus. Table 1.3 Production Possibilities for Brushes and Combs Combination Number of combs Opportunity Cost(Foregone brushes) Number of brushes Opportunity Cost (Foregone combs) 4 0 NA 3 10 2 17 1 21 0 NA 23 On the basis of Table 1.3,in the production range of 1 to 2 combs the opportunity cost of producing 1 more comb in terms of brushes is

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus. Table 1.1 Production Possibilities for Bombers Combination Number of B- 1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1) 0 NA 10 1 9 2 7 3 4 NA The highest opportunity cost anywhere in Table 1.1 for Stealth bombers in terms of B-1 bombers is

Describe the shape of the typical production possibilities curve and explain why it has this shape.

Economic models are used by economists to

Choose the letter of the curve in Figure 1.2 that best represents a production possibilities curve for two goods for which there are constant opportunity costs:

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce.

Macroeconomics focuses on the behavior of

At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1. )

To calculate the slope of a line,find the vertical distance between two points and divide it by the horizontal distance between the same two points.

In a market economy,the people who receive the goods and services that are produced are those who

At which point is society producing some of each type of structure but still producing inefficiently? (See Figure 1.1. )

Using Figure 1.5,if an economy has the capacity to produce represented by PP2,then point E represents

Government intervention may achieve a more optimal outcome than the market mechanism when addressing