Quest 1

Opportunity and Scarcity

What to do, how to do it, and who will get it
o The questions economics try to answer
The study of how people, businesses, governments and other
institutions make decisions when faced with scarce resources
o Economics
Economics is the study of
o the allocation and use of scarce resources to satisfy unlimited
human wants
Scarce resources makes us
o Make economic decisions
Limited resources and unlimited wants creates
o Scarcity
Opportunity cost of saving the engineer
o The three children that died
Opportunity cost of saving the 3rd and 4th child
o The engineer
We must make a choice about the number of boxes of food to take
away from the wrecked pod because of space on transport
o Scarce
Having enough saline is he opportunity cost of
o Loading too much food onto the transport
Another way to say limited resources
o Scarcity
Quest 2
Marginal Analysis and Diminishing Returns by the Numbers
What is the marginal benefit of the 2nd hour of practice to his points per
game
o 3
If the total benefit of something is increasing at a decreasing rate as
more of it is consumed, then marginal benefit of each additional unit
consumed is
o Positive but decreasing in value
As you do more and more of something the marginal benefits of doing
it tend to _____ and marginal cost tend to ______
o Decline; rise
If at the age of 21 Lamont scored 32.5 points per game, you would say
that as he got older his points per game were ______ at a ______ rate
o Increasing; decreasing
Production Possibility Frontiers
What does ppf stand for
o Production possibility frontier

What does a ppf do

o Shows the possible production combinations

What should you do if the marginal benefit of an action is greater that
its marginal cost
o You should do it
Which of the following is an example of marginal cost/benefit analysis?
Comparing the cost of
o Adding one more salt tablet to the extra benefit of adding the
same salt tablet
Constant opportunity costs is another way to say this
o You repeatedly gibe up the same thing for each additional item
added
Game Show
What is the extra benefit gained from adding one more
o Marginal benefit
Scarcity creates
o All of the above
Points inside the ppf represent
o Unemployment
The slope of the ppf measures
o The opportunity cost of producing another unit of x
If the ppf shifts parallel
o The opportunity cost of producing both goods remains
unchanged
Point c outside the ppf is
o Unattainable
What happened to the ppf when the labor force decreased
o The ppf shifted in
The reciprocal of the slop (1/slope) of the ppf measures
o The marginal cost of producing another unit of good y
If the ppf shifts parallel
o Less of everything can be produced
The slope of the ppf is calculated by computing
o The change in y over the change in x
What is the extra cost of adding one more
o Marginal cost
What does point D represent
o The Sarbonians NOT using all of their available resources to
produce goods
Quest 3
Impact of Technology
What is the basic purpose of technology
o To increase productivity
All of the following would increase productivity except
o Demolishing a building

What was Og the cavemans first attempt to increase his bird-hunting

o Throwing a stone
Why did Og replace the stone with the spear
o He caught more birds with the spear
Opportunity Cost by the Numbers
What does the equation look like that calculates the opportunity cost
for collecting 1 unit of meat instead of berries
o Opportunity cost of meat=berries/meat
What does the equation look like that calculates the opportunity cost
for collecting 1 unit of berries instead of meat
o Opportunity cost of berries=meat/berries
Suppose you decide to watch TV for an hour instead of spending time
either studying for 1 hour or going jogging for 1 hour. What is the
economic price associated with this decision
o 1 hour of time studying or I hour of time jogging
If you were to say the opportunity cost of 1 chopstick is 15 toothpicks,
you actually mean this
o What is the loss of 1 chopstick for the production of 15
toothpicks
Not being able to use the energy canisters for something else is an
example of this
o What is the opportunity cost of opening the doors in the pod
Diminishing returns means that
o After a certain point, additional effort brings forth less benefit
This is the best way of explaining diminishing marginal returns
o Why do the benefits gained get smaller and smaller fomr adding
more and more
This is why, given our hunting equipment and talent, we can only shoot
so many rabbits per day
o Diminishing marginal returns
This is why we were able to bring back 8 dead rabbits on this hunting
trip
o What is marginal benefit
This is why we have to give up gathering berries to hunt rabbits
o What is opportunity cost
This concept explains why each round of training doesnt bring in
about the same increase in hunting productivity
o What is diminishing marginal returns
This is why we cant gather 5 units of water 9 units of berries and 2
rabbits per worker per day
o What is scarcity
This would initially yield a larger marginal return if employed by the
workers
o What is more effective equipment
This would raise the opportunity cost of gathering berries

o What is larger water buckets

This would lower the productivity of workers
o What is attrition of equipment
The addition of new workers would affect the ppf in this fashion
o What is an outward shift of the ppf
The loss of 2 workers would affect he ppf in this fashion
o What is an inward shift of the ppf
Higher levels of hunting productivity shifted the ppf _________ along the
meat axis. This shift in ppf translated into ___________ consumption
potential
o Outwards; higher
Because the training and improved hunting productivity and did not
impact berry productivity the opportunity cost of hunting ____________
and the opportunity cost of gathering berries ___________
o Decreased, increasing
Additional training ___________ total productivity at a _______________
rate
o Increased, decreasing
In the short-run
o At least one input in the production process is fixed
In the long run
o All inputs in the production process are variable
Diminishing returns are more likely to be caused by
o Fixed input constraints
Diminishing returns are more likely to be experienced in
o The short-run
Technological improvements bring about
o All of the above
Ogs increased productivity at hunting would
o Shift his ppf to the right
Which describes John Lockes approach to distribute justice
o Those who work herder deserve more reward
Which describes John Rawls ideas about distribute justice
o Goods should be distributed according to peoples needs,
regardless at effort
All fo the following are advantages of rewarding people based on how
much produce except
o All people will receive the basic goods they need
Which is not an advantage of distributing goods equally, regardless of
effort
o Everyone will receive the goods they need
Game Show
Scarce resources make use do this
o What is all of the above
This would lower the productivity of the workers
o What is the deterioration of equipment

Increases in training leads to

o Increased productivity at a diminishing rate
The ppf would shift in this fashion if production was shifted towards
more berries
o What is the ppf will not shift
This is the best way to explain diminishing returns
o What is the more you add, the les return you get?
Marginal analysis implies people make choices by
o Comparing the additional benefits against the additional costs
If the berry bushes yielded twice as much fruit, the opportunity cost of
gathering berries would __________ and the opportunity cost of hunting
rabbits would _______
o Fall; rise
This is why, given our hunting equipment, we can only shoot so many
rabbits per day
o There are productivity constraints due to fixed production input