Question 1

Why is a production possibilities curve negatively sloped?

Accepted Answer

A)  Resources are wasted as you move along the curve. 
B)  The price of a good falls as you move down along the curve. 
C)  Once on the frontier, it is possible to increase production of one good only by reducing production of the other. 
D)  It is not possible to adjust production decisions once an economy operates on the curve. 
A)  Resources are wasted as you move along the curve. 
B)  The price of a good falls as you move down along the curve. 
C)  Once on the frontier, it is possible to increase production of one good only by reducing production of the other. 
D)  It is not possible to adjust production decisions once an economy operates on the curve.

Question 2

FIGURE 2-12
  
-Refer to Figure 2-12. Which of the following statements about a movement from Point D to Point A is the most accurate?

Accepted Answer

A)  It decreases production of both cakes and cupcakes and would be inefficient. 
B)  It requires the sacrifice of cupcakes in order to acquire more cakes. 
C)  It requires the sacrifice of cakes in order to acquire more cupcakes. 
D)  It increases efficiency by conserving resources. 
A)  It decreases production of both cakes and cupcakes and would be inefficient. 
B)  It requires the sacrifice of cupcakes in order to acquire more cakes. 
C)  It requires the sacrifice of cakes in order to acquire more cupcakes. 
D)  It increases efficiency by conserving resources.

Question 3

If an economy is operating inside its production possibilities curve for tanks and bread, which of the following best illustrates what is happening in the economy?

Accepted Answer

A)  Production of bread and tanks can both increase. 
B)  All resources are being used efficiently. 
C)  Production of bread can increase only by sacrificing the production of tanks. 
D)  Scarcity does not exist. 
A)  Production of bread and tanks can both increase. 
B)  All resources are being used efficiently. 
C)  Production of bread can increase only by sacrificing the production of tanks. 
D)  Scarcity does not exist.

Question 4

The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following illustrates excessive unemployment of resources on a production possibilities curve?

Accepted Answer

A)  an inward shift of the curve 
B)  a point inside the curve 
C)  a movement along the curve in a northwest direction 
D)  an outward shift of the curve 
A)  an inward shift of the curve 
B)  a point inside the curve 
C)  a movement along the curve in a northwest direction 
D)  an outward shift of the curve

Question 6

When resources are used efficiently, what is the only way you can produce more of one good, ceteris paribus?

Accepted Answer

A)  by charging a lower price for the good 
B)  by producing less of another good 
C)  by charging a higher price for the good 
D)  by printing more money so you can buy more goods 
A)  by charging a lower price for the good 
B)  by producing less of another good 
C)  by charging a higher price for the good 
D)  by printing more money so you can buy more goods

Question 7

What market is land bought and sold in?

Accepted Answer

A)  the services market 
B)  the goods market 
C)  the stock market 
D)  the factor market 
A)  the services market 
B)  the goods market 
C)  the stock market 
D)  the factor market

Question 8

FIGURE 2-11
  
-Refer to Figure 2-11. Which of the following could make Point Q attainable in the above production possibilities diagram?

Accepted Answer

A)  technological innovations in the production of apples only 
B)  a transfer of available resources from apple to wheat production 
C)  an increase in the land available for agriculture use 
D)  policies encouraging full employment of resources 
A)  technological innovations in the production of apples only 
B)  a transfer of available resources from apple to wheat production 
C)  an increase in the land available for agriculture use 
D)  policies encouraging full employment of resources

Question 9

An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would NOT be a factor that determines the position and shape of a society's production possibilities curve?

Accepted Answer

A)  the level of technology of the society 
B)  the skills of the work force 
C)  the average wage rate of that society 
D)  the physical resources of that society 
A)  the level of technology of the society 
B)  the skills of the work force 
C)  the average wage rate of that society 
D)  the physical resources of that society

Question 11

High-wage countries like Canada tend to use less labour-intensive production methods than low-wage countries like China.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would mostly likely shift the production possibilities curve in an outward direction?

Accepted Answer

A)  a movement along the curve sacrificing capital goods for consumption goods 
B)  advances in medicine that reduce the incidence of disease and lengthen productive life spans 
C)  an increase in the price of goods and services 
D)  a decrease in the current rate of unemployment 
A)  a movement along the curve sacrificing capital goods for consumption goods 
B)  advances in medicine that reduce the incidence of disease and lengthen productive life spans 
C)  an increase in the price of goods and services 
D)  a decrease in the current rate of unemployment

Question 13

FIGURE 2-2
  
-Refer to Figure 2-2. Which of the following statements best describes the opportunity cost of producing an additional cake?

Accepted Answer

A)  It increases as the economy moves in a southeast direction along the production possibilities curve. 
B)  It decreases as the economy moves in a southeast direction along the production possibilities curve. 
C)  It remains constant as the economy moves in a southeast direction along the production possibilities curve. 
D)  It equals zero. 
A)  It increases as the economy moves in a southeast direction along the production possibilities curve. 
B)  It decreases as the economy moves in a southeast direction along the production possibilities curve. 
C)  It remains constant as the economy moves in a southeast direction along the production possibilities curve. 
D)  It equals zero.

Question 14

FIGURE 2-4
  
-Refer to Figure 2-4. For this economy, what is the most preferred point to produce at?

Accepted Answer

A)  Point A 
B)  Point B 
C)  Point D 
D)  Point G 
A)  Point A 
B)  Point B 
C)  Point D 
D)  Point G

Question 15

Which of the following is NOT a payment made to households in exchange for the use of factors of production?

Accepted Answer

A)  taxes 
B)  wages 
C)  rent 
D)  interest 
A)  taxes 
B)  wages 
C)  rent 
D)  interest

Question 16

FIGURE 2-7
  
-Refer to Figure 2-7. What does Point A indicate about the economy?

Accepted Answer

A)  It is not using its resources efficiently. 
B)  It is using its resources efficiently to produce both food and clothing. 
C)  It is using its resources efficiently while producing food but no clothing. 
D)  It is using its resources efficiently while producing clothing but no food. 
A)  It is not using its resources efficiently. 
B)  It is using its resources efficiently to produce both food and clothing. 
C)  It is using its resources efficiently while producing food but no clothing. 
D)  It is using its resources efficiently while producing clothing but no food.

Question 17

Which of the following describes when an economy may be operating at a point inside the production possibilities curve?

Accepted Answer

A)  if production resources are being used efficiently 
B)  if a substantial amount of machinery is idle 
C)  if a substantial amount of labour is employed 
D)  if technological progress enables the economy to produce quantities of output otherwise unattainable 
A)  if production resources are being used efficiently 
B)  if a substantial amount of machinery is idle 
C)  if a substantial amount of labour is employed 
D)  if technological progress enables the economy to produce quantities of output otherwise unattainable

Question 18

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

Accepted Answer

The answer of FIGURE 2-14
  
-Refer to Figure 2-14....

Question 19

High economic growth can eventually eliminate the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 20

FIGURE 2-3
  
-Refer to Figure 2-3. Which of the following statements about Point A is most accurate?

Accepted Answer

A)  The economy is operating inefficiently at Point A. 
B)  Both wine and bread are produced at Point A. 
C)  Only wine is produced at Point A. 
D)  Only bread is produced at Point A. 
A)  The economy is operating inefficiently at Point A. 
B)  Both wine and bread are produced at Point A. 
C)  Only wine is produced at Point A. 
D)  Only bread is produced at Point A.

Why is a production possibilities curve negatively sloped?

FIGURE 2-12 -Refer to Figure 2-12. Which of the following statements about a movement from Point D to Point A is the most accurate?

If an economy is operating inside its production possibilities curve for tanks and bread, which of the following best illustrates what is happening in the economy?

The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

Which of the following illustrates excessive unemployment of resources on a production possibilities curve?

When resources are used efficiently, what is the only way you can produce more of one good, ceteris paribus?

What market is land bought and sold in?

FIGURE 2-11 -Refer to Figure 2-11. Which of the following could make Point Q attainable in the above production possibilities diagram?

An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

Which of the following would NOT be a factor that determines the position and shape of a society's production possibilities curve?

High-wage countries like Canada tend to use less labour-intensive production methods than low-wage countries like China.

Which of the following would mostly likely shift the production possibilities curve in an outward direction?

FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements best describes the opportunity cost of producing an additional cake?

FIGURE 2-4 -Refer to Figure 2-4. For this economy, what is the most preferred point to produce at?

Which of the following is NOT a payment made to households in exchange for the use of factors of production?

FIGURE 2-7 -Refer to Figure 2-7. What does Point A indicate about the economy?

Which of the following describes when an economy may be operating at a point inside the production possibilities curve?

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

High economic growth can eventually eliminate the problem of scarcity.

FIGURE 2-3 -Refer to Figure 2-3. Which of the following statements about Point A is most accurate?

The Role and Method of Economics

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters

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

Why is a production possibilities curve negatively sloped?

FIGURE 2-12 -Refer to Figure 2-12. Which of the following statements about a movement from Point D to Point A is the most accurate?

If an economy is operating inside its production possibilities curve for tanks and bread, which of the following best illustrates what is happening in the economy?

The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

Which of the following illustrates excessive unemployment of resources on a production possibilities curve?

When resources are used efficiently, what is the only way you can produce more of one good, ceteris paribus?

What market is land bought and sold in?

FIGURE 2-11 -Refer to Figure 2-11. Which of the following could make Point Q attainable in the above production possibilities diagram?

An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

Which of the following would NOT be a factor that determines the position and shape of a society's production possibilities curve?

High-wage countries like Canada tend to use less labour-intensive production methods than low-wage countries like China.

Which of the following would mostly likely shift the production possibilities curve in an outward direction?

FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements best describes the opportunity cost of producing an additional cake?

FIGURE 2-4 -Refer to Figure 2-4. For this economy, what is the most preferred point to produce at?

Which of the following is NOT a payment made to households in exchange for the use of factors of production?

FIGURE 2-7 -Refer to Figure 2-7. What does Point A indicate about the economy?

Which of the following describes when an economy may be operating at a point inside the production possibilities curve?

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

High economic growth can eventually eliminate the problem of scarcity.

FIGURE 2-3 -Refer to Figure 2-3. Which of the following statements about Point A is most accurate?

The Role and Method of Economics

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters