Question 1

Ted chooses to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

Accepted Answer

A) monetary cost 
B) absolute cost 
C) opportunity cost 
D) discretionary cost 
E) comparative cost 
A) monetary cost 
B) absolute cost 
C) opportunity cost 
D) discretionary cost 
E) comparative cost

Question 2

Use the figure below to answer the following questions.
   
Figure 2.1.1
-Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following is true about point A?

Accepted Answer

A) It is unattainable. 
B) While no more of good Y can be produced, more of good X can be produced. 
C) It is preferred to point B. 
D) Resources are either unused or misallocated or both. 
E) It is attainable only if the amount of capital goods is increased. 
A) It is unattainable. 
B) While no more of good Y can be produced, more of good X can be produced. 
C) It is preferred to point B. 
D) Resources are either unused or misallocated or both. 
E) It is attainable only if the amount of capital goods is increased.

Question 3

Which of the following quotations illustrates economic growth?

Accepted Answer

A) "The firm should lower the price it charges for widgets and gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand production next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets." 
A) "The firm should lower the price it charges for widgets and gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand production next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets."

Question 4

The principle of decreasing marginal benefit implies that the ________.

Accepted Answer

A) additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed 
B) additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed 
C) total benefit from obtaining more of a good or service decreases as more is consumed 
D) total benefit from obtaining more of a good or service remains the same as more is consumed 
E) additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced 
A) additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed 
B) additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed 
C) total benefit from obtaining more of a good or service decreases as more is consumed 
D) total benefit from obtaining more of a good or service remains the same as more is consumed 
E) additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced

Question 5

Consider a production possibilities frontier with corn production measured on the vertical axis and car production measured on the horizontal axis.Unusually good weather for growing corn shifts ________.

Accepted Answer

A) the horizontal intercept of the PPF rightward and the vertical intercept of the PPF upward 
B) the horizontal intercept of the PPF rightward but does not shift the vertical intercept of the PPF 
C) the vertical intercept of the PPF upward but does not shift the horizontal intercept of the PPF 
D) neither the horizontal intercept nor the vertical intercept of the PPF 
E) the vertical intercept of the PPF downward and the horizontal intercept of the PPF leftward 
A) the horizontal intercept of the PPF rightward and the vertical intercept of the PPF upward 
B) the horizontal intercept of the PPF rightward but does not shift the vertical intercept of the PPF 
C) the vertical intercept of the PPF upward but does not shift the horizontal intercept of the PPF 
D) neither the horizontal intercept nor the vertical intercept of the PPF 
E) the vertical intercept of the PPF downward and the horizontal intercept of the PPF leftward

Question 6

On a graph of a production possibilities frontier,opportunity cost is represented by

Accepted Answer

A) a point on the horizontal axis. 
B) a point on the vertical axis. 
C) a ray through the origin. 
D) the slope of the production possibilities frontier. 
E) the x-axis intercept. 
A) a point on the horizontal axis. 
B) a point on the vertical axis. 
C) a ray through the origin. 
D) the slope of the production possibilities frontier. 
E) the x-axis intercept.

Question 7

Use the information below to answer the following questions.
Fact 2.4.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.
-Given Fact 2.4.2,the opportunity cost of producing a unit of Y is

Accepted Answer

A) 1 unit of Y for Agnes and 2 units of Y for Brenda. 
B) 1 unit of Y for Agnes and 1/2 unit of Y for Brenda. 
C) 1 hour for Agnes and 1/2 hour for Brenda. 
D) 1 hour for Agnes and 2 hours for Brenda. 
E) 1 unit of X for Agnes and 1/2 unit of X for Brenda. 
A) 1 unit of Y for Agnes and 2 units of Y for Brenda. 
B) 1 unit of Y for Agnes and 1/2 unit of Y for Brenda. 
C) 1 hour for Agnes and 1/2 hour for Brenda. 
D) 1 hour for Agnes and 2 hours for Brenda. 
E) 1 unit of X for Agnes and 1/2 unit of X for Brenda.

Question 8

Use the figure below to answer the following questions.
   
Figure 2.1.2
-Refer to the production possibilities frontier in Figure 2.1.2.Suppose that 50 units of Y are currently being produced.Then

Accepted Answer

A) 7 units of X are being produced. 
B) 6 units of X can be produced if all resources are used and assigned to the task for which they are the best match. 
C) 9 units of X can be produced if all resources are used and assigned to the task for which they are the best match. 
D) resources are not being fully utilized. 
E) 6 units of X are being produced. 
A) 7 units of X are being produced. 
B) 6 units of X can be produced if all resources are used and assigned to the task for which they are the best match. 
C) 9 units of X can be produced if all resources are used and assigned to the task for which they are the best match. 
D) resources are not being fully utilized. 
E) 6 units of X are being produced.

Question 9

The development of new goods and better ways of producing goods and services is

Accepted Answer

A) capital accumulation. 
B) technological change. 
C) the big tradeoff. 
D) allocative efficiency. 
E) none of the above. 
A) capital accumulation. 
B) technological change. 
C) the big tradeoff. 
D) allocative efficiency. 
E) none of the above.

Question 10

If Harold can increase production of good X without decreasing production of any other good,then Harold

Accepted Answer

A) is producing on his production possibilities frontier. 
B) is producing outside his production possibilities frontier. 
C) is producing inside his production possibilities frontier. 
D) must have a linear production possibilities frontier. 
E) must prefer good X to any other good. 
A) is producing on his production possibilities frontier. 
B) is producing outside his production possibilities frontier. 
C) is producing inside his production possibilities frontier. 
D) must have a linear production possibilities frontier. 
E) must prefer good X to any other good.

Question 11

Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
  
-Suppose John and Joe each have different production possibility frontiers;John specializes in cloth and Joe specializes in corn.John's island unexpectedly has exceptionally good weather,and suddenly he is twice as productive in the production of both corn and cloth.Select the best statement.

Accepted Answer

A) This is an example of unemployed resources becoming employed. 
B) As a result, John will have an absolute advantage in both corn and cloth. 
C) As a result, it is possible that John and Joe will switch what they specialize in. 
D) There will be no change in what John and Joe specialize in, because John's comparative advantage has not changed. 
E) There will be a change in what John and Joe specialize in, because John's opportunity cost of production will have risen. 
A) This is an example of unemployed resources becoming employed. 
B) As a result, John will have an absolute advantage in both corn and cloth. 
C) As a result, it is possible that John and Joe will switch what they specialize in. 
D) There will be no change in what John and Joe specialize in, because John's comparative advantage has not changed. 
E) There will be a change in what John and Joe specialize in, because John's opportunity cost of production will have risen.

Question 12

The growth of capital resources,including human capital is

Accepted Answer

A) technological change. 
B) capital accumulation. 
C) depreciation. 
D) opportunity cost. 
E) none of the above. 
A) technological change. 
B) capital accumulation. 
C) depreciation. 
D) opportunity cost. 
E) none of the above.

Question 13

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
  
-The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be

Accepted Answer

A) negatively sloped and linear. 
B) negatively sloped and bowed inward. 
C) negatively sloped and bowed outward. 
D) positively sloped for X and negatively sloped for Y. 
E) a horizontal line. 
A) negatively sloped and linear. 
B) negatively sloped and bowed inward. 
C) negatively sloped and bowed outward. 
D) positively sloped for X and negatively sloped for Y. 
E) a horizontal line.

Question 14

If Harold must decrease production of some other good to increase production of good X,then Harold

Accepted Answer

A) is producing on his production possibilities frontier. 
B) is producing outside his production possibilities frontier. 
C) is producing inside his production possibilities frontier. 
D) must prefer good X to any other good. 
E) has too few capital goods. 
A) is producing on his production possibilities frontier. 
B) is producing outside his production possibilities frontier. 
C) is producing inside his production possibilities frontier. 
D) must prefer good X to any other good. 
E) has too few capital goods.

Question 15

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT

Accepted Answer

A) a technological improvement. 
B) an increase in the stock of capital. 
C) an increase in the labour force. 
D) opportunity cost is increasing. 
E) none of the above. 
A) a technological improvement. 
B) an increase in the stock of capital. 
C) an increase in the labour force. 
D) opportunity cost is increasing. 
E) none of the above.

Question 16

If individuals A and B can both produce only goods X and Y and A does not have a comparative advantage in the production of either X or Y,then we know

Accepted Answer

A) B has an absolute advantage in the production of X and Y. 
B) A and B have the same opportunity costs for X and for Y. 
C) B has a comparative advantage in the production of both X and Y. 
D) the gains from trade will be large but only in one direction. 
E) A must have lower opportunity costs of production for both goods. 
A) B has an absolute advantage in the production of X and Y. 
B) A and B have the same opportunity costs for X and for Y. 
C) B has a comparative advantage in the production of both X and Y. 
D) the gains from trade will be large but only in one direction. 
E) A must have lower opportunity costs of production for both goods.

Question 17

Use the figure below to answer the following question.
   
Figure 2.1.6
-Complete the following sentence.Marginal cost

Accepted Answer

A) is the opportunity cost of producing one more unit of a good or service. 
B) is unrelated to the production possibilities frontier. 
C) always equals marginal benefit. 
D) remains constant. 
E) is always greater then marginal benefit. 
A) is the opportunity cost of producing one more unit of a good or service. 
B) is unrelated to the production possibilities frontier. 
C) always equals marginal benefit. 
D) remains constant. 
E) is always greater then marginal benefit.

Question 18

A property right is

Accepted Answer

A) any commodity or token that is generally acceptable as a means of payment. 
B) an economic unit that hires factors of production and organizes those factors to produce and sell goods and services. 
C) any arrangement that enables buyers and sellers to get information and to do business with each other. 
D) a social arrangement that governs the ownership, use, and disposable of anything that people value. 
E) a medium of exchange. 
A) any commodity or token that is generally acceptable as a means of payment. 
B) an economic unit that hires factors of production and organizes those factors to produce and sell goods and services. 
C) any arrangement that enables buyers and sellers to get information and to do business with each other. 
D) a social arrangement that governs the ownership, use, and disposable of anything that people value. 
E) a medium of exchange.

Question 19

In general,if country A is accumulating capital at a faster rate than country B,then country A

Accepted Answer

A) will soon have a comparative advantage in the production of most goods. 
B) is using a larger proportion of resources to produce consumption goods. 
C) will have a production possibilities frontier that is shifting out faster than country B's. 
D) will have a higher rate of inflation than country B. 
E) will have more unemployment than country B. 
A) will soon have a comparative advantage in the production of most goods. 
B) is using a larger proportion of resources to produce consumption goods. 
C) will have a production possibilities frontier that is shifting out faster than country B's. 
D) will have a higher rate of inflation than country B. 
E) will have more unemployment than country B.

Question 20

In an economy lacking property rights,it would be ________ to realize the gains from trade and there would be ________ specialization compared to an economy with property rights.

Accepted Answer

A) more difficult;less 
B) more difficult;more 
C) easier;less 
D) easier;more 
E) none of the above 
A) more difficult;less 
B) more difficult;more 
C) easier;less 
D) easier;more 
E) none of the above

Exam 2: The Economic Problem

Ted chooses to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

Use the figure below to answer the following questions. Figure 2.1.1 -Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following is true about point A?

Which of the following quotations illustrates economic growth?

The principle of decreasing marginal benefit implies that the ________.

Consider a production possibilities frontier with corn production measured on the vertical axis and car production measured on the horizontal axis.Unusually good weather for growing corn shifts ________.

On a graph of a production possibilities frontier,opportunity cost is represented by

Use the information below to answer the following questions. Fact 2.4.2 Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. -Given Fact 2.4.2,the opportunity cost of producing a unit of Y is

Use the figure below to answer the following questions. Figure 2.1.2 -Refer to the production possibilities frontier in Figure 2.1.2.Suppose that 50 units of Y are currently being produced.Then

The development of new goods and better ways of producing goods and services is

If Harold can increase production of good X without decreasing production of any other good,then Harold

The growth of capital resources,including human capital is

Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be

If Harold must decrease production of some other good to increase production of good X,then Harold

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT

If individuals A and B can both produce only goods X and Y and A does not have a comparative advantage in the production of either X or Y,then we know

Use the figure below to answer the following question. Figure 2.1.6 -Complete the following sentence.Marginal cost

A property right is

In general,if country A is accumulating capital at a faster rate than country B,then country A

In an economy lacking property rights,it would be ________ to realize the gains from trade and there would be ________ specialization compared to an economy with property rights.

What Is Economics?

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

In an economy lacking property rights,it would be to realize the gains from trade and there would be specialization compared to an economy with property rights.