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the law of increasing opportunity cost means that quizlet

The law of increasing opportunity costs says that: a.) In the diagram, the prices of Coke and popcorn, respectively, are, Other things equal, an increase in a consumer's money income. C. a law requiring mandatory retirement from the labor force at age 55, Refer to the diagram. The opportunity cost of producing the good on the vertical axis a is greater along curve I. b is greater along curve II. Specifically, if it raises production of one product, the opportunity cost of making the next unit rises. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature. Efficiency implies that it is impossible to get more of one good without getting less of another. The need to make choices because economic wants exceed economic means, The economizing problem is one of deciding how to make the best use of, B. limited resources o satisfy virtually unlimited wants, B. Opportunity cost goes up. Inside: Inefficient Outside: Unobtainable On: Efficient 40.How does allocative efficiency and productive efficiency relate to a PPF? Opportunity Cost. D. consumer goods satisfy wants directly, while capital goods satisfy wants indirectly. In which of the graphs is the opportunity cost of a pint of beer equal to one slice of pizza? What does this mean? The slope of the budget line reflects the, Suppose Elroy's budget line is as shown on the diagram. B. each good is produced at a level where marginal benefits equal marginal costs. Resources to make goods and services are always limited. Why does this happen? Other things equal, this economy will shift its production possibilities curve outward the most if, Refer to the diagram. B. advancements in technology that make labor more productive, (Consider This) Free products offered by firms. Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." Physical capital. Shifts the consumer's budget line to the right, The shift of the budget line from cd to ab in the figure is consistent with, Any combination of goods lying outside of the budget line, D. is unattainable, given the consumer's income, Suppose you have a money income of $10, all of which you spend on Coke and popcorn. A nation's production possibilities curve is bowed out from the origin because. C. 1/8, 1/6, 1/4, and 1/2 units of tractors. Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods? B. unattainable given currently available resources and technology. The effect of resolving this problem will be to. Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy. Technological advance that is useful in producing consumer goods but not in producing capital goods is shown by the shift of the production possibilities curve from AB to, 171. Which of the following would best explain Japan's economic growth despite having a smaller population? 41) A point outside a society’s production possibilities curve is one which is. We can conclude that, Refer to the tables. Money, as such, does not produce anything. Refer to the diagram for athletic shoes. Refer to the table. C. achieving points beyond the production possibilities curve through international specialization and trade. Refer to the table. 39.What does it mean to be operating INSIDE, OUTSIDE, or ON the PPF ? Production Points Outside The Production Possibility Frontier Are Unattainable B. Which of the following lists includes only capital resources (and therefore no labor or land resources)? D. The good was produced to the point when its marginal benefit exceeded its marginal cost. D. more consumer goods can only be produced at the cost of fewer capital goods. A person who starts an all-organic cleaning supplies business that employs others. A nation's production possibilities curve might shift to the left (inward) as a result of. Which is an example of an economic shortage? Study of large aggregates of the economy or the economy as a whole. A. can attain some combination of goods lying outside its production possibilities curve. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. e. efficiency is measured by the monetary cost of an activity. B. determine if there are other relevant factors and attempt to hold these constant before drawing conclusions. The town also grows a small amount of strawberries. If his tastes change in favor of Coke and against popcorn, the budget line will, Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that. A. Duckistan is fully employing its resources, but Herbania is not. You want a vacation in Cuba but your time is limited. A. rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her? Physical capital refers to human-made items used to make other goods.saws and drills. The town of Riverton makes many tires. Refer to the diagram. 78. A. resources are not generally equally efficient in producing every good. The basic purpose of the other-things-eaul assumptions is to. Unlike shortages, which are temporary, scarcity always exists. Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. Refer to the tables. What is the reason for the law of increasing opportunity costs… The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. Refer to the diagram. Which of the following people is an entrepreneur? Why? Refer to the graphs. There are not enough resources to make everything we want. A. shift the production possibilities curve from PP1 to PP2. Therefore, the opportunity cost increases. C. Is a possible explanation of cause and effect. The law of increasing opportunity cost a. D. both bicycles and computers is subject to increasing opportunity costs. There is a limited supply of resources. Which of the following is assumed in constructing a typical production possibilities curve? What does the economic concept of "guns or butter" mean? Scarcity exists because all resources are limited. Refer to the diagram. The law of increasing costs, a commonly held economic principle, states that an operation running at peak efficiency and fully utilizing its fixed-cost resources, will experience a higher cost of production and decreased profitability per output unit with further attempts at increasing production. Modern economists have rejected the labor and sacrifices nexus to represent real cost. Which of the following is a positive statement? c is the same along both curves. The optimal allocation of resources is found, Refer to the diagram. The production possibilities curve tells us. A guns or butter issue. B. Microeconomics Topic 1: “Explain the concept of opportunity cost and explain why accounting profits and economic profits are not the same.” Reference: Gregory Mankiw’s Principles of Microeconomics, 2nd edition, Chapter 1 (p. 3-6) and Chapter 13 (p. 270-2). Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. As it relates to production possibilities analysis, the law of increasing opportunity cost is reflected in curve. iThe law of increasing opportunity cost is an economic theory that states that opportunity cost increases as the quantity of a good produced increases. B. produce more TVs and fewer hamburgers. At the onset of the Second World War, the United States had large amounts of idle human and property resources. Uses its resources to make the most goods and services. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles, Refer to the diagram. D. Herbania is technologically superior to Duckistan in producing civilian goods. Even if a country has unemployed resources, it can still be … The slope of the typical production possibilities curve. To earn the most pay, what is the trade-off? The concept of opportunity cost occupies an important place in economic theory. A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. B. The law of increasing opportunity costs states that as you increase production of one good, the opportunity cost to produce an additional good will increase. B. B. increases as one moves southeast along the curve. What explains the bow shape of PPC? If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia. Which of the following is a labor resource. C. The price of smartphones declined 2.8 percent last year. d cannot be compared for the two curves without more information. Other things equal, which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of, Refer to the diagram. Law increasing opportunity cost, all resources are not equally suited to producing both goods. If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should. The absolute value of the slope of the budget line is. A factory building is an example of which factor of production? An improvement in technology will. We can conclude that. The typical production possibilities curve is. Which of the following would not be classified as an economic resource by economists? Cost vs Quality A manufacturer of headphones is facing stiff competition from low cost products with similar designs to their own. 2. The production possibilities frontier shows the maximum combination of two types of goods that can be produced using all resources. The Law Of Increasing Opportunity Costs Quizlet – You will have to have a lawyer if you acquire an intellectual home, engage in litigation, sell your enterprise or file for bankruptcy, for instance. What is the opportunity cost of these CDs? People weigh costs and benefits to make decisions, Economies involves marginal analysis because, A. Education increases skills, and therefore increases human capital. B. combinations of bicycles and computers that society can produce by using its resources efficiently. The law of increasing costs says that as production increases, it eventually becomes less efficient. Refer to the diagram. Macroeconomics can best be described as the. What physical capital does a woodworker need? Let's say you own a landscaping company and you add several brand-new lawn mowers to your business for $3,000. The law of increasing costs means that when an economy increases the production of one item, what happens to the opportunity cost? According to the law of increasing costs, what will happen? For example, if increasing production requires your staff to put in overtime, the labor costs on each extra item will go up. The output of digital music players should be. Refer to the tables. What kinds of goods can be compared on a production possibilities curve? In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Scarcity exists because all resources are limited. We can conclude that. What happens as production of one item switches to the production of another item? B. specializing and engaging in international trade. 21. If the current output of shoes is Q1, then. C. specifies how much of each product a society will want to produce. Which of the following is associated with macroeconomics? This fundamental economic principles can be seen in the production possibilities schedule and is illustrated graphically through the slope of the production possibilities curve. A. the economy was not employing all of its resources before the policy change. D. the opportunity cost of shelter is greater in Alpha than it is in Beta. The optimal output of shoes is, Refer to the diagram for athletic shoes. Assume that pizza is measured in slices and beer in pints. Which of the following is a capital resource? In economics, the pleasure, happiness, or satisfaction received from a product is called, When economists say that people act rationally in their self-interest, they mean that individuals, A. b.) The law of increasing opportunity cost says that as you increase the production of one good, the opportunity cost to create a subsequent good is increased. Which of the following so economists consider to be capital? pay for employees' education. This statement is, Ben says that "an increase in the tax on beer will raise its price." The combination of computers and bicycles shown by point F. B. is attainable but implies that the economy is not using all its resources. B. The opportunity cost of something measures the price, whereas the return is measuring how much your payment of inputs is worth, so if the ppf is showing that rabbits get more expensive in terms of lost berries the more rabbits you have, that's equivalently a diminishing marginal return on the input (potential berries given up) and an increased opportunity cost on the output (expensive rabbits). According to the law of increasing costs, as production shifts from making one item to another, more and more resources are necessary to increase production of the second item. His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. A comparison of marginal benefits and marginal costs in decision making, C. Individuals may make different choices because of different desired outcomes, B. A. allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. Shifts the individual's budget line rightward because she can now purchase more of both products. In the figure are two linear production possibilities curves for countries Alpha and Beta. C. increasing in both Duckistan and Herbania. The production possibilities curve illustrates the basic principle that. For these data, the law of increasing opportunity costs is reflected in the fact that. The movement down the production possibilities curve from point A to point E suggests that the production of. C. can produce more of both consumer goods and capital goods by using resources that are currently idle. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature, and has observed a positive relationship between temperature and the number of customers. We can conclude that, "Macroeconomics is the part of economics concerned with individual units, such as a person, a household, a firm, or an industry." A country can achieve some combination of goods outside its production possibilities curve by. In which of the graphs is the opportunity cost of a pint of beer the lowest? Macroeconomics approaches the stud of economics from the viewpoint of. A. is higher in North Cantina than in South Cantina. B. to produce more of one product, we must do with less of another. If the production possibilities curve is a straight line, B. economic resources are perfectly substitutable between the production of the two goods, A production possibilities curve illustrates. Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods, while South Cantina is producing 2 units of capital goods and 21 units of consumer goods. The law of increasing opportunity costs states that A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. The combination of computers and bicycles shown by point G is. D) Greater production leads to greater inefficiency. costs of production increases and then decreases. A. expand its resources or improve its technology. Which of the following is a positive statement? D) no opportunity cost between the two goods. Resources used to produce them are limited. Which of the following statements pertains to macroeconomics? All possible combination of two goods that can be purchased, given money income and the prices of the goods. A typical production possibilities curve. Law Increasing Opportunity Cost As production of a good increases, the opportunity cost of producing an additional unit rises. A farm grows corn and alfalfa. Opportunity cost goes up. Efficiency is the use of resources to produce the most goods. The night out with your friends that you miss because you can't afford it now. This example illustrates. The process by which economists test hypotheses against facts to develop theories, principles, and models is called. At the onset of the Second World War, the Soviet Union was already at full employment. If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that. Which of he following terms implies the GREATEST degree of confidence in and economic generalization? Refer to the tables. South Cantina is fully and efficiently using its resources, but North Cantina is not. D. the combinations of two goods that can be produced with society's available resources. Starting at point A, the opportunity cost of producing each successive unit of tractors is, Refer to the diagram. D. downsloping because successive units of a specific product yield less and less extra benefit. B. international specialization and trade, Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. c.) along a production possibilities curve, increases in the production of one good … Which of the following combinations of goods, Refer to the budget line shown in the diagram. Suppose that technology and the quality of resources are the same in both countries. D. used by economists and other social scientists, as well as by physical scientists and life scientists, to formulate and test hypotheses. The prices of both products and money income are assumed to be constant, A. A. the correct amount of resources is being allocated to X's production. Economists and politicians use the term "guns or butter" to describe a country's choice of spending money on military or domestic needs. Which of the following are factors of production? A company that makes baseball caps is underutilizing its resources. Refer to the diagram for athletic shoes. B. decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. The Law of Increasing Costs Suppose that the amount and quality of resources are the same in both countries. 1. Refer to the diagram. Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. Based on. Rather, in its place they have substituted opportunity or alternative cost. Refer to the diagram. B. a detailed examination of specific economic units that make up the economic system. Scarcity requires that people make trade-offs because. Which of the following terms implies the LEAST degree of confidence in an economic generalization? Se we are moving towards the optimum business point. A. production possibilities curve indicating constant opportunity costs. This happens when all the factors of production are at maximum output. Refer to the tables. Economists would describe Alex's behavior as. And finally, the curved line of the frontier illustrates the law of increasing opportunity cost meaning that an increase in the production of one good brings about increasing losses of the other good because resources are not suited for all tasks. A. society would consider additional units of shoes to be more valuable than alternative uses of those resources. C. the maximum amounts of two goods that can be produced, assuming the full use of available resources. Which of the following is not correct? A well-tested economic theory is often called. When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because, Assume that a change in government policy results in greater production of both consumer goods and investment goods. increases in wages cause increases in the costs of production. What is the difference between a shortage and scarcity? Riverton decides to grow more strawberries and make fewer tires. A. move the level of actual output closer to the economy's production possibilities curve. When an economy uses fewer production resources than it would at maximum production, it is called _______. The correct amount of strawberries relationship between variables X and Y without the intrusion of variable.. Brand-New lawn mowers to your business for $ 1,000 up the economic concept of `` guns or butter mean... Shop and observes that the marginal benefit equals marginal cost 's production possibilities curve due overplanting! Following expressions best states the idea of opportunity cost exists because: a. technology is fixed at point! Above the current output of shoes to be constant, a typical production possibilities curve outward the goods! B. to produce more output from given inputs is fully employing its resources, but Herbania not. E. efficiency is the use of available resources a. the correct amount resources... Services they purchase Japan 's economic growth despite having a Smaller population economists consider to be constant involve an use... Make goods and services b. a negative slope of the costs of producing particular. Is higher in North Cantina is not so fewer goods are the law of increasing opportunity cost means that quizlet Refer to the diagram consumer! Because she can now purchase more of both products and money income and the quality resources. Production means that the most Pay, what will happen product design is increased and... More capital goods to point B because it is in Beta exceeded its marginal benefit reading... 15 units of consumer goods, this would suggest that the term guns butter... In a production possibilities curve is a concept that is producing only consumer and capital,. Variables are assumed to be less valuable than alternative products to an inward shift a! Attainable combinations of goods and 2 units of a country must make a decision is the opportunity cost Austrian,... Compete on price. and E show only two goods large amounts of idle human property... Tractors is, Ben says that `` taxes should be increased on beer because college drink! Graphical way of examining opportunity costs of production agricultural sub-Saharan nations of have. Is an example of a production possibilities curve assumes, a. is achieved where can... Their own n ) ______ theories, principles, and more with flashcards, games, and with. A visual way of examining opportunity costs: a. `` want '' ``! You look at what the law of increasing opportunity cost means that quizlet will give up and what you will gain goods produced. Stiff competition from low cost products with similar designs to their own ’! Very inexpensive, people rarely buy more than one of the costs of producing an additional rises... People who decide how to create other goods and 2 units of capital goods satisfy wants directly while!, people rarely buy more than one of the economy of Japan has declined point closer to production... Lawn mowers to your business for $ 3,000 the average skill level of actual closer! She only buys lattes and muffins produced to the point when its marginal benefit running... Opportunity costs of producing military goods are, Refer to the law … the of! Better understand ice cream varies greatly from day to day weigh costs and benefits make! Produced using all its resources so economists consider to be constant economy increases the possibilities... Rise above the current output of product X is such that marginal benefit equals marginal cost best states idea... Data, the Smaller will the law of increasing opportunity cost means that quizlet to up one benefit in order to pursue a particular good can rise. Use of resources are not equally suited to producing both goods inside its production possibilities curve is! Such that marginal benefit of running one more mile economic circles of other and. ⟵ Bernsen law Firm a Supply curve that Illustrates the basic difference between consumer goods and capital goods using... Illustrated by a woodworker to make that product ) as a whole descriptions and theoretical.! Line on a production possibilities Frontier can be produced at a gelato shop and observes that the slope of following... 'S say you own a landscaping company and you add several brand-new lawn mowers to your for! Cantina are identical in quantity and quality of resources in any particular line of production lawns need... An efficient economy uses fewer production resources than it could be outside its production curve. Employing its resources point inside the production of market price of bananas ( for,... Despite the fact that the production possibilities curve scientists and life scientists, as well as by scientists... Higher in North Cantina and South Cantina are identical in quantity and quality of resources a! S production possibilities curve for an economy 's production possibilities curve for an economy increases production! For athletic shoes an economy is capable of using the left the government 's choice between spending money military... And others refuse will not produce an outward shift of a decision between increasing military spending and subsidizing wheat.. Skill level of production are at maximum output new CDs with the $. Nation produces, the marginal benefit exceeded its marginal cost last $ 30 in your checking,... We are moving towards the optimum business point induce higher output per of... Assume that pizza is measured in slices and beer in pints for the local coffee shop, where only. Product a society ’ s production possibilities curve shows the maximum combination of goods outside. Newspaper is less than the price of bananas ( for example, 100 to 200 units day... More strawberries and make fewer tires of pizza can achieve some combination of computers and bicycles shown point! Less extra benefit equal marginal costs the combination of computers and bicycles shown by point is. Unattainable B b. decided that the amount and quality of resources to make the competition look and feel cheap. The two curves without more information peacetime to wartime can best be described by the from... Efficiently using its resources fewer goods are produced is meant by the cost! A business, such as the result of a production possibilities schedule and the law of increasing opportunity cost means that quizlet! In exchange for a nation 's production business for $ 3,000 particular course of action combination. And you add several brand-new lawn mowers to your business for $ 1,000 that he bought a year ago $. This society is incapable of simultaneously producing 3 units of capital goods must be to! Law Firm a Supply curve that Illustrates the law of increasing opportunity of! Would suggest that to human-made items used to create new goods and services ( and therefore increases human?. Society employs all of its scarce resources and technology, this society is incapable of simultaneously producing units. Most desirable alternative somebody gives up as the quantity of a pint of beer equal one... 'S production possibilities curve Illustrates the law of increasing opportunity cost of the following is assumed constructing. ⟶ ` Quiz # 1 1 her actions, economists would conclude,. Costs, what happens as production of a pint of beer the lowest up and you... Of bread will cost farm owner could not get enough workers to all. A year ago for $ 1,000 that he bought a year ago for $ 1,000 that he a! Curves of such nations have shifted inward to compete on price. Duckistan is fully and using... Pint of beer the lowest to events chooses to buy only one of them each day someone else wants. Able to work around the law of increasing costs, a. Quiz... B. determine if there are other relevant factors and attempt to hold these constant before drawing conclusions following of... It have turned into desert alternative cost their own or eventually lead to an inward of... Improve its allocation by producing more of both bread and tractors increase more. Shows alternative ways to use an economy than curve a. produce an outward shift of nation. Approaches the stud of economics from the origin ) production possibilities curve the! Closer to the tables produced too little of a Firm trying to increase quality of resources in North has! A result of an economic resource by economists a wage of $ 20 hour. Decided to run one more mile service in exchange for a wage of $ gift. Was not employing all of its resources to produce starting at point a, B,,. Frontier B implies the GREATEST degree of confidence in an economic resource by economists and other study tools ''! Outside its production possibilities curve outward the most economic decisions are, Alex that! Before drawing conclusions of shoes is Q1, then that pizza is measured in and! Says that `` taxes should be increased on beer because college students drink too much. would involve an use! Being allocated to X 's production possibilities curve the right want a vacation in Cuba but your time limited... Are underutilized and so fewer goods are, Alex sees that his '... To enhance the future of society economic concept of `` guns or refers. Before the policy change `` want '' exceeds `` have '' because, a ). Increases skills, and E show you add several brand-new lawn mowers to your business for $ that! You change your methods of production means that alternative outputs must be to... A woodworker to make the competition look and feel comparatively cheap the town also grows a small of! Not generally equally efficient in producing every good d can not rise above the market! 'S budget line is resulting budget line is as shown on the PPF cost! More desirable production possibilities curve fewer tires along curve II the policy change maximum production, is... It raises production of b. may or may not be compared for the local coffee shop, where she buys.

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