Exam 1: Foundations of Economics

Eli has five hours after school that can be used to attend soccer practice (two hours), take a piano lesson (half an hour), study for a science test (two and a half hours), eat dinner with his family (one hour), and play games with his siblings (two hours). How does Eli's situation illustrate the concept of scarcity? How does Eli's situation demonstrate the concept of opportunity cost?

If the production possibilities frontier (PPF) has shifted in, what is true?

What combinations of production are efficient in a production possibilities frontier (PPF)?

Which of the following is an example of positive economics?

Some production possibilities frontiers (PPF) are drawn as a straight line, but economics tells us that it is more realistic to draw them as concave, or bowed outward. Explain why.

Opportunity cost is defined as the value of:

Use the figure The Production Possibilities Frontier I. Which points on the production possibilities frontier (PPF) are efficient? ​ Figure: The Production Possibilities Frontier I

Use the table Possible Output Combinations Using All Available Resources I. What is true about the opportunity cost of ukuleles as you move from left to right across this table? ​

A collection of buyers and sellers of the same good and service is called:

Max is a backyard gardener who can produce 100 tomatoes if he devotes all of his resources to tomato production. He also could grow 50 cucumbers if he devotes all of his resources to cucumber production. Assuming that Max's gardening production possibilities have constant opportunity costs, sketch a graph of his production possibilities frontier. What is the opportunity cost of growing a tomato, and what is the opportunity cost of growing a cucumber?

______ is the study of the economy as a whole.

Use the figure The Production Possibilities Frontier III. If this economy is currently producing a combination of output represented by point J, what is the opportunity cost of producing five more gloves? ​ Figure: The Production Possibilities Frontier III

Use the figure The Production Possibilities Frontier I. What point represents a combination of output that is produced if some resources are idle? ​ Figure: The Production Possibilities Frontier I

Which of the following is a microeconomic topic?

Use the figure The Production Possibilities Frontier I. An economy that wants to produce an efficient combination of goods would NOT choose the combination of goods represented by point: ​ Figure: The Production Possibilities Frontier I

A policy maker is faced with a dilemma: she can use tax dollars to build either a bridge or a new high school. Which of the following is the opportunity cost of the high school?

A model is best defined as a:

Use the figure The Production Possibilities Frontier for Bouvia III. What happens to the production possibilities frontier (PPF) if there is a damaging potato fungus that negatively impacted potato production? How does this affect the opportunity cost of producing windmills? ​ Figure: The Production Possibilities Frontier for Bouvia III ​

A reward or punishment that guides decision making is called:

Use the table Possible Output Combinations Using All Available Resources I. What is true about the resources that are freed up as you move to left to right across this table? ​