Question 1

In Figure 1.6,if the opportunity cost of producing cars was zero at all levels of production,the production possibilities curve would be best be represented by a

Accepted Answer

A) Vertical line. 
B) 45-degree line starting at the origin. 
C) Horizontal line. 
D) Circle. 
A) Vertical line. 
B) 45-degree line starting at the origin. 
C) Horizontal line. 
D) Circle.

Question 2

Producing at a point inside the production possibilities curve

Accepted Answer

A) Means society must be using its resources efficiently. 
B) Is unattainable given the present level of technology. 
C) Is feasible when the nation is at war but not feasible when the nation is at peace. 
D) Suggests we are forgoing the ability to produce more of both goods. 
A) Means society must be using its resources efficiently. 
B) Is unattainable given the present level of technology. 
C) Is feasible when the nation is at war but not feasible when the nation is at peace. 
D) Suggests we are forgoing the ability to produce more of both goods.

Question 3

Which of the following is the best example of land?

Accepted Answer

A) The ethanol refined from corn. 
B) A factory that produces new goods and services. 
C) The water used to make a soft drink. 
D) A barber's chair. 
A) The ethanol refined from corn. 
B) A factory that produces new goods and services. 
C) The water used to make a soft drink. 
D) A barber's chair.

Question 4

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus. Table 1.3
Production Possibilities for Brushes and Combs
$$\begin{array} { | l | c | c | r | r | } 
\hline \text { Combination } & \begin{array} { c } 
\text { Number of } \
\text { combs }
\end{array} & \begin{array} { c } 
\text { Opportunity } \
\text { Cost(Foregone } \
\text { brushes) }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { brushes }
\end{array} & \begin{array} { c } 
\text { Opportunity Cost } \
\text { (Foregone combs) }
\end{array} \
\hline \mathrm { J } & 4 & &0& \text { NA } \
\hline \mathrm { K } & 3 & & 10 & \
\hline \mathrm { L } & 2 & & 17 & \
\hline \mathrm {  M} & 1 & & 21 & \
\hline \mathrm { N } & 0 & \text { NA } & 23 & \
\hline
\end{array}$$ On the basis of Table 1.3,the lowest opportunity cost for combs in terms of brushes is

Accepted Answer

A) 10 brushes per comb. 
B) 2 brushes per comb. 
C) 0.33 brush per comb. 
D) 8.5 brushes per comb. 
A) 10 brushes per comb. 
B) 2 brushes per comb. 
C) 0.33 brush per comb. 
D) 8.5 brushes per comb.

Question 5

How does the market mechanism answer the WHAT,HOW,and FOR WHOM questions?

Accepted Answer

The market mechanism answers the WHAT qu

Question 6

When an economy is producing efficiently,it is

Accepted Answer

A) Producing a combination of goods and services beyond the production possibilities curve. 
B) Getting the maximum goods and services possible from the available resources. 
C) Experiencing decreasing opportunity costs. 
D) Producing equal amounts of all goods. 
A) Producing a combination of goods and services beyond the production possibilities curve. 
B) Getting the maximum goods and services possible from the available resources. 
C) Experiencing decreasing opportunity costs. 
D) Producing equal amounts of all goods.

Question 7

Opportunity cost is

Accepted Answer

A) Measured only in dollars and cents. 
B) The total dollar cost to society of producing the goods. 
C) The difficulty associated with using one good in place of another. 
D) What is given up in order to get something else. 
A) Measured only in dollars and cents. 
B) The total dollar cost to society of producing the goods. 
C) The difficulty associated with using one good in place of another. 
D) What is given up in order to get something else.

Question 8

Explain why an economist would say,"There is no such thing as a free lunch."

Accepted Answer

All resources are scarce.Any time a scar

Question 9

Refer to Figure 1.7.The cost of producing at point D rather than point J is

Accepted Answer

A) KM units of clothing. 
B) AC units of food. 
C) OM units of clothing. 
D) OA units of food. 
A) KM units of clothing. 
B) AC units of food. 
C) OM units of clothing. 
D) OA units of food.

Question 10

According to the text,there is no such thing as a free lunch because

Accepted Answer

A) The producer must charge something to cover the cost of production. 
B) Resources used to produce the lunch could be used to produce other goods and services. 
C) The government must raise taxes to pay for the lunches. 
D) No one would pay for lunch anymore if they could get it for free. 
A) The producer must charge something to cover the cost of production. 
B) Resources used to produce the lunch could be used to produce other goods and services. 
C) The government must raise taxes to pay for the lunches. 
D) No one would pay for lunch anymore if they could get it for free.

Question 11

If market signals result in pollution beyond the optimal level,then

Accepted Answer

A) The economy experiences government failure. 
B) A laissez faire approach will reduce the level of pollution. 
C) The market mechanism has failed to achieve efficiency. 
D) The government is allocating resources inefficiently. 
A) The economy experiences government failure. 
B) A laissez faire approach will reduce the level of pollution. 
C) The market mechanism has failed to achieve efficiency. 
D) The government is allocating resources inefficiently.

Question 12

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus. Table 1.3
Production Possibilities for Brushes and Combs
$$\begin{array} { | l | c | c | r | r | } 
\hline \text { Combination } & \begin{array} { c } 
\text { Number of } \
\text { combs }
\end{array} & \begin{array} { c } 
\text { Opportunity } \
\text { Cost(Foregone } \
\text { brushes) }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { brushes }
\end{array} & \begin{array} { c } 
\text { Opportunity Cost } \
\text { (Foregone combs) }
\end{array} \
\hline \mathrm { J } & 4 & &0& \text { NA } \
\hline \mathrm { K } & 3 & & 10 & \
\hline \mathrm { L } & 2 & & 17 & \
\hline \mathrm {  M} & 1 & & 21 & \
\hline \mathrm { N } & 0 & \text { NA } & 23 & \
\hline
\end{array}$$ On the basis of Table 1.3,in the production range of 2 to 3 combs the opportunity cost of producing 1 more comb in terms of brushes is

Accepted Answer

A) 3.33. 
B) 7.0. 
C) 0.67. 
D) 0.14. 
A) 3.33. 
B) 7.0. 
C) 0.67. 
D) 0.14.

Question 13

A consequence of the economic problem of scarcity is that

Accepted Answer

A) Choices have to be made about how resources are used. 
B) There is never too much of any good or service produced. 
C) The production of goods and services must be controlled by the government. 
D) The production possibilities curve is bowed outward. 
A) Choices have to be made about how resources are used. 
B) There is never too much of any good or service produced. 
C) The production of goods and services must be controlled by the government. 
D) The production possibilities curve is bowed outward.

Question 14

Which of the following is an example of government failure?

Accepted Answer

A) Bureaucratic delays. 
B) Required use of pollution control technology that is obsolete. 
C) Inefficient incentives. 
D) All of the choices are correct. 
A) Bureaucratic delays. 
B) Required use of pollution control technology that is obsolete. 
C) Inefficient incentives. 
D) All of the choices are correct.

Question 15

The points on a production possibilities curve show

Accepted Answer

A) Desired output. 
B) Actual output. 
C) Potential output. 
D) None of the choices are correct. 
A) Desired output. 
B) Actual output. 
C) Potential output. 
D) None of the choices are correct.

Question 16

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus. Table 1.2
Production Possibilities for Bombers
$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Combination } & \begin{array} { c } 
\text { Number of B- } \
1 \text { Bombers }
\end{array} & \begin{array} { c } 
\text { Opportunity } \
\text { cost(Foregone } \
\text { Stealth) }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { Stealth Bombers }
\end{array} & \begin{array} { c } 
\text { Opportunity cost } \
\text { (Foregone B-1) }
\end{array} \
\hline \text { A } & 20 & \text { NA } & 195 & \
\hline \text { B } & 35 & & 180 & \
\hline \text { C } & 45 & & 150 &\
\hline \text { D } & 50 & & 100 & \text { NA }  \
\hline
\end{array}$$  Refer to Table 1.2.In the production range of 20 to 35 B-1 bombers,the opportunity cost of producing 1 more B-1 bomber is

Accepted Answer

A) 195/20 of Stealth bombers. 
B) 35/20 of Stealth bombers. 
C) 15 Stealth bombers. 
D) 1 Stealth bomber. 
A) 195/20 of Stealth bombers. 
B) 35/20 of Stealth bombers. 
C) 15 Stealth bombers. 
D) 1 Stealth bomber.

Question 17

Which of the following has occurred when government directives do not produce better economic outcomes?

Accepted Answer

A) Government failure. 
B) Market failure. 
C) Macroeconomic failure. 
D) Scarcity. 
A) Government failure. 
B) Market failure. 
C) Macroeconomic failure. 
D) Scarcity.

Question 18

With respect to factors of production,which of the following statements is not true?

Accepted Answer

A) Factors of production are also known as resources. 
B) In order to produce any good or service,it is necessary to have factors of production. 
C) Factors of production include land,labor,capital,and entrepreneurship. 
D) Only those resources that are privately owned are counted as factors of production. 
A) Factors of production are also known as resources. 
B) In order to produce any good or service,it is necessary to have factors of production. 
C) Factors of production include land,labor,capital,and entrepreneurship. 
D) Only those resources that are privately owned are counted as factors of production.

Question 19

Microeconomics is concerned with issues such as

Accepted Answer

A) The demand for bottled water by individuals. 
B) The level of inflation in the economy. 
C) Maintaining a strong level of economic growth. 
D) All of the choices are correct. 
A) The demand for bottled water by individuals. 
B) The level of inflation in the economy. 
C) Maintaining a strong level of economic growth. 
D) All of the choices are correct.

Question 20

In Figure 1.6,at which of the following points would the opportunity cost of producing one more SUV be highest?

Accepted Answer

A) A. 
B) B. 
C) C. 
D) F. 
A) A. 
B) B. 
C) C. 
D) F.

Exam 1: Economics: the Core Issues

In Figure 1.6,if the opportunity cost of producing cars was zero at all levels of production,the production possibilities curve would be best be represented by a

Producing at a point inside the production possibilities curve

Which of the following is the best example of land?

How does the market mechanism answer the WHAT,HOW,and FOR WHOM questions?

When an economy is producing efficiently,it is

Opportunity cost is

Explain why an economist would say,"There is no such thing as a free lunch."

Refer to Figure 1.7.The cost of producing at point D rather than point J is

According to the text,there is no such thing as a free lunch because

If market signals result in pollution beyond the optimal level,then

A consequence of the economic problem of scarcity is that

Which of the following is an example of government failure?

The points on a production possibilities curve show

Which of the following has occurred when government directives do not produce better economic outcomes?

With respect to factors of production,which of the following statements is not true?

Microeconomics is concerned with issues such as

In Figure 1.6,at which of the following points would the opportunity cost of producing one more SUV be highest?

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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