Exam 2: Scarcity, Trade-Offs, and Production Possibilities

FIGURE 2-1 -Refer to Figure 2-1. Which of the following statements about goods and services is the most accurate?

FIGURE 2-5 -Refer to Figure 2.5. How would Point A be described?

Which of the following is an illustration of the concept of opportunity cost?

What does a straight-line production possibilities curve illustrate?

Consider a production possibilities curve for an economy producing bicycles and video game players. Under what circumstances is it possible to increase the production of bicycles without sacrificing video game players?

What does the concavity (bowed-out shape) of the production possibilities curve result from?

Which of the following best characterizes the circular flow model?

What does the use of large amounts of labour relative to capital in an economy indicate?

What tends to occur in countries with high labour costs?

Which of society's questions does a market system answer?

Capital accumulation causes the production possibilities curve to shift inward over time.

In a market economy, who will get the goods that are produced?

FIGURE 2-14 -Refer to Figure 2-14. Moving from Point A to Point B, what is the opportunity cost of producing a mountain bike?

Which of the following will NOT shift the production possibilities curve outward?

Which of the following best describes what occurs along a bowed-out production possibilities curve?

Any point NOT on the production possibilities curve cannot be optimal. What reasoning supports this?

FIGURE 2-1 -Refer to Figure 2-1. What does the arrow from the firms to the product markets represent?

FIGURE 2-3 -Refer to Figure 2-3. Which of the following movements will result in an increase in the production of capital goods but a decrease in the production of consumption goods this period?

What occurs with a movement in a southeast direction along a production possibilities curve?

Three economic questions must be determined in all societies. What are they?