BIllie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player. Both the amp and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that
People face tradeoffs
Efficiency means that
society is getting the maximum benefits from its scarce resources.
When the government redistributes income from the wealthy to the poor
Equality is improved, but efficiency is not.
When computing the opportunity cost of attending a basketball game, you should include what?
The price you pay for the ticket and the value of your time.
Melody decides to spend 3 hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is?
The enjoyment she would have received had she gone to the park.
The "invisible hand" works to promote general well-being in the economy primarily through?
People's pursuit of self-interest.
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. The opportunity cost of 1 mixer for Maya is
1.6 toasters
The opportunity cost of 1 mixer for Miguel is
2 toasters
The opportunity cost of 1 toaster for Maya is
0.625 mixers.
The opportunity cost of 1 toaster for Miguel is
1/2 mixer.
Maya has an absolute advantage in the production of what?
Both goods, and a comparative advantage in the production of mixers.
Which of the following best describes the movement from E1 to E2?
A decrease in supply.
Which of the following would explain a movement from E1 to E2?
The cost of an input to the production of this good increases.
Equilibrium price and quantity are respectively:
$25 and 400 units.
At a price of $35, there would be a:
surplus of 400 units.
U.S GNP
excludes production of foreigners working in the US but includes production by US citizens working in foreign countries.
A US citizen buys a tea kettle manufactered in China by a company that is owned and operated by US citizens. In which of the following components of US GDP is this transaction accounted for?
Consumption and imports.
Which of the following items is included in US GDP?
All of the above are included in US GDP.
If in some year nominal GDP was $20 billion and GDP deflator was 50, what was the real GDP?
$40 billion.
When a US citizen buys $500 of Chinese made parts for a motorcycle:
US consumption increases by $500, US net exports decline by $500, and US GDP remains the same.
Disposable personal income is the income that
Households and noncorporate businesses have left after paying taxes and non-tax payments to the government.
Nominal GDP will definitely increase when
prices increase and outputs increase.
In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?
$75.
If an economy is producing efficiently, then:
There is no way to produce more of one good without producing less of another good.
Economics is the study of
How society manages its scarce resources.
The adage, "there is no such thing as a free lunch", means
People face tradeoffs.
The terms equality and efficiency are similar in that they both refer to benefits in society. However, they are different in that
equality refers to uniform distribution of those benefits, and efficiency refers to maximizing benefits from scarce resources.