Microeconomics, 10E (Parkin)

Microeconomics, 10e (Parkin)

Part 1 Review

Introduction

1) All economic questions arise because

A) of scarcity.

B) production possibilities are unlimited.

C) our wants are limited.

D) people are irrational.

Answer: A

Topic: Scarcity

Skill: Recognition

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

2) Which of the following is NOT a factor of production?

A) mineral resources

B) money

C) a computer programmer

D) a commercial aircraft

Answer: B

Topic: Factors of Production

Skill: Recognition

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

3) The opportunity cost of a good is

A) the income you forgo to get it.

B) the lowest valued alternative you give up to get it.

C) the highest valued alternative you give up to get it.

D) all alternatives you give up to get it.

Answer: C

Topic: Opportunity Cost

Skill: Recognition

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

4) Jen won $900 in a lottery. She has a choice between using the money to buy a sofa, a television, or going on a vacation. If she chooses to buy a television, the opportunity cost of this decision is

A) zero because she won the money.

B) the sofa and the vacation trip.

C) the sofa, the vacation trip, and $900.

D) the sofa if that was her second choice.

Answer: D

Topic: Opportunity Cost

Skill: Analytical

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

Cheese
(tons) / DVDs
(thousands)
0 / 60
2 / 56
4 / 48
6 / 36
8 / 20
10 / 0

5) The table above lists six points on the production possibilities frontier for cheese and DVDs. Given this information, which of the following combinations is unattainable?

A) 2 tons of cheese and 56 thousand DVDs

B) 8 tons of cheese and 21 thousand DVDs

C) 6 tons of cheese and 34 thousand DVDs

D) 7 tons of cheese and 20 thousand DVDs

Answer: B

Topic: Production Possibilities Frontier

Skill: Analytical

Question history: Previous edition, Part Review 1

AACSB: Analytical Skills

6) The table above lists six points on the production possibilities frontier for cheese and DVDs. From this information you can conclude that production is inefficient if this economy produces

A) 2 tons of cheese and 56 thousand DVDs.

B) 8 tons of cheese and 21 thousand DVDs.

C) 5 tons of cheese and 48 thousand DVDs.

D) 7 tons of cheese and 20 thousand DVDs.

Answer: D

Topic: Production Possibilities Frontier

Skill: Analytical

Question history: Previous edition, Part Review 1

AACSB: Analytical Skills

7) The table above lists six points on the production possibilities frontier for cheese and DVDs. What is the opportunity cost of producing the 7th ton of cheese?

A) 16 DVDs

B) 8 DVDs

C) 20 DVDs

D) 28 DVDs

Answer: B

Topic: Opportunity Cost

Skill: Analytical

Question history: Previous edition, Part Review 1

AACSB: Analytical Skills

8) An opportunity cost of economic growth is

A) the capital accumulation given up to increase present consumption.

B) the increased future consumption.

C) the present consumption given up to accumulate capital.

D) None of the above because there is no opportunity cost since if an economy grows, it can produce more of all goods.

Answer: C

Topic: Economic Growth

Skill: Conceptual

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

9) Country X devoted 70 percent of its resources to consumption, while Country Y devoted 80 percent to consumption. Other things being equal, you can predict that

A) Country X's opportunity cost of economic growth is lower than Country Y's.

B) Country Y's rate of capital accumulation is higher than Country X's

C) Country Y's economy will grow faster than Country X's.

D) Country X's economy will grow faster than Country Y's.

Answer: D

Topic: Economic Growth

Skill: Conceptual

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking

10) Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it. Arnold takes 15 seconds to stuff an envelope and 5 seconds to seal it. Lizzie has a comparative advantage in ______and Arnold has a comparative advantage in ______.

A) sealing envelopes; stuffing them

B) stuffing envelopes; sealing them

C) neither of these activities; both activities

D) both activities; neither of these activities

Answer: B

Topic: Comparative Advantage

Skill: Analytical

Question history: Previous edition, Part Review 1

AACSB: Analytical Skills

11) According to the principle of comparative advantage, if the United States trades with Mexico, most likely,

A) the United States will benefit and Mexico will lose.

B) the United States will lose and Mexico will benefit.

C) neither of the countries will benefit.

D) both countries will benefit.

Answer: D

Topic: Comparative Advantage and Trade

Skill: Conceptual

Question history: Previous edition, Part Review 1

AACSB: Reflective Thinking