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

What is assumed when an economy's production possibilities curve for a year is drawn?

Which of the following is NOT a question that scarcity forces all societies to answer?

Ming-Na must write a political science term paper and prepare for an economics exam. The production possibilities curve between political science and economics preparation is a straight line. As time spent studying economics increases, what is the effect on the opportunity cost of studying for economics?

Which of the following will shift a production possibilities curve outward?

An economy that has many unemployed workers and idle factories is not operating efficiently.

FIGURE 2-3 -Refer to Figure 2-3. Comparatively, at which point is the opportunity cost of one more unit of a consumption good greater?

Which of the following distinguishes a "straight-line" production possibilities curve from one that is "bowed out"?

What does a linear (straight line) production possibilities curve illustrate?

Which of the following is NOT a resource exchanged in the factor markets?

A decrease in the unemployment rate will shift an economy's production possibilities curve outward.

FIGURE 2-8 -Refer to Figure 2-8. In order to move from Point D to Point C, what will the economy have to give up?

How can economic growth be illustrated?

FIGURE 2-9 -Refer to Figure 2-9. If Points A and B indicate consumption and investment for two different economies, other things held constant, which of the following statements about the growth of the economies is most accurate?

Along a straight-line production possibilities curve, which of the following best describes the opportunity costs of producing the good on the X-axis?

FIGURE 2-8 -Refer to Figure 2-8. In order for the economy to move from Point B to Point E at a given point in time, what would it have to do?

How can we measure the opportunity cost of producing a good? Using a bowed outward production possibilities curve between ice cream and hammers, identify graphically the opportunity cost of obtaining an additional hammer.

When more resources in an economy are devoted to the production of capital goods, what happens to the production possibilities curve?

In the simple circular flow model of the economy, total expenditures on goods and services equal total household income.

An increase in an economy's capital stock increases its future productive capacity.

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