Question 1

The process through which an economy's production possibilities curve shifts outward is:

Accepted Answer

A) full-employment management. 
B) investment. 
C) resource renewal. 
D) out-resourcing. 
A) full-employment management. 
B) investment. 
C) resource renewal. 
D) out-resourcing.

Question 2

What can a nation do to increase its economic growth? Why is economic growth among the major national economic goals of all countries?

Accepted Answer

A nation must increase its production po

Question 3

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis. On this diagram, the opportunity cost of good X, in terms of good Y, is represented by the:

Accepted Answer

A) distance to the curve from the horizontal axis. 
B) distance to the curve from the vertical axis. 
C) distance from the origin to the curve. 
D) change in Y for each change in X along the curve. 
A) distance to the curve from the horizontal axis. 
B) distance to the curve from the vertical axis. 
C) distance from the origin to the curve. 
D) change in Y for each change in X along the curve.

Question 4

A point outside the production possibilities curve represents a combination of goods that is:

Accepted Answer

A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable. 
A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable.

Question 5

Production possibilities curve analysis includes the idea of:

Accepted Answer

A) opportunity cost. 
B) scarcity. 
C) maximum production choices. 
D) all of these. 
A) opportunity cost. 
B) scarcity. 
C) maximum production choices. 
D) all of these.

Question 6

Which of the following does not illustrate opportunity cost?

Accepted Answer

A) If I study, I must give up going to the football game. 
B) If I buy a computer, I must do without a 35" television. 
C) If I spend more on clothes, I must spend less on food. 
D) All of these illustrate opportunity cost. 
A) If I study, I must give up going to the football game. 
B) If I buy a computer, I must do without a 35" television. 
C) If I spend more on clothes, I must spend less on food. 
D) All of these illustrate opportunity cost.

Question 7

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Accepted Answer

A) no more carrots will be produced. 
B) resources are equally suited to the production of carrots and to other goods. 
C) the production possibilities curve is a straight line. 
D) the production possibilities curve becomes positively sloped. 
E) the law of increasing costs is present. 
A) no more carrots will be produced. 
B) resources are equally suited to the production of carrots and to other goods. 
C) the production possibilities curve is a straight line. 
D) the production possibilities curve becomes positively sloped. 
E) the law of increasing costs is present.

Question 8

The most efficient point on the production possibilities curve is the midpoint on the curve.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 2-12 Production possibilities curve   In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false ?

Accepted Answer

A) This economy could produce more of both capital and consumption goods. 
B) This economy is experiencing full employment. 
C) This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D) This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E) Not every resource in this economy is being utilized 
A) This economy could produce more of both capital and consumption goods. 
B) This economy is experiencing full employment. 
C) This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D) This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E) Not every resource in this economy is being utilized

Question 10

On a production possibilities curve diagram, greater entrepreneurship:

Accepted Answer

A) causes the curve to shift outward. 
B) keeps the economy on the curve. 
C) prevents movement along the curve. 
D) keeps the economy at the corners of the curve. 
A) causes the curve to shift outward. 
B) keeps the economy on the curve. 
C) prevents movement along the curve. 
D) keeps the economy at the corners of the curve.

Question 11

Why are all costs really "opportunity costs"?

Accepted Answer

An opportunity cost is what must be give

Question 12

Robinson Crusoe's decision to produce more capital goods and fewer consumer goods in a given period causes:

Accepted Answer

A) a decrease in the resources available in its economy. 
B) an increase in economic growth in future periods. 
C) a decrease in economic growth in future periods. 
D) no change in the availability of resources in its economy. 
E) a decrease in the ability to produce goods in the next period. 
A) a decrease in the resources available in its economy. 
B) an increase in economic growth in future periods. 
C) a decrease in economic growth in future periods. 
D) no change in the availability of resources in its economy. 
E) a decrease in the ability to produce goods in the next period.

Question 13

Exhibit 2-15 Production possibilities curve   In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

Accepted Answer

A) 40 less consumer goods. 
B) 25 less consumer goods. 
C) 15 less consumer goods. 
D) 15 more consumer goods. 
E) 25 more consumer goods. 
A) 40 less consumer goods. 
B) 25 less consumer goods. 
C) 15 less consumer goods. 
D) 15 more consumer goods. 
E) 25 more consumer goods.

Question 14

A point outside a production possibilities curve reflects:

Accepted Answer

A) efficiency. 
B) specialization. 
C) inefficiency. 
D) unemployment. 
E) an impossible choice. 
A) efficiency. 
B) specialization. 
C) inefficiency. 
D) unemployment. 
E) an impossible choice.

Question 15

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

Accepted Answer

A) economy A will operate inefficiently. 
B) economy B will operate inefficiently. 
C) economy A and economy B will grow equally fast. 
D) economy A will grow faster than economy B. 
E) economy B will grow faster than economy A. 
A) economy A will operate inefficiently. 
B) economy B will operate inefficiently. 
C) economy A and economy B will grow equally fast. 
D) economy A will grow faster than economy B. 
E) economy B will grow faster than economy A.

Question 16

Exhibit 2-16 Production possibilities curve   In Exhibit 2-16, which of the following points on the production possibilities curve are efficient production points?

Accepted Answer

A) A, B, C, U 
B) A, B, C, D, U 
C) E, U, W 
D) B, C, D, U 
E) A, B, C, D 
A) A, B, C, U 
B) A, B, C, D, U 
C) E, U, W 
D) B, C, D, U 
E) A, B, C, D

Question 17

Which of the following causes the production possibilities curve to shift to the right?

Accepted Answer

A) d and e. 
B) c and e. 
C) A war. 
D) The development of a new technology that improves productivity. 
E) The discovery of oil reserves. 
A) d and e. 
B) c and e. 
C) A war. 
D) The development of a new technology that improves productivity. 
E) The discovery of oil reserves.

Question 18

The law of increasing opportunity costs causes the production possibilities curve to:

Accepted Answer

A) be a straight line. 
B) slope upwards. 
C) have a bowed-out shape. 
D) shift inward. 
A) be a straight line. 
B) slope upwards. 
C) have a bowed-out shape. 
D) shift inward.

Question 19

Investment in capital accumulation, as well as investment in education and other labor productivity enhancing programs, is necessary for economic growth.

Accepted Answer

A) True 
 B)False

Question 20

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

Accepted Answer

A) would be zero. 
B) would be 25 cents. 
C) would be 50 cents. 
D) cannot be determined because the information about the price of the French fries is not provided. 
A) would be zero. 
B) would be 25 cents. 
C) would be 50 cents. 
D) cannot be determined because the information about the price of the French fries is not provided.

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

The process through which an economy's production possibilities curve shifts outward is:

What can a nation do to increase its economic growth? Why is economic growth among the major national economic goals of all countries?

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis. On this diagram, the opportunity cost of good X, in terms of good Y, is represented by the:

A point outside the production possibilities curve represents a combination of goods that is:

Production possibilities curve analysis includes the idea of:

Which of the following does not illustrate opportunity cost?

When the opportunity cost of producing carrots increases as more carrots are produced, then:

The most efficient point on the production possibilities curve is the midpoint on the curve.

Exhibit 2-12 Production possibilities curve In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false ?

On a production possibilities curve diagram, greater entrepreneurship:

Why are all costs really "opportunity costs"?

Robinson Crusoe's decision to produce more capital goods and fewer consumer goods in a given period causes:

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

A point outside a production possibilities curve reflects:

Exhibit 2-16 Production possibilities curve In Exhibit 2-16, which of the following points on the production possibilities curve are efficient production points?

Which of the following causes the production possibilities curve to shift to the right?

The law of increasing opportunity costs causes the production possibilities curve to:

Investment in capital accumulation, as well as investment in education and other labor productivity enhancing programs, is necessary for economic growth.

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

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