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cerisecoyote781Lv1

11 Dec 2019

The most obvious benefit of specialization and trade is that they allow us to:

a. work more hours per week than we otherwise would be able to work.

b. consume more goods than we otherwise would be able to consume.

c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.

d. consume more goods, by forcing people in other countries to consume fewer goods

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Divya SinghLv10

14 Oct 2020

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Part 1.Choose the correct answer of the following:

1.In a market economy, economic activity is guided by

a.Self-interest and prices

b.The government.

c.Corporations.

d. Central planners.

2. Which of the following decisions must be made by all economies?

a.How much to produce? When to produce? How much does it cost?

b.What to produce? How to produce? For whom to produce?

c.What is the price? Who will produce it? Who will consume it?

d. None of the above

3.Since the resources used in the production of goods and services are limited, society must:

a.Reduce the use of those resources

b.Try to get more resources

c.Make choices about how to use resources

d.Focus on their most abundant resource

4.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

a.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

b.There is no such thing as a free lunch.

c.People buy more when prices are low than when prices are high.

d. No matter how much people earn, they tend to spend more than they earn.

5.If real GDP increased by 2 percent, then

a.Government spending increased by 2 percent

b.The price level has increased by 2 percent

c.Real output/production has increased by 2 percent

d. The increase might have been caused by an increase in the price level or output, but we cannot tell for sure

6. Which of the following would show an efficient economy?

a.Uses the least costly amount of resources available

b.Has a small amount of people who do not work

c.Resources are used to make the most goods and services possible

d.None of the above

7.What is the type of unemployment that occurs when people take time to find a job?

a.cyclical

b.frictional

c.Disguised

d.structural

emeraldoyster872

A bowed out PPF reflects which of the following ideas?

i.increasing opportunity cost

ii. resources are not equally productive in all activities

iii. prices of goods increase over time

		I only
		I and iii
		ii and iii
		I and ii

1 point

QUESTION 2

With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.

		can; cannot
		cannot; can
		cannot; cannot
		can; can

1 point

QUESTION 3

If the production possibilities frontier between two goods is a straight line, then the

		the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points.
		opportunity cost is not a ratio.
		increasing opportunity costs.
		resources are equally productive in both goods.

1 point

QUESTION 4

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

		It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
		It decreases.
		It increases.
		It remains constant.

1 point

QUESTION 5

"Comparative advantage" is defined as a situation in which one person can produce

		more of a good than another person.
		a good for a lower dollar cost than another person.
		a good for a lower opportunity cost than another person.
		more of all goods than another person.

1 point

QUESTION 6

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

		increases.
		decreases.
		might increase, decrease, or remain constant depending on how much people value the additional units of the good.
		remains constant.

1 point

QUESTION 7

A bowed out production possibility frontier shows that the

		opportunity cost relationship is linear.
		the opportunity cost of a good is constant as more of the good is produced.
		the opportunity cost of a good increase as more of the good is produced.
		the opportunity cost of a good decrease as more of the good is produced.

1 point

QUESTION 8

Which of the following statements is correct?

		The production possibilities frontier shows that there are no limits to production.
		Any point on or within the PPF is production efficient.
		If capital is idle, the economy is producing at its full potential.
		A tradeoff is a limit that forces an exchange or a substitution of one thing for something else.

1 point

QUESTION 9

A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?

		A tradeoff would occur to replace the resources and goods destroyed.
		It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed.
		It would shift outward because unemployment would be reduced.
		Nothing would happen because the nation would still have the same capabilities.

1 point

QUESTION 10

When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods

		must increase.
		must decrease.
		must remain the same.
		must change but they might increase or decrease.

1 point

QUESTION 11

Moving along a country's PPF, a reasonable opportunity costs increase is that

		unemployment increases as a country produce more and more of one good.
		unemployment decreases as a country produces more and more of one good.
		some resources are better suited for producing one good rather than the other.
		technology declines as a country produce more and more of one good.

1 point

QUESTION 12

A reason the production possibilities frontier exists is

		scarcity of resources and unlimited technology.
		unemployment.
		scarcity of resources.
		unlimited resources and technology.

1 point

QUESTION 13

Moving from one point to another on a production possibilities frontier implies

		increasing the production of one good and decreasing the production of another.
		increasing the production of both goods.
		decreasing the production of both goods.
		holding the production levels of both goods constant.

1 point

QUESTION 14

Specialization and trade make a country better off because with trade the country can consume at a point

		outside its production possibilities frontier.
		on its trading partner's production possibilities frontier.
		inside its production possibilities frontier.
		on its production possibilities frontier.

1 point

QUESTION 15

The production possibilities frontier is the

		the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing.
		the minimum output that can be produced when resources are used inefficiently.
		the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology.
		maximum output that can be produced at an opportunity cost of zero.

1 point

QUESTION 16

The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.

		decreased current consumption; decreased future consumption
		decreased current consumption; increased future consumption
		increased current consumption; increased future consumption
		increased current consumption; decreased future consumption

1 point

QUESTION 17

In terms of a nation's production possibilities frontier, what impact does international trade have?

		International trade shifts the nation's production possibilities frontier outward.
		International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported.
		International trade shifts the nation's production possibilities frontier inward.
		International trade allows the nation to consume at a point outside its production possibilities frontier.

1 point

QUESTION 18

The production possibilities frontier illustrates the

		goods and services that people want.
		limits to people's wants.
		resources the economy possesses, but not it is the level of technology.
		maximum combinations of goods and services that can be produced.

1 point

QUESTION 19

As we move along the production possibilities frontier,

		the possibilities of tradeoffs diminish.
		the production of one good increases as the production of the other good decreases.
		more of both goods can be produced.
		a tradeoff is not possible because nations need all goods.

1 point

QUESTION 20

What is the opportunity cost of economic growth?

		Eliminate scarcity
		Land.
		Capital goods.
		Consumption of goods.

1 point

QUESTION 21

Which of the following statements is correct?

i.As the economy grows, the opportunity costs of economic growth decrease.

ii. Economic growth has no opportunity cost.

iii. The opportunity cost of economic growth is current consumption forgone.

		ii only
		iii only
		I only
		I and iii

1 point

QUESTION 22

Does economic growth depend upon which of the following?

i. Increasing the quantity of labor.

ii. Lowering the prices of goods and services.

iii. Advancing technology.

		ii only.
		I only.
		I and iii.
		iii only.

1 point

QUESTION 23

When drawing a production possibilities frontier, which of the following is held constant?

		the amount of money in the economy
		the prices of goods and services
		the quantity of the goods and services that are produced
		the available factors of production and the state of technology

1 point

QUESTION 24

To increase its economic growth, a nation should

		encourage spending on goods and services.
		increase in current consumption.
		encourage education because that increases the quality of labor.
		limit the number of people in college because they produce nothing.

1 point

QUESTION 25

The opportunity cost of one more slice of pizza in terms of sodas is the

		some pizza slices we have to give up to get one extra soda.
		the total number of sodas that we have divided by the total number of pizza slices that we have.
		the total number of pizza slices that we have divided by the total number of sodas that we have.
		the number of sodas we have to give up to get one extra pizza slice.

jadecrow966

What does this article suggest to us about how people should go about to truly maximize their level of utility from their limited incomes?

Can Money Buy You Happiness?

It's true to some extent. But chances are you're not getting the most bang for your buck.

New research is suggesting that happiness is determined not by how much money one earns, but rather, how one spends it. University of British Columbia associate professor Elizabeth Dunn explains why. Photo: Getty.
By

Andrew Blackman November 10, 2014

It's an age-old question: Can money buy happiness?

Over the past few years, new research has given us a much deeper understanding of the relationship between what we earn and how we feel. Economists have been scrutinizing the links between income and happiness across nations, and psychologists have probed individuals to find out what really makes us tick when it comes to cash.

The results, at first glance, may seem a bit obvious: Yes, people with higher incomes are, broadly speaking, happier than those who struggle to get by.

But dig a little deeper into the findings, and they get a lot more surprising and a lot more useful.

In short, this latest research suggests, wealth alone doesn't provide any guarantee of a good life. What matters a lot more than a big income is how people spend it. For instance, giving money away makes people a lot happier than lavishing it on themselves. And when they do spend money on themselves, people are a lot happier when they use it for experiences like travel than for material goods.

With that in mind, here's what the latest research says about how people can make smarter use of their dollars and maximize their happiness.

Experiences Are Worth More Than You Think

Ryan Howell was bothered by a conundrum. Numerous studies conducted over the past 10 years have shown that life experiences give us more lasting pleasure than material things, and yet people still often deny themselves experiences and prioritize buying material goods.

So, Prof. Howell, associate professor of psychology at San Francisco State University, decided to look at what's going on. In a study published earlier this year, he found that people think material purchases offer better value for the money because experiences are fleeting, and material goods last longer. So, although they'll occasionally splurge on a big vacation or concert tickets when they're in a more money-conscious mode, they stick to material goods.

But in fact, Prof. Howell found that when people looked back at their purchases, they realized that experiences actually provided better value.

What we find is that there's this huge misinformed forecast, he says. People think that experiences are only going to provide temporary happiness, but they actually provide both more happiness and more lasting value. And yet we still keep on buying material things, he says, because they're tangible and we think we can keep on using them.

Cornell University psychology professor Thomas Gilovich has reached similar conclusions. People often make a rational calculation: I have a limited amount of money, and I can either go there, or I can have this, he says. If I go there, it'll be great, but it'll be done in no time. If I buy this thing, at least I'll always have it. That is factually true, but not psychologically true. We adapt to our material goods.

It's this process of hedonic adaptation that makes it so hard to buy happiness through material purchases. The new dress or the fancy car provides a brief thrill, but we soon come to take it for granted.

Experiences, on the other hand, tend to meet more of our underlying psychological needs, says Prof. Gilovich. They're often shared with other people, giving us a greater sense of connection, and they form a bigger part of our sense of identity. If you've climbed in the Himalayas, that's something you'll always remember and talk about, long after all your favorite gadgets have gone to the landfill.

And, crucially, we tend not to compare our experiences with other people so much. Keeping up with the Joneses is much more prominent for material things than for experiential things, he says. Imagine you've just bought a new computer that you really like, and I show up and say I've paid the same amount for the one with a brighter monitor and faster processor. How much would that bug you?

In experiments he has run, it bugs people a lot. But when people are told to imagine they've gone on vacation to New Zealand, and someone else has had a slightly better vacation, it bothers people somewhat, but you still have your own experiences and your own memories, and so it tends to trouble you less.

In a recent paper called Waiting for Merlot, Prof. Gilovich and colleagues showed that we also get more pleasure out of anticipating experiences than anticipating the acquisition of material things. People waiting for an event were generally excited, whereas waiting for material things seemed to have an impatient quality.

Don't adapt to what you buy.

One of the main reasons why having more stuff doesn't always make us happy is that we adapt to it. Human beings are remarkably good at getting used to changes in their lives, especially positive changes,says Sonja Lyubomirsky, a psychology professor at the University of California, Riverside. If you have a rise in income, it gives you a boost, but then your aspirations rise too. Maybe you buy a bigger home in a new neighborhood, and so your neighbors are richer, and you start wanting even more. You've stepped on the hedonic treadmill. Trying to prevent that or slow it down is really a challenge.

One approach that can work, she says, is consciously trying to foster appreciation and gratitude for what you have. The process of adaptation, after all, comes from taking what you have for granted, so you can slow it down by reminding yourself of why you value what you have.

It could be as simple as setting aside time every day to follow the traditional advice of counting your blessings. Or you might want to keep a daily journal or express your gratitude to other people. The key is to find a way to remain conscious of everything you own and avoid simply adapting to having it around.

Because you're working against your natural inclination, Prof. Lyubomirsky acknowledges that feelings of gratitude and appreciation can be very difficult to sustain. If your journal or daily list becomes just a stale routine, it will no longer have much effect. You might have to keep switching techniques.

Increasing variety, novelty or surprise can also help you to enjoy your possessions more. When things become unchanging, that's when you adapt to them, Prof. Lyubomirsky says.

If you keep a painting hanging in the same spot on the same wall, for example, you'll stop noticing it after a while. But swap it with a painting from another room, and you'll see each of them with fresh eyes, and appreciate them more. Try sharing your possessions with other people, too, and opening yourself up to new experiences, she says.

This could even mean depriving yourself of your possessions for a while, perhaps by lending them or sharing them with someone else. Elizabeth Dunn, associate professor of psychology at the University of British Columbia and co-author of the book Happy Money, recently conducted an experiment where she sent people home with a big bag of chocolate, telling some of them to eat as much of it as they could and others that they were forbidden to eat it. A third group could choose how much to eat.

The result? The people who had been forbidden from eating chocolate were able to enjoy their next chocolate bar much more than those who'd either eaten a lot or consumed their normal amount. Giving something up temporarily can actually help to preserve our capacity to enjoy it, Prof. Dunn says.

Try Giving It Away

The paradox of money is that although earning more of it tends to enhance our well-being, we become happier by giving it away than by spending it on ourselves.

That's the finding from a series of studies by Prof. Dunn. She began by handing out cash to students on campus and telling some to spend it on themselves and others to spend it on someone else. Those who spent money on other people were happier than those who treated themselves.

Prof. Dunn has since repeated the experiment in other countries across the world and has extended it to look at whether people were still happy when giving away their own money rather than free money handed to them by a professor. She found that in countries as diverse as Canada, South Africa, and Uganda, giving away money consistently made people happier. This was even true when people were giving away their own money, and even when they themselves were relatively poor.

She also worked with economists to analyze survey data from 100 countries in the Gallup World Poll, and found that people who donated money to charity were happier, in poor and rich countries alike.

The fact that we were able to observe the same effect that we'd seen in Canada in places like South Africa and Uganda was probably the biggest surprise of my career, she says. A lot of us think we'll give to charity one day, when we are richer, but actually, we see the benefits of giving even among people who are struggling to meet their own basic needs.

What moves the needle in terms of happiness is not so much the dollar amount you give, Prof. Dunn says, but the perceived impact of your donation. If you can see your money making a difference in other people's lives, it will make you happy even if the amount you gave was quite small.

Be Sure to Buy Time, Too

It's also important to consider how what you're buying will affect how you spend your time. That big house in the suburbs may seem like a good idea, but a 2004 study by Alois Stutzer and Bruno Frey of the University of Zurich found that people with longer commutes reported lower overall life satisfaction, all other things being equal. They calculated that you would need a 40% raise to offset the added misery of a one-hour commute.

Use money to buy yourself better time, says Prof. Dunn. Don't buy a slightly fancier car so that you have heated seats during your two-hour commute. Buy a place close to work, so that you can use that final hour of daylight to kick a ball around in the park with your kids.

Another way to buy yourself time, Prof. Dunn says, is by outsourcing tasks you dislike. Whereas hiring personal assistants used to be the preserve of the wealthy, it is now easier and more affordable to hire freelancers and virtual assistants online to help you with either regular administration or just individual tasks.

She's currently doing research on how people actually spend the time they save by outsourcing tasks and whether it makes them happier. The preliminary findings, she says, are that most people do become happier by buying time for themselves, but only if they use the time in the right way.

Our hypothesis is that people will be much more likely to derive an emotional benefit if they think of it as windfall time and use it to do something good, rather than just taking it for granted, she says.

But while buying time is a good idea, putting a dollar value on your time may not be. In another piece of research in progress, Prof. Dunn is finding that when people think of their time as money, it makes them less likely to spend even small amounts of time on things that are not financially compensated. Seeing time as money may have a number of destructive consequences, she says.

Money Only Brings Happiness Up to a Point

When looking at all of these research results, there's an important caveat to bear in mind. Those in the field divide happiness into two components, and you need to have both parts working together to be truly happy. But only one of those components keeps improving the more you earn. The other tops out after a certain point.

The first measure of happiness is evaluative. Prof. Lyubomirsky defines it as a sense that your life is good, you're satisfied with your life, you're progressing towards your life goals.That's the measure used by economists Justin Wolfers and Betsey Stevenson, who have conducted extensive research comparing economic data and happiness surveys across the world. We found very clear evidence that in just about every country around the world, rich people are happier than poor people,says Prof. Wolfers. And people in rich countries are happier than people in poor countries.

The other component of happiness affective looks at how often you experience positive emotions like joy, affection, and tranquility, as opposed to negative ones, explains Prof. Lyubomirsky. You could be satisfied with your life overall but you may not actually be happy at the time, she says. Of course, happy people experience negative emotions, just not as often. So you have to have both components.

Daniel Kahneman and Angus Deaton of Princeton University found that when they looked at affective measures, happiness did not rise after a household reached an annual income of approximately $75,000. (They did, however, find a consistent rise in overall life satisfaction, matching the results of Profs. Wolfers and Stevenson.)

The bottom line: When you don't have much money, a little extra can go a long way, because you have more essential needs to fulfill. As you accumulate more wealth, however, it becomes more difficult to keep buying more happiness.

Don't Get in Over Your Head

Finally, although much of the research in this field is on spending money rather than saving it, the researchers agree that spending more than you can afford is a route to misery. Taking care of your basic needs and achieving a level of financial security is important.

Prof. Gilovich says that although his research shows that life experiences give more happiness than material goods, people should of course buy the essentials first. His findings hold true across a broad range of income levels and demographic groups, but not for people with very low incomes. Those people don't really have discretionary income; it pretty much all has to go on necessities, he says.

Some studies, meanwhile, have shown that debt has a detrimental effect on happiness, while savings and financial security tend to boost it. A survey of British households found that those with higher levels of debt reported lower happiness, and a separate piece of research on married couples showed that those in more debt had more marital conflict.

Savings are good for happiness; debt is bad for happiness. But debt is more potently bad than savings are good, Prof. Dunn says. From a happiness perspective, its more important to get rid of debt than to build savings.

So before you go out and spend all your money on a dream vacation, make sure you've taken care of the basics, paid off your debts, and have enough money to shield yourself from the worst of life's troubles.

Financial advisers are actually right, Prof. Howell says. The first thing you should be doing with your money is building up a safety net. If you go into debt to buy these great life experiences, the stress you'll feel when the credit card bill comes in will probably wipe out the good that you got from the experience.

Mr. Blackman is a writer in Crete. He can be reached at [email protected].

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