Question 1

All points on the production possibilities curve represent efficient levels of production.

Accepted Answer

A) True 
 B)False

Question 2

A production possibilities curve shows the:

Accepted Answer

A) dollar costs of producing two different goods. 
B) amounts of labor and capital needed to produce one good. 
C) various combinations of goods that can be produced. 
D) prices of different goods that are produced in an economy. 
E) inefficient use of available resources and technology. 
A) dollar costs of producing two different goods. 
B) amounts of labor and capital needed to produce one good. 
C) various combinations of goods that can be produced. 
D) prices of different goods that are produced in an economy. 
E) inefficient use of available resources and technology.

Question 3

Exhibit 2-19 Production possibilities curves   In Exhibit 2-19, 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) has lower unemployment in Year Y than in Year X. 
B) was more efficient in Year X than in Year Y. 
C) achieved full employment in Year X and in Year Y. 
D) showed no growth between Year X and Year Y. 
E) is worse off in Year Y than in Year X. 
A) has lower unemployment in Year Y than in Year X. 
B) was more efficient in Year X than in Year Y. 
C) achieved full employment in Year X and in Year Y. 
D) showed no growth between Year X and Year Y. 
E) is worse off in Year Y than in Year X.

Question 4

Exhibit 2-2 Production possibilities curve   In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Accepted Answer

A) 2 million bushels of corn. 
B) 6 million bushels of corn. 
C) 8 million bushels of corn. 
D) 14 million bushels of corn. 
E) it is not possible to determine. 
A) 2 million bushels of corn. 
B) 6 million bushels of corn. 
C) 8 million bushels of corn. 
D) 14 million bushels of corn. 
E) it is not possible to determine.

Question 5

Exhibit 2-2 Production possibilities curve   In Exhibit 2-2, the slope of the production possibilities curve indicates that the opportunity cost of:

Accepted Answer

A) coffee is constant. 
B) coffee is increasing. 
C) coffee is decreasing. 
D) corn is increasing. 
E) corn is decreasing, 
A) coffee is constant. 
B) coffee is increasing. 
C) coffee is decreasing. 
D) corn is increasing. 
E) corn is decreasing,

Question 6

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

Accepted Answer

A) Unemployment and capital goods production. 
B) Number of resources and consumption goods production. 
C) Composition of the economy's output and number of resources. 
D) Capital and consumption goods production. 
E) Technology and number of resources. 
A) Unemployment and capital goods production. 
B) Number of resources and consumption goods production. 
C) Composition of the economy's output and number of resources. 
D) Capital and consumption goods production. 
E) Technology and number of resources.

Question 7

When making a rational decision which requires the consideration of costs and benefits involved, the opportunity cost of a decision is often not taken into consideration when indeed it should be.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Of all the points on the production possibilities curve, only one point represents an efficient point.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 2-15 Production possibilities curve   In Exhibit 2-15, inefficient resource use is shown by which of the following points?

Accepted Answer

A) N. 
B) J. 
C) Q. 
D) L. 
E) P. 
A) N. 
B) J. 
C) Q. 
D) L. 
E) P.

Question 11

Any point on the production possibilities curve illustrates:

Accepted Answer

A) minimum production combinations. 
B) maximum production combinations. 
C) economic growth. 
D) a nonfeasible production combination. 
A) minimum production combinations. 
B) maximum production combinations. 
C) economic growth. 
D) a nonfeasible production combination.

Question 12

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Accepted Answer

A) The production possibilities curves for these countries would have shifted outward. 
B) The production possibilities curves for these countries would have shifted inward. 
C) The production possibilities curves for these countries would have been unaffected. 
D) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them. 
A) The production possibilities curves for these countries would have shifted outward. 
B) The production possibilities curves for these countries would have shifted inward. 
C) The production possibilities curves for these countries would have been unaffected. 
D) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.

Question 13

A nation's current location on its production possibilities curve can determine the future location of that nation's production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 14

The amount of a good that must be given up to produce another good is the concept of:

Accepted Answer

A) scarcity. 
B) specialization. 
C) trade. 
D) efficiency. 
E) opportunity cost. 
A) scarcity. 
B) specialization. 
C) trade. 
D) efficiency. 
E) opportunity cost.

Question 15

Only socialist economies need to answer the What , How , and For Whom questions.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would not lead to a shift in an economy's production possibilities curve?

Accepted Answer

A) Change in technology. 
B) Change in the number of resources. 
C) An earthquake. 
D) Improvement in the education level. 
E) Change in the composition of current output. 
A) Change in technology. 
B) Change in the number of resources. 
C) An earthquake. 
D) Improvement in the education level. 
E) Change in the composition of current output.

Question 17

Which of the following is true ?

Accepted Answer

A) The production possibilities curve indicates that it will be impossible to expand total output with the passage of time. 
B) As long as resources are scarce, output cannot be increased. 
C) The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less. 
D) Over time, the output of goods and services can be increased through human ingenuity and discovery of better ways of doing things. 
A) The production possibilities curve indicates that it will be impossible to expand total output with the passage of time. 
B) As long as resources are scarce, output cannot be increased. 
C) The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less. 
D) Over time, the output of goods and services can be increased through human ingenuity and discovery of better ways of doing things.

Question 18

A nation can accelerate economic growth by increasing its production of consumer goods.

Accepted Answer

A) True 
 B)False

Question 19

Opportunity cost is the best alternative sacrificed for a chosen alternative.

Accepted Answer

A) True 
 B)False

Question 20

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.

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

All points on the production possibilities curve represent efficient levels of production.

A production possibilities curve shows the:

Exhibit 2-19 Production possibilities curves In Exhibit 2-19, 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 2-2 Production possibilities curve In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Exhibit 2-2 Production possibilities curve In Exhibit 2-2, the slope of the production possibilities curve indicates that the opportunity cost of:

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

When making a rational decision which requires the consideration of costs and benefits involved, the opportunity cost of a decision is often not taken into consideration when indeed it should be.

A source of economic growth is:

Of all the points on the production possibilities curve, only one point represents an efficient point.

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, inefficient resource use is shown by which of the following points?

Any point on the production possibilities curve illustrates:

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

A nation's current location on its production possibilities curve can determine the future location of that nation's production possibilities curve.

The amount of a good that must be given up to produce another good is the concept of:

Only socialist economies need to answer the What , How , and For Whom questions.

Which of the following would not lead to a shift in an economy's production possibilities curve?

Which of the following is true ?

A nation can accelerate economic growth by increasing its production of consumer goods.

Opportunity cost is the best alternative sacrificed for a chosen alternative.

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

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters