Week 1 Quiz

Which of these questions belongs to macroeconomics rather than microeconomics?

Select one.

• How much did one sneaker brand raise the price of its newest shoe?
• Did total output across the whole economy grow this year?
• Should a neighborhood bakery hire one more baker?
• How does one household split its weekly grocery budget?

You have a free evening of 5 hours. A shift you were offered pays 18 dollars an hour, and the best alternative to that shift is a free concert. In this illustrative example, what is the opportunity cost of going to the concert?

Select one.

• 0 dollars, because the ticket is free
• 23 dollars, from adding 5 and 18
• 90 dollars of forgone pay
• 18 dollars, the pay for one hour

On the labor-hours frontier (illustrative: 24 million labor-hours; a unit of consumer goods takes 3 hours and a unit of capital goods takes 6 hours), what is the opportunity cost of one capital good?

Select one.

• 2 consumer goods
• 0.5 consumer goods
• 6 consumer goods
• 4 consumer goods

On the labor-hours frontier (illustrative: 24 million labor-hours; a unit of consumer goods takes 3 hours and a unit of capital goods takes 6 hours), with consumer goods x on the horizontal axis and capital goods y on the vertical axis, which point shows every labor-hour spent on capital goods?

Select one.

• (4, 0)
• (0, 8)
• (0, 6)
• (0, 4)

On the labor-hours frontier (illustrative: 24 million labor-hours; a unit of consumer goods takes 3 hours and a unit of capital goods takes 6 hours), how should you describe the combination (2, 2)?

Select one.

• Unattainable, because it does not sit on the frontier
• Efficient, because it makes some of both goods
• Attainable but wasteful, with 6 million labor-hours idle
• Attainable but wasteful, with 18 million labor-hours idle

On the labor-hours frontier (illustrative: 24 million labor-hours; a unit of consumer goods takes 3 hours and a unit of capital goods takes 6 hours), how should you describe the combination (6, 3)?

Select one.

• Inside the frontier, because it needs 18 million hours
• Outside the frontier, because it needs 36 million hours
• On the frontier, because it needs 24 million hours
• Outside the frontier, because it needs 30 million hours

Why does a realistic production possibilities frontier bow outward instead of forming a straight line?

Select one.

• Because the economy grows over time and the frontier moves out
• Because prices rise as an economy produces more
• Because a straight line is the general case and curves are rare
• Because resources are not equally suited to every task

In the circular-flow model, select every event that takes place in a factor market.

Select every option that applies.

• A worker sells hours of labor to a factory for wages
• A family buys groceries from a supermarket
• A household rents the use of its land to a farm
• A student buys a monthly bus pass
• A household saves part of its paycheck

True or false: the statement "The country should build more capital goods and fewer consumer goods" is a positive statement, because it describes a good outcome.

True or false.

• True
• False

In the circular-flow model, which of these is an injection into the circle of spending between households and firms?

Select one.

• A firm buys new machines as business investment
• A household saves part of its paycheck
• A household pays its income taxes
• A household buys a phone made in another country