Question

which of these items is a measure of productivity?

• years of education
• number of workers employed
• dollars invested in new equipment
• bushels of corn per acre

why are tradeoffs necessary?

• advertisers promote products.
• resources are limited.
• people want different things.
• every products has flaws.

when amy returns a good library book without finishing it so she wont have to pay a late fee, what is her opportunity cost?

• paying for something else
• paying the fee
• reading a different book
• finishing the book

what does it mean to maximize utility?

• to become as efficient as possible
• to strengthen a national infrastructure
• to strengthen the skills of a workforce
• to gain the most satisfaction possible

which scenario best illustrates the law of diminishing marginal utility?

• a new toy is less exciting to a child with many toys than to a child with just a few.
• a collector of china figurines is eager to get a new one.
• someone who doesnt listen to music does not care about getting a new cd.
• a car breaks down more often as it gets older.

Explanation:

1. Productivity measures output per input; bushels of corn per acre is output per land input.
2. Tradeoffs exist because resources are scarce, so choices must be made.
3. Opportunity cost is the foregone benefit; Amy gave up finishing the book to avoid fees.
4. Utility refers to satisfaction, so maximizing it means gaining the most satisfaction.
5. Diminishing marginal utility means less additional satisfaction from more of a good; a child with many toys gets less excitement from a new one.

Answer:

1. bushels of corn per acre
2. Resources are limited.
3. finishing the book
4. to gain the most satisfaction possible
5. A new toy is less exciting to a child with many toys than to a child with just a few.