Question 1

Exhibit 1-4  
-Refer to Exhibit 1-4. The opportunity cost of producing the sixth TV set is

Accepted Answer

A) 15 units of computers. 
B) 5 units of computers. 
C) 43 units of computers. 
D) 42 units of computers. 
E) 1 unit of computers. 
A) 15 units of computers. 
B) 5 units of computers. 
C) 43 units of computers. 
D) 42 units of computers. 
E) 1 unit of computers.

Question 2

Scarcity applies to everyone regardless of income.

Accepted Answer

A) True 
 B)False

Question 3

The existence of scarcity implies that

Accepted Answer

A) economic interaction is limited. 
B) people are not able to use all the available resources. 
C) people must make a choice. 
D) people will always be poor. 
E) rich people are better off than poor people. 
A) economic interaction is limited. 
B) people are not able to use all the available resources. 
C) people must make a choice. 
D) people will always be poor. 
E) rich people are better off than poor people.

Question 4

Exhibit 1-6  
-Refer to the production possibilities schedule in Exhibit 1-6. A combination of 40 units of computers and 4 TV sets

Accepted Answer

A) cannot be produced with the current supply of resources. 
B) is possible only with full and efficient use of all resources. 
C) has never been and never will be produced. 
D) illustrates underemployment of resources. 
E) will not satisfy the consumers' demands. 
A) cannot be produced with the current supply of resources. 
B) is possible only with full and efficient use of all resources. 
C) has never been and never will be produced. 
D) illustrates underemployment of resources. 
E) will not satisfy the consumers' demands.

Question 5

If firms adopt a technology that can increase production without increasing labor or other resource inputs, then

Accepted Answer

A) the production possibilities curve remains unchanged. 
B) the production possibilities curve shifts inward. 
C) there is movement along the production possibilities curve. 
D) society does not face a new set of tradeoffs. 
E) points that were previously unattainable to society may now be attainable. 
A) the production possibilities curve remains unchanged. 
B) the production possibilities curve shifts inward. 
C) there is movement along the production possibilities curve. 
D) society does not face a new set of tradeoffs. 
E) points that were previously unattainable to society may now be attainable.

Question 6

Exhibit 1-8  
-If society begins by producing 3 units of X and 4 units of Y and then alters production so that it is now producing 4 units of X and 4 units of Y, and we know that the quantity and quality of resources were unchanged and that technology did not change, then

Accepted Answer

A) society has moved along the production possibilities curve. 
B) the combination of 3 units of X and 4 units of Y are best represented by a point inside the production possibilities curve. 
C) the combination of 3 units of X and 4 units of Y are best represented by a point outside the production possibilities curve. 
D) resources were being fully utilized at 3 units of X and 4 units of Y. 
E) resources were being efficiently utilized at 3 units of X and 4 units of Y. 
A) society has moved along the production possibilities curve. 
B) the combination of 3 units of X and 4 units of Y are best represented by a point inside the production possibilities curve. 
C) the combination of 3 units of X and 4 units of Y are best represented by a point outside the production possibilities curve. 
D) resources were being fully utilized at 3 units of X and 4 units of Y. 
E) resources were being efficiently utilized at 3 units of X and 4 units of Y.

Question 7

Trade benefits people only when they together produce more goods or services.

Accepted Answer

A) True 
 B)False

Question 8

International trade exists only when a country can gain a trade advantage over another country.

Accepted Answer

A) True 
 B)False

Question 9

Resources include all of the following except

Accepted Answer

A) Money 
B) Workers 
C) Land 
D) Machinery 
E) Factories 
A) Money 
B) Workers 
C) Land 
D) Machinery 
E) Factories

Question 10

Transaction costs are the costs of

Accepted Answer

A) bribing government officials. 
B) buying and selling in a market. 
C) doing something within an organization. 
D) avoiding any economic interactions. 
E) producing a product instead of buying it from someone else. 
A) bribing government officials. 
B) buying and selling in a market. 
C) doing something within an organization. 
D) avoiding any economic interactions. 
E) producing a product instead of buying it from someone else.

Question 11

Exhibit 1-7  
-Refer to Exhibit 1-7. The production possibilities curve indicates that

Accepted Answer

A) it is possible to produce more of one good without sacrificing some of the other good only if production occurs at a point inside the production possibilities curve. 
B) Good X is an input in the production of Good Y. 
C) producing an additional unit of Good X requires producing an additional unit of Good Y. 
D) more resources exist than the economy can efficiently use. 
E) the economy is experiencing decreasing opportunity costs. 
A) it is possible to produce more of one good without sacrificing some of the other good only if production occurs at a point inside the production possibilities curve. 
B) Good X is an input in the production of Good Y. 
C) producing an additional unit of Good X requires producing an additional unit of Good Y. 
D) more resources exist than the economy can efficiently use. 
E) the economy is experiencing decreasing opportunity costs.

Question 12

If an increase in the price of lemonade causes more people to sell lemonade, then it can be argued that the price increase

Accepted Answer

A) acted as a transfer price. 
B) caused a redistribution of income. 
C) caused a market failure 
D) reduced competition. 
E) acted as an incentive. 
A) acted as a transfer price. 
B) caused a redistribution of income. 
C) caused a market failure 
D) reduced competition. 
E) acted as an incentive.

Question 13

The division of labor enables

Accepted Answer

A) people not to work at all. 
B) the elimination of scarcity. 
C) opportunity costs. 
D) self-sufficiency. 
E) specialization. 
A) people not to work at all. 
B) the elimination of scarcity. 
C) opportunity costs. 
D) self-sufficiency. 
E) specialization.

Question 14

Exhibit 1-9  
-Any point on the production possibilities curve represents the fact that resources are efficiently allocated.

Accepted Answer

A) True 
 B)False

Question 15

Suppose Ashley and Allison can produce the following combinations of pizza and cakes in a day:

Accepted Answer

The answer of Suppose Ashley and Allison can produce the...

Question 16

Scarcity is a problem

Accepted Answer

A) only for poor countries. 
B) only for economies under complete government control. 
C) faced by all economies. 
D) that can be eliminated as the economy grows. 
E) not faced by free market economies. 
A) only for poor countries. 
B) only for economies under complete government control. 
C) faced by all economies. 
D) that can be eliminated as the economy grows. 
E) not faced by free market economies.

Question 17

Which of the following does a production possibilities curve best illustrate?

Accepted Answer

A) The concept of achieving an impossible goal 
B) The concept of unlimited possibilities 
C) The concept of an opportunity cost 
D) The elimination of scarcity 
E) The concept of economic interaction 
A) The concept of achieving an impossible goal 
B) The concept of unlimited possibilities 
C) The concept of an opportunity cost 
D) The elimination of scarcity 
E) The concept of economic interaction

Question 18

What does a company need to take into consideration when deciding whether to set up its own IT department or to contract for maintenance on its computer equipment?

Accepted Answer

The company needs to consider transactio

Question 19

The opportunity cost of an activity is the total value of all activities that a person cannot do.

Accepted Answer

A) True 
 B)False

Question 20

John is a high school student. He has ranked his three options of what he can do during the Christmas school break in the following order: (1) work in a fast-food restaurant full-time and earn $2,000; (2) work in a department store for the first two weeks of the break and earn $1,000, and spend the rest of the break traveling; and (3) work in his father's shoe factory full-time and earn $1,500. What is the opportunity cost of his choice?

Accepted Answer

John's first choice is to work full-time

Exam 1: The Central Idea

Exhibit 1-4 -Refer to Exhibit 1-4. The opportunity cost of producing the sixth TV set is

Scarcity applies to everyone regardless of income.

The existence of scarcity implies that

Exhibit 1-6 -Refer to the production possibilities schedule in Exhibit 1-6. A combination of 40 units of computers and 4 TV sets

If firms adopt a technology that can increase production without increasing labor or other resource inputs, then

Exhibit 1-8 -If society begins by producing 3 units of X and 4 units of Y and then alters production so that it is now producing 4 units of X and 4 units of Y, and we know that the quantity and quality of resources were unchanged and that technology did not change, then

Trade benefits people only when they together produce more goods or services.

International trade exists only when a country can gain a trade advantage over another country.

Resources include all of the following except

Transaction costs are the costs of

Exhibit 1-7 -Refer to Exhibit 1-7. The production possibilities curve indicates that

If an increase in the price of lemonade causes more people to sell lemonade, then it can be argued that the price increase

The division of labor enables

Exhibit 1-9 -Any point on the production possibilities curve represents the fact that resources are efficiently allocated.

Suppose Ashley and Allison can produce the following combinations of pizza and cakes in a day:

Scarcity is a problem

Which of the following does a production possibilities curve best illustrate?

What does a company need to take into consideration when deciding whether to set up its own IT department or to contract for maintenance on its computer equipment?

The opportunity cost of an activity is the total value of all activities that a person cannot do.

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters