21) Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The opportunity cost of grooming the sixth dog in a day is bathing ________ dog(s).
A) 0
B) 5
C) 6
D) 7
22) Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of grooming additional dogs
A) falls.
B) rises.
C) remains constant.
D) depends on the prices being charged.
23) Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of bathing additional dogs
A) falls.
B) rises.
C) remains constant.
D) depends on the prices being charged.
24) Referring to Figure 2.1,if you increase the production of farm goods, what other area is affected?
A) the price of produce
B) the production of manufactured goods
C) how much people can purchase
D) the wages earned by farm workers
25) The production possibilities curve in Figure 2.1 illustrates the notion of
A) increased factory goods production.
B) increased farm produce production.
C) diminishing resources.
D) opportunity cost.
26) Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?
A) 300 tons
B) 500 tons
C) 600 tons
D) 700 tons
27) Refer to Figure 2.1. If you choose to produce only agricultural products, what is the maximum quantity you can produce per year?
A) 200 tons
B) 400 tons
C) 600 tons
D) > 600 tons
28) Refer to Figure 2.1. What is the opportunity cost of increasing production of manufactured products from 500 tons to 600 tons per year?
A) 200 tons of agricultural products per year
B) 400 tons of agricultural products per year
C) 500 tons of agricultural products per year
D) 600 tons of agricultural products per year
29) If an economy is fully utilizing its resources, it can produce more of one product only if it
A) doubles manufacturing of the product.
B) produces less of another product.
C) adds more people to the labor force.
D) reduces the prices of the most expensive products.
30) If you remove resources from factory production, the quantity of factory goods will
A) increase.
B) decrease.
C) remain the same but their price will decrease.
D) be diverted to other production.
Additional Application
Summary of the article:
Consumer spending stalls, threatens recovery
msnbc.com news services
August 3, 2010
Reflecting what is being referred to as the "new normal," consumer spending is down, home sales have declined, and personal savings has risen since the start of the recession in 2007, and the continuation of this trend is threatening the economic recovery in the United States. In June 2010, factory orders fell for the second consecutive month, home sales fell by nearly 19 percent compared to June 2009, and personal spending and income remained relatively flat. The personal savings rate, however, has continued to increase, reaching a level of 6.4 percent of after-tax income in June 2010, which is more than three times higher than the average savings rate prior to the start of the recession in 2007. The increase in savings is coming at the expense of consumer spending, and economists worry that households' financial problems could cause a further decline in spending for the second half of 2010.
31) The relationship between consumer spending and saving discussed in the Application addresses the economic principle of
A) opportunity cost.
B) diminishing returns.
C) thinking at the margin.
D) real versus nominal.
32) All else equal, if income continues to remain flat, the only way for consumer spending to increase is for personal savings to
A) increase.
B) decrease.
C) remain unchanged.
D) remain flat.
33) According to the Application, a tradeoff exists between
A) consumer spending and home sales.
B) home sales in 2009 and home sales in 2010.
C) consumer spending and personal savings.
D) income levels and the savings rate.
Recall the Application about the time and invested funds that are involved in starting a decorative bottle-cap pin business to answer the following question(s).
34) The time and invested funds involved in starting a decorative bottle-cap pin business address the economic concept of
A) the marginal principle.
B) opportunity cost.
C) the real-nominal principle.
D) the principle of diminishing returns.
35) The current income Betty would sacrifice to start her own decorative bottle-cap pin business reflects the
A) opportunity cost of invested funds.
B) opportunity cost of her starting a business.
C) cost of doing business.
D) present value of her initial investment.
36) If you have $10,000 to start a decorative bottle-cap pin business, the interest rate is 4 percent, your annual cost of raw materials are $3,000, and the earnings you sacrifice from working at another job are $32,000, your yearly cost of doing business would be
A) $13,000.
B) $13,400.
C) $35,400.
D) $45,000.
37) A principle is a self-evident truth that most people readily understand and accept.
38) Opportunity cost is the difference between the nominal and real cost of some action.
39) The opportunity cost of something is the gain you receive as a result of your sacrifice.
40) The opportunity cost of something is the nominal price paid for the product.