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Flashcards in More Review Questions Deck (15)
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1
Q

The principle of increasing marginal opportunity costs state that the initial opportunity costs are:

A

Low but increase the more you concentrate on the activity

2
Q

According to Adam smith, individuals are directed to do those things for which they have a comparative advantage by:

A

Their self interest

3
Q

John can clean the house in 3 hours and do laundry in 4. Jane can clean in 2 and laundry in 2. Can they benefit by specialization?

A

Both can benefit because John has comparative advantage in cleaning (because if Jane does both she takes four hours if she does laundry she takes two and John takes 3)

4
Q

A market economy:

A

Expects people to be self interested

5
Q

Markets coordinate economic activity through:

A

Price mechanism

6
Q

Government regulation of working conditions is an example of:

A

Government referee

7
Q

The law of demand states that consumers buy more of a good when its price decline:

A

Provided all else remains constant

8
Q

The explanation for the law of demand involves:

A

Consumers ability to substitute different goods

9
Q

Explanation for demand for college education in US?

A

Income in US has risen

10
Q

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the:

A

Quantity of apartment units supplied will fall

11
Q

What explains a decrease in the supply of squash ?

A

An increase in the price of other vegetables

12
Q

When quantity supplied is greater than quantity demanded, prices tend to:

A

Fall

13
Q

The marginal benefit of consuming another unit of a good:

A

Equals the increase in total benefits from consuming the unit

14
Q

Government as an actor

A

Collects money in taxes and spends money in its own projects such as defense and education

15
Q

Govt as a referee

A

Sets the rules that determine relations between businesses and households