ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
Chapterd01d-
dLimits,dAlternatives,danddChoicesdMcConnelldBrued
Flynnd23e
DISCUSSIONdQUESTIONS
1. Whatdisdandopportunitydcost?dHowddoesdthedideadrelatedtodtheddefinitiondofdeconomics?d
Whichdofdthedfollowingddecisionsdwoulddentaildthedgreaterdopportunitydcost:dallocatingd
adsquaredblockdindthedheartdofdNewdYorkdCitydfordadsurfacedparkingdlotdordallocatingdadsq
uaredblockdatdthededgedofdadtypicaldsuburbdfordsuchdadlot?dExplain.dLO1.1
Answer:dAndopportunitydcostdisdwhatdwasdsacrificeddtoddodordacquiredsomethingdel
se.dThedconditiondofdscarcitydcreatesdopportunitydcost.dIfdtheredwasdnodscarcity,dther
edwoulddbednodneeddtodsacrificedonedthingdtodacquiredanother.dThedopportunitydcostd
woulddbedmuchdhigherdindNewdYorkdCitydasdthedalternativedusesdfordthatdsquaredblo
ckdaredmuchdmoredvaluabledthandfordadtypicaldsuburbandcitydblock.
2. Citedthreedexamplesdofdrecentddecisionsdthatdyoudmadedindwhichdyou,datdleastdi
mplicitly,dweigheddmarginaldcostdanddmarginaldbenefit.dLO1.1
Answer:dAnswersdwilldvary,dbutdmaydincludedtheddecisiondtodcomedtodclass,dtodskipd
breakfastdtodgetdadfewdextradminutesdofdsleep,dtodattenddcollege,dordtodmakedadpurcha
se.dMarginaldbenefitsdofdattendingdclassdmaydincludedthedacquisitiondofdknowledge,d
participationdinddiscussion,danddbetterdpreparationdfordandupcomingdexamination.d
Marginaldcostsdmaydincludedlostdopportunitiesdfordsleep,dmeals,dordstudyingdfordoth
erdclasses.dIndevaluatingdtheddiscussiondofdmarginaldbenefitsdanddmarginaldcosts,dbed
carefuldtodwatchdfordsunkdcostsdoffereddasdadrationaledfordmarginalddecisions.
3. Whatdisd“utility”danddhowddoesditdrelatedtodpurposefuldbehavior?dLO1.1
Answer:d“Utility”drefersdtodthedpleasure,dhappiness,dordsatisfactiondgaineddfromden
gagingdindandactivityd(eatingdadmeal,dattendingdadballdgame,detc.).dItdisdandimportantd
componentdofdpurposefuldbehaviordbecausedpeopledwilldallocatedtheirdscarcedtime,de
nergy,danddmoneydindandattemptdtodgaindthedmostdutilitydpossible.
4. Whatdaredthedkeydelementsdofdthedscientificdmethod,danddhowddoesdthisdmethoddrelatedt
odeconomicdprinciplesdanddlaws?dLO1.2
Answer:dThedkeydelementsdincludedthedgatheringdofddatad(observation),dthedformul
ationdofdpossibledexplanationsd(hypothesis),dtestingdthedhypothesis,ddeterminingdthe
dvaliditydofdthedhypothesis,danddrepeateddtestingdofdthedhypothesisdthatdhavedappeare
ddtodbedvaliddindpriordtests.
1-1
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
,ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
Thedscientificdmethoddisdthedtechniqueduseddbydeconomistsdtoddeterminedeconomicdl
awsdordprinciples.dThesedlawsdordprinciplesdaredformulateddtodexplaindand/ordpredictd
behaviordofdindividualsdordinstitutions.
5. Maked(a)dadpositivedeconomicdstatementdofdyourdchoice,danddthend(b)dadnormativede
conomicdstatementdrelatingdtodyourdfirstdstatement.dLO1.3
Answer:dAnswersdwilldvary.d Example:d(a)dThedunemploymentdratedisd4.8dpercent;
(b)dthedunemploymentdratedisdtoodhigh.dIndgeneral,dwedtreatd“whatdis”dstatementsdasdp
ositive,d“whatdshoulddbe”dasdnormative,dbutdkeepdandeyedoutdfordstatementsdliked“atdf
ulldemploymentdandincreasedindthedproductiondofdpizzasdshoulddcomedatdthedcostdofdl
essdrobots.”dSomedstudentsdmaydincorrectlydidentifydthedstatementdasdnormativedbec
ausedofdthedtermd“should.”
6. Howddoesdthedslopedofdadbudgetdlinedillustratedopportunitydcostdanddtrade-
offs?d Howddoesdadbudgetdlinedillustratedscarcitydanddthedeffectdofdlimiteddincomes?dL
O1.4
Answer:dBudgetdlinesdaredalwaysdslopedddownward.d Thisddownwarddslopedshowsda
ndinversedrelationshipdbetweendthedtwodgoods,dmeaningdthatdasdyoudincreasedone,dth
edotherdmustddecrease.d Thisddecreasedisdwhatdyoudaredgivingdup,dordthedopportunitydc
ost,dofdthedgooddyoudaredgettingdmoredof.
Budgetdlinesdillustratedscarcitydindthatdtheydshowdyoudaredlimiteddbydyourdincome.dSi
ncedtheydslopeddownward,dtheydshowdyoudcannotdkeepdgettingdmoredanddmoredofdbot
hdgoods.dTheredisdalwaysdadtrade-
off.d Thedareadbeyonddthedbudgetdlinedrepresentsdcombinationsdofdthedgoodsdthatdared
beyonddyourdincome.
7. Whatdaredeconomicdresources?dWhatdcategoriesddodeconomistsdusedtodclassifydthem?d
Whydaredresourcesdalsodcalleddfactorsdofdproduction?dWhydaredtheydcalleddinputs?dLd
O1.5
Answer:dEconomicdresourcesdaredthednatural,dhuman,danddmanufactureddinputsduse
ddtodproducedgoodsdanddservices.
Economicdresourcesdfalldintodfourdmaindcategories:d labor,dlandd(naturaldresources),dr
ealdcapitald(machines,dfactories,dbuildings,detc.,)danddentrepreneurs.
Economicdresourcesdaredalsodcalleddfactorsdofdproductiondbecausedtheydareduseddtod
producedgoodsdanddservices.dTheydaredcalleddinputsdbecausedtheydgodintodadproducti
ondprocessd(likedingredientsdgodintodadbowldtodmakedadcake),dwithdthedresultingdgood
sdanddservicesdalsodbeingdreferreddtodasdoutput.
mynursytest.store
,ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
1-2
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
8. Whydisdmoneydnotdconsidereddtodbedadcapitaldresourcedindeconomics?dWhydisdentre
preneurialdabilitydconsidereddadcategorydofdeconomicdresource,ddistinctdfromdlabor
?dWhatdrolesddodentrepreneursdplaydindthedeconomy?dLO1.5
Answer:dMoneydisdnotdconsidereddadcapitaldresourcedbecausedmoneydisdnotdproducti
ve.dItdprovidesdaccessdtodresourcesdbutdbyditself,dmoneyddoesdnotddirectlydcontributed
todthedproductiondofdgoodsdanddservices.dAdditionally,dthedquantitydofdmoneydindcirc
ulationddoesdnotddeterminedandeconomy’sdproductivedcapacity,dwhiledthedamountdofd
capitaldanddotherdresourcesddoes.d Doublingdthedamountdofdmoneydindcirculationddoe
sdnotdchangedthedeconomy’sdphysicaldcapacitydtodproducedgoodsd anddservices.d Mon
eydis,dhowever,dreferreddasdadfinancialdresourcedanddasdfinancialdcapital,dreflectingdit
sdabilitydtodacquiredrealdeconomicdresources.
Entrepreneurialdabilitydanddlabordaredbothdhumandresources,dbutdtheydperformddiffe
rentdfunctionsdindthedproductivedprocess.d Entrepreneurialdabilityddoesdnotddirectlydp
roducedgoodsdanddservices;ditdorganizesdthedresourcesdthatddo.d Labordrefersdtodthedh
umandinputsdthatddirectlydengagedindproduction.
Entrepreneursdaredrisk-
takers:d theydcoordinatedthedactivitiesdofdthedotherdthreedinputsdfordprofit—
ordloss,dwhichdisdwhydtheydaredcalleddrisk-
takers.d Entrepreneursdsometimesdmanagedcompaniesdthatdtheydown,dbutdadmanager
dwhodisdnotdandownerdisdnotdnecessarilydandentrepreneurdbutdmaydbedperformingdso
medofdthedentrepreneurialdfunctionsdfordthedcompany.d Entrepreneursdaredalsodinnov
ators,dordperhapsdinventors,danddprofitsdhelpdtodmotivatedsuchdactivities.
9. Explaindthedtypicaldshapesdofdmarginal-benefitdanddmarginal-
costdcurves.dHowdaredthesedcurvesduseddtoddeterminedthedoptimaldallocationdofdresource
sdtodadparticulardproduct?dIfdcurrentdoutputdisdsuchdthatdmarginaldcostdexceedsdmarginald
benefit,dshoulddmoredordfewerdresourcesdbedallocateddtodthisdproduct?dExplain.dLO1.6
Answer:dThedmarginaldbenefitdcurvedisddownwarddsloping,dMBdfallsdasdmoredofdadp
roductdisdconsumeddbecausedadditionaldunitsdofdadgooddyielddlessdsatisfactiondthandpr
eviousdunits.d Thedmarginaldcostdcurvedisdupwarddsloping,dMCdincreasesdasdmoredofd
adproductdisdproduceddsincedadditionaldunitsdrequiredthedusedofdincreasinglydunsuitab
ledresources.dThedoptimaldamountdofdadparticulardproductdoccursdwheredMBdequalsd
MC.dIfdMCdexceedsdMB,dfewerdresourcesdshoulddbedallocateddtodthisduse,dasdthedadd
itionaldcostdisdmoredthandthedadditionaldbenefit.dThedresourcesdaredmoredvaluabledinds
omedalternativedused(asdreflecteddindthedhigherdMC)dthandindthisdused(asdreflecteddindt
hedlowerdMB).
1-3
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
Chapterd01d-
dLimits,dAlternatives,danddChoicesdMcConnelldBrued
Flynnd23e
DISCUSSIONdQUESTIONS
1. Whatdisdandopportunitydcost?dHowddoesdthedideadrelatedtodtheddefinitiondofdeconomics?d
Whichdofdthedfollowingddecisionsdwoulddentaildthedgreaterdopportunitydcost:dallocatingd
adsquaredblockdindthedheartdofdNewdYorkdCitydfordadsurfacedparkingdlotdordallocatingdadsq
uaredblockdatdthededgedofdadtypicaldsuburbdfordsuchdadlot?dExplain.dLO1.1
Answer:dAndopportunitydcostdisdwhatdwasdsacrificeddtoddodordacquiredsomethingdel
se.dThedconditiondofdscarcitydcreatesdopportunitydcost.dIfdtheredwasdnodscarcity,dther
edwoulddbednodneeddtodsacrificedonedthingdtodacquiredanother.dThedopportunitydcostd
woulddbedmuchdhigherdindNewdYorkdCitydasdthedalternativedusesdfordthatdsquaredblo
ckdaredmuchdmoredvaluabledthandfordadtypicaldsuburbandcitydblock.
2. Citedthreedexamplesdofdrecentddecisionsdthatdyoudmadedindwhichdyou,datdleastdi
mplicitly,dweigheddmarginaldcostdanddmarginaldbenefit.dLO1.1
Answer:dAnswersdwilldvary,dbutdmaydincludedtheddecisiondtodcomedtodclass,dtodskipd
breakfastdtodgetdadfewdextradminutesdofdsleep,dtodattenddcollege,dordtodmakedadpurcha
se.dMarginaldbenefitsdofdattendingdclassdmaydincludedthedacquisitiondofdknowledge,d
participationdinddiscussion,danddbetterdpreparationdfordandupcomingdexamination.d
Marginaldcostsdmaydincludedlostdopportunitiesdfordsleep,dmeals,dordstudyingdfordoth
erdclasses.dIndevaluatingdtheddiscussiondofdmarginaldbenefitsdanddmarginaldcosts,dbed
carefuldtodwatchdfordsunkdcostsdoffereddasdadrationaledfordmarginalddecisions.
3. Whatdisd“utility”danddhowddoesditdrelatedtodpurposefuldbehavior?dLO1.1
Answer:d“Utility”drefersdtodthedpleasure,dhappiness,dordsatisfactiondgaineddfromden
gagingdindandactivityd(eatingdadmeal,dattendingdadballdgame,detc.).dItdisdandimportantd
componentdofdpurposefuldbehaviordbecausedpeopledwilldallocatedtheirdscarcedtime,de
nergy,danddmoneydindandattemptdtodgaindthedmostdutilitydpossible.
4. Whatdaredthedkeydelementsdofdthedscientificdmethod,danddhowddoesdthisdmethoddrelatedt
odeconomicdprinciplesdanddlaws?dLO1.2
Answer:dThedkeydelementsdincludedthedgatheringdofddatad(observation),dthedformul
ationdofdpossibledexplanationsd(hypothesis),dtestingdthedhypothesis,ddeterminingdthe
dvaliditydofdthedhypothesis,danddrepeateddtestingdofdthedhypothesisdthatdhavedappeare
ddtodbedvaliddindpriordtests.
1-1
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
,ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
Thedscientificdmethoddisdthedtechniqueduseddbydeconomistsdtoddeterminedeconomicdl
awsdordprinciples.dThesedlawsdordprinciplesdaredformulateddtodexplaindand/ordpredictd
behaviordofdindividualsdordinstitutions.
5. Maked(a)dadpositivedeconomicdstatementdofdyourdchoice,danddthend(b)dadnormativede
conomicdstatementdrelatingdtodyourdfirstdstatement.dLO1.3
Answer:dAnswersdwilldvary.d Example:d(a)dThedunemploymentdratedisd4.8dpercent;
(b)dthedunemploymentdratedisdtoodhigh.dIndgeneral,dwedtreatd“whatdis”dstatementsdasdp
ositive,d“whatdshoulddbe”dasdnormative,dbutdkeepdandeyedoutdfordstatementsdliked“atdf
ulldemploymentdandincreasedindthedproductiondofdpizzasdshoulddcomedatdthedcostdofdl
essdrobots.”dSomedstudentsdmaydincorrectlydidentifydthedstatementdasdnormativedbec
ausedofdthedtermd“should.”
6. Howddoesdthedslopedofdadbudgetdlinedillustratedopportunitydcostdanddtrade-
offs?d Howddoesdadbudgetdlinedillustratedscarcitydanddthedeffectdofdlimiteddincomes?dL
O1.4
Answer:dBudgetdlinesdaredalwaysdslopedddownward.d Thisddownwarddslopedshowsda
ndinversedrelationshipdbetweendthedtwodgoods,dmeaningdthatdasdyoudincreasedone,dth
edotherdmustddecrease.d Thisddecreasedisdwhatdyoudaredgivingdup,dordthedopportunitydc
ost,dofdthedgooddyoudaredgettingdmoredof.
Budgetdlinesdillustratedscarcitydindthatdtheydshowdyoudaredlimiteddbydyourdincome.dSi
ncedtheydslopeddownward,dtheydshowdyoudcannotdkeepdgettingdmoredanddmoredofdbot
hdgoods.dTheredisdalwaysdadtrade-
off.d Thedareadbeyonddthedbudgetdlinedrepresentsdcombinationsdofdthedgoodsdthatdared
beyonddyourdincome.
7. Whatdaredeconomicdresources?dWhatdcategoriesddodeconomistsdusedtodclassifydthem?d
Whydaredresourcesdalsodcalleddfactorsdofdproduction?dWhydaredtheydcalleddinputs?dLd
O1.5
Answer:dEconomicdresourcesdaredthednatural,dhuman,danddmanufactureddinputsduse
ddtodproducedgoodsdanddservices.
Economicdresourcesdfalldintodfourdmaindcategories:d labor,dlandd(naturaldresources),dr
ealdcapitald(machines,dfactories,dbuildings,detc.,)danddentrepreneurs.
Economicdresourcesdaredalsodcalleddfactorsdofdproductiondbecausedtheydareduseddtod
producedgoodsdanddservices.dTheydaredcalleddinputsdbecausedtheydgodintodadproducti
ondprocessd(likedingredientsdgodintodadbowldtodmakedadcake),dwithdthedresultingdgood
sdanddservicesdalsodbeingdreferreddtodasdoutput.
mynursytest.store
,ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
1-2
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Economics 23rd Edition McConnell
d d d d d d d
Chapterd01d-dLimits,dAlternatives,dChoices
8. Whydisdmoneydnotdconsidereddtodbedadcapitaldresourcedindeconomics?dWhydisdentre
preneurialdabilitydconsidereddadcategorydofdeconomicdresource,ddistinctdfromdlabor
?dWhatdrolesddodentrepreneursdplaydindthedeconomy?dLO1.5
Answer:dMoneydisdnotdconsidereddadcapitaldresourcedbecausedmoneydisdnotdproducti
ve.dItdprovidesdaccessdtodresourcesdbutdbyditself,dmoneyddoesdnotddirectlydcontributed
todthedproductiondofdgoodsdanddservices.dAdditionally,dthedquantitydofdmoneydindcirc
ulationddoesdnotddeterminedandeconomy’sdproductivedcapacity,dwhiledthedamountdofd
capitaldanddotherdresourcesddoes.d Doublingdthedamountdofdmoneydindcirculationddoe
sdnotdchangedthedeconomy’sdphysicaldcapacitydtodproducedgoodsd anddservices.d Mon
eydis,dhowever,dreferreddasdadfinancialdresourcedanddasdfinancialdcapital,dreflectingdit
sdabilitydtodacquiredrealdeconomicdresources.
Entrepreneurialdabilitydanddlabordaredbothdhumandresources,dbutdtheydperformddiffe
rentdfunctionsdindthedproductivedprocess.d Entrepreneurialdabilityddoesdnotddirectlydp
roducedgoodsdanddservices;ditdorganizesdthedresourcesdthatddo.d Labordrefersdtodthedh
umandinputsdthatddirectlydengagedindproduction.
Entrepreneursdaredrisk-
takers:d theydcoordinatedthedactivitiesdofdthedotherdthreedinputsdfordprofit—
ordloss,dwhichdisdwhydtheydaredcalleddrisk-
takers.d Entrepreneursdsometimesdmanagedcompaniesdthatdtheydown,dbutdadmanager
dwhodisdnotdandownerdisdnotdnecessarilydandentrepreneurdbutdmaydbedperformingdso
medofdthedentrepreneurialdfunctionsdfordthedcompany.d Entrepreneursdaredalsodinnov
ators,dordperhapsdinventors,danddprofitsdhelpdtodmotivatedsuchdactivities.
9. Explaindthedtypicaldshapesdofdmarginal-benefitdanddmarginal-
costdcurves.dHowdaredthesedcurvesduseddtoddeterminedthedoptimaldallocationdofdresource
sdtodadparticulardproduct?dIfdcurrentdoutputdisdsuchdthatdmarginaldcostdexceedsdmarginald
benefit,dshoulddmoredordfewerdresourcesdbedallocateddtodthisdproduct?dExplain.dLO1.6
Answer:dThedmarginaldbenefitdcurvedisddownwarddsloping,dMBdfallsdasdmoredofdadp
roductdisdconsumeddbecausedadditionaldunitsdofdadgooddyielddlessdsatisfactiondthandpr
eviousdunits.d Thedmarginaldcostdcurvedisdupwarddsloping,dMCdincreasesdasdmoredofd
adproductdisdproduceddsincedadditionaldunitsdrequiredthedusedofdincreasinglydunsuitab
ledresources.dThedoptimaldamountdofdadparticulardproductdoccursdwheredMBdequalsd
MC.dIfdMCdexceedsdMB,dfewerdresourcesdshoulddbedallocateddtodthisduse,dasdthedadd
itionaldcostdisdmoredthandthedadditionaldbenefit.dThedresourcesdaredmoredvaluabledinds
omedalternativedused(asdreflecteddindthedhigherdMC)dthandindthisdused(asdreflecteddindt
hedlowerdMB).
1-3
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittend consentdofdMcGrawdHilldLLC.
mynursytest.store
