Question 1

Exhibit 2-13 Production possibilities curve  
-In Exhibit 2-13, point H is:

Accepted Answer

A)  achievable with today's resource base. 
B)  not achievable today because the economy has not achieved full employment. 
C)  not achievable today because the economy is not at its maximum point of efficiency. 
D)  not achievable today because of waste. 
E)  not achievable today because of inadequate production capacity. 
A)  achievable with today's resource base. 
B)  not achievable today because the economy has not achieved full employment. 
C)  not achievable today because the economy is not at its maximum point of efficiency. 
D)  not achievable today because of waste. 
E)  not achievable today because of inadequate production capacity.

Question 2

One source of economic growth is:

Accepted Answer

A)  producing inside the production possibilities curve. 
B)  producing outside the production possibilities curve. 
C)  increasing capital. 
D)  discouraging profit-seeking entrepreneurs. 
A)  producing inside the production possibilities curve. 
B)  producing outside the production possibilities curve. 
C)  increasing capital. 
D)  discouraging profit-seeking entrepreneurs.

Question 3

If some resources were used inefficiently, the economy would operate outside its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 4

A point outside a production possibilities curve reflects:

Accepted Answer

A)  efficiency. 
B)  specialization. 
C)  inefficiency. 
D)  unemployment. 
E)  an impossible choice. 
A)  efficiency. 
B)  specialization. 
C)  inefficiency. 
D)  unemployment. 
E)  an impossible choice.

Question 5

A rightward (an outward) shift of a nation's production possibilities curve could be caused by:

Accepted Answer

A)  a decrease in technology. 
B)  an increase in resources. 
C)  producing more consumer and fewer capital goods. 
D)  a decline in the labor force's level of education and skills. 
A)  a decrease in technology. 
B)  an increase in resources. 
C)  producing more consumer and fewer capital goods. 
D)  a decline in the labor force's level of education and skills.

Question 6

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

Accepted Answer

A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy A and economy B will grow equally fast. 
D)  economy A will grow faster than economy B. 
E)  economy B will grow faster than economy A. 
A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy A and economy B will grow equally fast. 
D)  economy A will grow faster than economy B. 
E)  economy B will grow faster than economy A.

Question 7

Exhibit 2-12 Production possibilities curve  
-In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false?

Accepted Answer

A)  This economy could produce more of both capital and consumption goods. 
B)  This economy is experiencing full employment. 
C)  This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D)  This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E)  Not every resource in this economy is being utilized 
A)  This economy could produce more of both capital and consumption goods. 
B)  This economy is experiencing full employment. 
C)  This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D)  This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E)  Not every resource in this economy is being utilized

Question 8

The opportunity cost of watching television is:

Accepted Answer

A)  all of the alternative programs that appear on other stations. 
B)  zero because there is no money expenditure involved. 
C)  the alternative use of the time foregone by watching the program. 
D)  zero if it benefits you. 
A)  all of the alternative programs that appear on other stations. 
B)  zero because there is no money expenditure involved. 
C)  the alternative use of the time foregone by watching the program. 
D)  zero if it benefits you.

Question 9

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve:

Accepted Answer

A)  shifts inwards to the left. 
B)  becomes flatter at one end and steeper at the other end. 
C)  becomes steeper. 
D)  shifts outward to the right. 
E)  does not change. 
A)  shifts inwards to the left. 
B)  becomes flatter at one end and steeper at the other end. 
C)  becomes steeper. 
D)  shifts outward to the right. 
E)  does not change.

Question 10

Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:

Accepted Answer

A)  five hours she worked. 
B)  $75 she earned. 
C)  10 points she lost on her exam. 
D)  time she could have spent watching television. 
E)  guilt she feels about neglecting her economics studies. 
A)  five hours she worked. 
B)  $75 she earned. 
C)  10 points she lost on her exam. 
D)  time she could have spent watching television. 
E)  guilt she feels about neglecting her economics studies.

Question 11

Exhibit 2-7 Production possibilities curve  
-For the economy shown in Exhibit 2-7, which of the following is true when the economy is at point A?

Accepted Answer

A)  More cars are being produced than are needed. 
B)  There must be resources that are not being used fully. 
C)  Some car production must be forgone in order to produce more grain in the same period. 
D)  Increased grain production would be impossible. 
A)  More cars are being produced than are needed. 
B)  There must be resources that are not being used fully. 
C)  Some car production must be forgone in order to produce more grain in the same period. 
D)  Increased grain production would be impossible.

Question 12

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

Accepted Answer

A)  The What to Produce question. 
B)  The Why to Produce question. 
C)  The How to Produce question. 
D)  The For Whom to Produce question. 
A)  The What to Produce question. 
B)  The Why to Produce question. 
C)  The How to Produce question. 
D)  The For Whom to Produce question.

Question 13

Which of the following correctly lists the three fundamental economic questions?

Accepted Answer

A)  If to produce? Why to produce? When to produce? 
B)  If to produce? What to produce? How to produce? 
C)  Why to produce? What to produce? How to produce? 
D)  What to produce? How to produce? For whom to produce? 
A)  If to produce? Why to produce? When to produce? 
B)  If to produce? What to produce? How to produce? 
C)  Why to produce? What to produce? How to produce? 
D)  What to produce? How to produce? For whom to produce?

Question 14

A source of economic growth is:

Accepted Answer

A)  unemployment. 
B)  inefficiency. 
C)  less resources. 
D)  greater entrepreneurship. 
A)  unemployment. 
B)  inefficiency. 
C)  less resources. 
D)  greater entrepreneurship.

Question 15

Exhibit 2-18 Production possibilities curves  
-In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Accepted Answer

A)  is worse off in Year Y than in Year X. 
B)  has stagnated production in this two year period. 
C)  is more efficient in Year Y than in Year X. 
D)  has shown growth between these two years. 
E)  has higher unemployment in Year Y than in Year X. 
A)  is worse off in Year Y than in Year X. 
B)  has stagnated production in this two year period. 
C)  is more efficient in Year Y than in Year X. 
D)  has shown growth between these two years. 
E)  has higher unemployment in Year Y than in Year X.

Question 16

Exhibit 2-9 Production possibilities curve  
-Movement along this production possibilities curve shown in Exhibit 2-9 indicates:

Accepted Answer

A)  that labor is not equally productive or homogeneous (nonhomogeneous). 
B)  decreasing opportunity costs. 
C)  all inputs are homogeneous. 
D)  all of these. 
A)  that labor is not equally productive or homogeneous (nonhomogeneous). 
B)  decreasing opportunity costs. 
C)  all inputs are homogeneous. 
D)  all of these.

Question 17

In economics, investment refers to the process of accumulating:

Accepted Answer

A)  capital goods. 
B)  consumer goods. 
C)  money. 
D)  stocks and bonds. 
A)  capital goods. 
B)  consumer goods. 
C)  money. 
D)  stocks and bonds.

Question 18

Exhibit 2-6 Production possibilities curve data $$\begin{array} { | l | r | r | r | r | r | r | } 
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } &  { \text { F } } \
\hline \text { Capital goods } & 150 & 140 & 120 & 90 & 50 & 0 \
\text { Consume goods } & 0 & 20 & 40 & 60 & 80 & 100 \
\hline
\end{array}$$
-In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Accepted Answer

A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero. 
A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero.

Question 19

Assuming an economy is already experiencing full employment, then it must produce more consumer goods and fewer capital goods if it wishes to experience greater rates of economic growth over time.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be least likely to cause the production possibilities curve to shift outward?

Accepted Answer

A)  a decreased desire for leisure by workers in the economy. 
B)  an invention that requires fewer resources to produce a good. 
C)  a shift in consumer preferences that causes expansion in the output of one product and a decline in output of other products. 
D)  an expansion in the man-made productive resources available to the economy as the result of a high rate of investment. 
A)  a decreased desire for leisure by workers in the economy. 
B)  an invention that requires fewer resources to produce a good. 
C)  a shift in consumer preferences that causes expansion in the output of one product and a decline in output of other products. 
D)  an expansion in the man-made productive resources available to the economy as the result of a high rate of investment.

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13, point H is:

One source of economic growth is:

If some resources were used inefficiently, the economy would operate outside its production possibilities curve.

A point outside a production possibilities curve reflects:

A rightward (an outward) shift of a nation's production possibilities curve could be caused by:

Exhibit 2-12 Production possibilities curve -In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false?

The opportunity cost of watching television is:

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve:

Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:

Exhibit 2-7 Production possibilities curve -For the economy shown in Exhibit 2-7, which of the following is true when the economy is at point A?

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

Which of the following correctly lists the three fundamental economic questions?

A source of economic growth is:

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Exhibit 2-9 Production possibilities curve -Movement along this production possibilities curve shown in Exhibit 2-9 indicates:

In economics, investment refers to the process of accumulating:

Exhibit 2-6 Production possibilities curve data A B C D E F Capital goods 150 140 120 90 50 0 Consume goods 0 20 40 60 80 100 -In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Assuming an economy is already experiencing full employment, then it must produce more consumer goods and fewer capital goods if it wishes to experience greater rates of economic growth over time.

Which of the following would be least likely to cause the production possibilities curve to shift outward?

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

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Exam 2: Production Possibilities, Opportunity Cost, and Economic Growth

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13, point H is:

One source of economic growth is:

If some resources were used inefficiently, the economy would operate outside its production possibilities curve.

A point outside a production possibilities curve reflects:

A rightward (an outward) shift of a nation's production possibilities curve could be caused by:

Exhibit 2-12 Production possibilities curve -In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false?

The opportunity cost of watching television is:

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve:

Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:

Exhibit 2-7 Production possibilities curve -For the economy shown in Exhibit 2-7, which of the following is true when the economy is at point A?

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

Which of the following correctly lists the three fundamental economic questions?

A source of economic growth is:

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Exhibit 2-9 Production possibilities curve -Movement along this production possibilities curve shown in Exhibit 2-9 indicates:

In economics, investment refers to the process of accumulating:

Exhibit 2-6 Production possibilities curve data A B C D E F Capital goods 150 140 120 90 50 0 Consume goods 0 20 40 60 80 100 -In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Assuming an economy is already experiencing full employment, then it must produce more consumer goods and fewer capital goods if it wishes to experience greater rates of economic growth over time.

Which of the following would be least likely to cause the production possibilities curve to shift outward?

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters