Question 1

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

Accepted Answer

A)  bowed outward. 
B)  bowed inward. 
C)  as a straight line (but not horizontal). 
D)  as a horizontal straight line. 
A)  bowed outward. 
B)  bowed inward. 
C)  as a straight line (but not horizontal). 
D)  as a horizontal straight line.

Question 2

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

Accepted Answer

A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan. 
A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan.

Question 3

The idea of opportunity cost is relevant

Accepted Answer

A)  only in consumption decisions. 
B)  only in production decisions. 
C)  only in financial decisions. 
D)  in almost any kind of decision. 
A)  only in consumption decisions. 
B)  only in production decisions. 
C)  only in financial decisions. 
D)  in almost any kind of decision.

Question 4

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)  an economy's capacity to produce increases in proportion to its population. 
B)  if all resources of an economy are in use, more of one good can be produced only if less of another is produced. 
C)  an economy will automatically seek that output at which all of its resources are employed. 
D)  no opportunity cost exists in production. 
A)  an economy's capacity to produce increases in proportion to its population. 
B)  if all resources of an economy are in use, more of one good can be produced only if less of another is produced. 
C)  an economy will automatically seek that output at which all of its resources are employed. 
D)  no opportunity cost exists in production.

Question 5

Economics is often described as a science of constrained choice.How do you justify this argument?

Accepted Answer

Economics deals with the allocation of l

Question 6

What mechanism assures that producers use inputs efficiently?

Accepted Answer

A)  governmental regulations on use of resources 
B)  altruism 
C)  the desire for profit 
D)  an innate desire to be efficient 
E)  All of the above are correct. 
A)  governmental regulations on use of resources 
B)  altruism 
C)  the desire for profit 
D)  an innate desire to be efficient 
E)  All of the above are correct.

Question 7

The production possibilities frontier for a country is usually drawn

Accepted Answer

A)  as a straight line, sloping downward. 
B)  as a straight line, sloping upward. 
C)  bowed outward from the origin. 
D)  bowed inward toward the origin. 
E)  as a dotted line when sloping downward and as a full line when sloping upward. 
A)  as a straight line, sloping downward. 
B)  as a straight line, sloping upward. 
C)  bowed outward from the origin. 
D)  bowed inward toward the origin. 
E)  as a dotted line when sloping downward and as a full line when sloping upward.

Question 8

A market system (market economy) depends on the market to

Accepted Answer

A)  find the most efficient way of using resources. 
B)  determine how large the budget deficit should be. 
C)  decide how much government regulation there should be. 
D)  provide minimum incomes for everyone. 
E)  All of the above are correct. 
A)  find the most efficient way of using resources. 
B)  determine how large the budget deficit should be. 
C)  decide how much government regulation there should be. 
D)  provide minimum incomes for everyone. 
E)  All of the above are correct.

Question 9

When a firm or economy is operating efficiently, it is operating

Accepted Answer

A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  at the intersection of the production possibilities frontier and the vertical axis. 
E)  at the intersection of the production possibilities frontier and the horizontal axis. 
A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  at the intersection of the production possibilities frontier and the vertical axis. 
E)  at the intersection of the production possibilities frontier and the horizontal axis.

Question 10

Which of the following is a listing of the types or categories of resources?

Accepted Answer

A)  land, labor, and capital 
B)  land, labor, and education 
C)  land, labor, and efficiency 
D)  land, labor, and markets 
E)  land, labor, and inputs 
A)  land, labor, and capital 
B)  land, labor, and education 
C)  land, labor, and efficiency 
D)  land, labor, and markets 
E)  land, labor, and inputs

Question 11

A decrease in the unemployment rate will shift the PPF outward from the origin.

Accepted Answer

A) True 
 B)False

Question 12

In a properly functioning economy, money costs approximate opportunity costs.

Accepted Answer

A) True 
 B)False

Question 13

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

A) True 
 B)False

Question 14

Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college.Do you agree? Explain.

Accepted Answer

No.Although the rate of return on colleg

Question 15

The divergence between money costs and opportunity costs is the least in which of the following situations?

Accepted Answer

A)  China uses millions of otherwise unemployable workers to build roads with picks and shovels. 
B)  Wilhelm, an engineer at Exxon, is drafted-his army salary is $2,000 per month. 
C)  Colleen quits her job to stay at home and raise her children. 
D)  A university, using a private contractor, builds a field house on land it purchased at full market value from a local farmer. 
A)  China uses millions of otherwise unemployable workers to build roads with picks and shovels. 
B)  Wilhelm, an engineer at Exxon, is drafted-his army salary is $2,000 per month. 
C)  Colleen quits her job to stay at home and raise her children. 
D)  A university, using a private contractor, builds a field house on land it purchased at full market value from a local farmer.

Question 16

The problem of scarcity

Accepted Answer

A)  has been "cooked up" by disenchanted anticapitalists. 
B)  exists because resources are limited relative to wants. 
C)  is solved by promoting economic growth. 
D)  is caused by artificially high prices. 
A)  has been "cooked up" by disenchanted anticapitalists. 
B)  exists because resources are limited relative to wants. 
C)  is solved by promoting economic growth. 
D)  is caused by artificially high prices.

Question 17

List the three coordination decisions made by every economy.

Accepted Answer

A)  Where? When? How? 
B)  How? What? To whom? 
C)  Why? Where? What? 
D)  When? To Whom? Where? 
A)  Where? When? How? 
B)  How? What? To whom? 
C)  Why? Where? What? 
D)  When? To Whom? Where?

Question 18

Employment discrimination is a source of

Accepted Answer

A)  economic inefficiency. 
B)  increased economic growth. 
C)  innovation. 
D)  shifting production possibilities. 
E)  All of the above are correct. 
A)  economic inefficiency. 
B)  increased economic growth. 
C)  innovation. 
D)  shifting production possibilities. 
E)  All of the above are correct.

Question 19

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

Accepted Answer

Money price can be higher than opportuni

Question 20

In a market economy, government decides the answers to the three economic decisions.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

The idea of opportunity cost is relevant

The production possibilities curve illustrates the basic principle that

Economics is often described as a science of constrained choice.How do you justify this argument?

What mechanism assures that producers use inputs efficiently?

The production possibilities frontier for a country is usually drawn

A market system (market economy) depends on the market to

When a firm or economy is operating efficiently, it is operating

Which of the following is a listing of the types or categories of resources?

A decrease in the unemployment rate will shift the PPF outward from the origin.

In a properly functioning economy, money costs approximate opportunity costs.

Market economies are not constrained by scarcity; only planned economies have that problem.

Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college.Do you agree? Explain.

The divergence between money costs and opportunity costs is the least in which of the following situations?

The problem of scarcity

List the three coordination decisions made by every economy.

Employment discrimination is a source of

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

In a market economy, government decides the answers to the three economic decisions.

What Is Economics?

The Economy: Myth and Reality

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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