Module 2 ECON

Looking at Table 2.1, what is the marginal benefit of increasing the hours spent studying economics from 3 hours to 4 hours? ​[Image description: same table as Table 2.1, see description for Table 2.1]

• 70

• 85

• 20

• 15

A firm produces pencils or pens. Three workers can produce a total of 10 pens per hour, four workers produce a total of 14 pens per hour, and 5 workers can produce a total of 16 pens per hour. Likewise, three workers can produce a total of 10 pencils per hour, four workers produce a total of 14 pencils per hour, and five workers can produce a total of 16 pencils per hour. The firm has a total of eight workers. Three workers are producing pens and five workers are producing pencils. What is the marginal cost of increasing the production of pens from 10 pens per hour to 14 pens per hour?

• 4 pencils per hour

• 2 pencils per hour

• 16 pencils per hour

• 14 pencils per hour

A firm produces pencils or pens. Three workers can produce a total of 10 pens per hour, four workers produce a total of 14 pens per hour, and five workers can produce a total of 16 pens per hour. Likewise, three workers can produce a total of 10 pencils per hour, four workers produce a total of 14 pens per hour, and five workers can produce a total of 16 pens per hour. The firm has a total of eight workers. Four workers are producing pens and four workers are producing pencils. What is the marginal cost of increasing the production of pens from 14 pens per hour to 16 pens per hour?

• 14 pencils per hour

• 12 pencils per hour

• 4 pencils per hour

• 2 pencils per hour

A company could produce t-shirts for a $500 profit, long-sleeved shirts for a $350 profit, hoodies for a $200 profit, or socks for a $50 profit. If they can only produce one of these four options, what is the opportunity cost of producing t-shirts?

• $600

• $550

• $350

• $200

Is it possible to have allocative efficiency without technical efficiency?

• Yes

• No

Refer to Figure 2.3. Point B is _______.

• possible if we are fully using our resources

• possible is we are using the very best available technology

• the projected level of production in the future

• not a possible level of production given current levels of technology and resources

Which of the following best describes the relationship between diminishing marginal returns and marginal cost?

• Marginal cost must increase as output increases due to diminishing marginal return.

• If marginal returns are diminishing while output increases, marginal cost must be increasing.

• Marginal cost must increase as output decreases because of diminishing marginal returns

• Marginal returns diminish as output decreased, and thus marginal cost must decrease.

Which of the following options best describes the cost of moving production from point C to point B on the production possibilities frontier pictured below? ​[Image description: Below is a graph of the production possibilities frontier for tennis racquets and tennis balls. Vertical axis is tennis racquets and horizontal axis is tennis balls. The points on the PPF are as follows: 95 tennis racquets and 0 tennis balls, 90 tennis racquets and 25 tennis balls, 85 tennis racquets and 50 tennis balls, 70 tennis racquets and 70 tennis balls (Point C), 50 tennis racquets and 85 tennis balls (Point B), 25 tennis racquets and 90 tennis balls, and 0 tennis racquets and 95 tennis balls].

• The opportunity cost is the number of tennis rackets given up

• The opportunity cost is the number of tennis balls given up

• There is no opportunity cost as we are still on the production possibilities frontier

• There is an increasing opportunity cost of tennis balls

In the production possibilities frontier below, point D represents which of the following? ​[Image description: Below is a graph of the production possibilities frontier for tennis racquets and tennis balls. On the vertical Vertical axis are tennis racquets and on the horizontal axis are tennis balls. The points on the PPF are as follows: 95 tennis racquets and 0 tennis balls, 90 tennis racquets and 25 tennis balls, 85 tennis racquets and 50 tennis balls, 70 tennis racquets and 70 tennis balls (Point B), 50 tennis racquets and 85 tennis balls (Point A), 25 tennis racquets and 90 tennis balls, and 0 tennis racquets and 95 tennis balls. Point C is inside the PPF at 45 tennis racquets and 45 tennis balls. Point D is outside the PPF at 85 tennis racquets and 95 tennis balls].

• An unobtainable level of production

• A point where the opportunity cost of the production of one good is greater than the benefits gained

• An inefficient allocation of resources

• A point where the opportunity cost of the production of one good equals the benefits gained

If the opportunity cost of an action was greater than the benefits of that action, we would describe the effects on the economy as _______.

• technically inefficient

• allocatively inefficient

• economically inefficient

• technically inefficient and allocatively inefficient

• allocatively inefficient and economically inefficient