Question

multiple-choice questions1. which of the following pairs indicates a category of resources and an example of that resource?category examplea. money investmentb. capital moneyc. capital mineralsd. land factorye. land timber2. you can either go to a movie or study for an exam. which of the following is an opportunity cost of studying for the exam?a. a higher grade on the examb. the price of a movie ticketc. the cost of paper, pens, books, and other study materialsd. the enjoyment from seeing the moviee. the sense of achievement from learning3. which of the following situations is explained by increasing opportunity costs?a. more people go to college when the job market is good.b. more people do their own home repairs when hourly wages fall.c. there are more parks in crowded cities than in suburban areas.d. convenience stores cater to busy people.e. people with higher wages are more likely to mow their own lawns.4. which of the following is a microeconomic issue?a. the unemployment rate in your countryb. the gross domestic product for francec. the wage rate for employees at your schoold. the national rate of inflatione. government efforts to end a recessionrefer to the following table and information for questions 5-8.suppose that atlantis is a small, isolated island in the south atlantic. the inhabitants grow potatoes and catch fish. the following table shows the maximum annual output combinations of potatoes and fish that can be produced.maximum annual output options | quantity of potatoes (pounds) | quantity of fish (pounds)a | 1,000 | 0b | 800 | 300c | 600 | 500d | 400 | 600e | 200 | 650f | 0 | 6755. atlantis can produce which of the following combinations of output?pounds of potatoes | pounds of fisha. 1,000 | 675b. 600 | 600c. 400 | 600d. 300 | 800e. 200 | 6756. if atlantis is efficient in production, what is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds?a. 200 pounds of fishb. 300 pounds of fishc. 500 pounds of fishd. 675 pounds of fishe. 800 pounds of fish

Explanation:

Step1: Analyze Q1 resource categories

• a. money (not a resource category); investment (financial asset, not resource example)
• b. capital (resource category); money (not a capital good example)
• c. capital (resource category); minerals (land resource, not capital)
• d. land (resource category); factory (capital good, not land)
• e. land (resource category); timber (natural resource from land, correct match)

Step2: Analyze Q2 opportunity cost

Opportunity cost = foregone alternative benefit. Studying means missing movie enjoyment.

• a. Benefit of studying, not cost
• b. Ticket cost is not the foregone benefit
• c. Study materials are direct study costs
• d. Foregone movie enjoyment, correct
• e. Benefit of studying, not cost

Step3: Analyze Q3 increasing opportunity cost

Increasing opportunity cost means reallocating resources to a good reduces efficiency, so higher cost per additional unit.

• a. Relates to labor market incentives, not opportunity cost
• b. Relates to wage changes, not opportunity cost
• c. Crowded cities have higher land value, so parks have higher opportunity cost (more alternative uses for land), correct
• d. Relates to market segmentation, not opportunity cost
• e. Relates to time value, not increasing opportunity cost

Step4: Analyze Q4 microeconomic issue

Microeconomics focuses on individual/industry-level issues; macroeconomics focuses on national economy.

• a. National unemployment rate: macroeconomic
• b. GDP of France: macroeconomic
• c. School employee wage rate: individual firm/industry level, microeconomic, correct
• d. National inflation rate: macroeconomic
• e. Government recession policy: macroeconomic

Step5: Analyze Q5 production combinations

Only combinations on/inside the production possibilities frontier are feasible.

• a. 1,000 potatoes + 675 fish: outside PPF, impossible
• b. 600 potatoes + 600 fish: outside PPF, impossible
• c. 400 potatoes + 600 fish: on PPF, feasible, correct
• d. 300 potatoes + 800 fish: outside PPF, impossible
• e. 200 potatoes + 675 fish: outside PPF, impossible

Step6: Analyze Q6 opportunity cost calculation

Opportunity cost = fish lost when potatoes increase.
From 600 to 800 potatoes: move from point C (600 potatoes, 500 fish) to point B (800 potatoes, 300 fish).
Expression: $\text{Opportunity cost} = 500 - 300 = 200$ pounds of fish

Answer:

1. e. land, timber
2. d. the enjoyment from seeing the movie
3. c. There are more parks in crowded cities than in suburban areas.
4. c. the wage rate for employees at your school
5. c. 400 pounds of potatoes, 600 pounds of fish
6. a. 200 pounds of fish