Question 1

Exhibit 2-13 Production possibilities curve   In Exhibit 2-13, point H is:

Accepted Answer

A) achievable with today's resource base. 
B) not achievable today because the economy has not achieved full employment. 
C) not achievable today because the economy is not at its maximum point of efficiency. 
D) not achievable today because of waste. 
E) not achievable today because of inadequate production capacity. 
A) achievable with today's resource base. 
B) not achievable today because the economy has not achieved full employment. 
C) not achievable today because the economy is not at its maximum point of efficiency. 
D) not achievable today because of waste. 
E) not achievable today because of inadequate production capacity.

Question 2

Other things being equal, a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Accepted Answer

A) movement off the curve to a point inside the curve. 
B) movement down along the curve. 
C) movement up along the curve. 
D) inward shift of the entire curve. 
A) movement off the curve to a point inside the curve. 
B) movement down along the curve. 
C) movement up along the curve. 
D) inward shift of the entire curve.

Question 3

The amount of a good that is given up to produce another good is:

Accepted Answer

A) its dollar cost. 
B) its opportunity cost. 
C) its relative cost. 
D) its absolute cost. 
E) all of these. 
A) its dollar cost. 
B) its opportunity cost. 
C) its relative cost. 
D) its absolute cost. 
E) all of these.

Question 4

A production possibility graph slopes down because of:

Accepted Answer

A) the law of increasing costs. 
B) nonhomogeneous resources. 
C) inefficiency. 
D) improper output mix. 
E) unemployment. 
A) the law of increasing costs. 
B) nonhomogeneous resources. 
C) inefficiency. 
D) improper output mix. 
E) unemployment.

Question 5

Which fundamental economic question requires society to choose the technological and resource mix used to produce goods?

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.

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) More consumer spending now means more spending in the future. 
D) If I spend more on clothes, I must spend less on food. 
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) More consumer spending now means more spending in the future. 
D) If I spend more on clothes, I must spend less on food.

Question 7

The basic approach in marginal analysis is to compare a policy's total benefits with its total costs.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 2-10 Production possibilities curve data     Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must ____, because ____.

Accepted Answer

A) increase; the production possibility table shows only the maximum efficiency points 
B) increase; of the law of increasing costs 
C) decrease; of the law of increasing costs 
D) decrease; of the finite nature of the resource base 
E) increase; capital goods will assist in the production of consumer goods 
A) increase; the production possibility table shows only the maximum efficiency points 
B) increase; of the law of increasing costs 
C) decrease; of the law of increasing costs 
D) decrease; of the finite nature of the resource base 
E) increase; capital goods will assist in the production of consumer goods

Question 9

All points on the production possibilities curve are:

Accepted Answer

A) unattainable. 
B) fair. 
C) efficient. 
D) optimal. 
A) unattainable. 
B) fair. 
C) efficient. 
D) optimal.

Question 10

Exhibit 2-1 Production possibilities curve data   In Exhibit 2-1, according to the information, the opportunity cost of producing 3 units of capital is:

Accepted Answer

A) 3 units of consumption goods. 
B) 4 units of consumption goods. 
C) 6 units of consumption goods. 
D) 7 units of consumption goods. 
A) 3 units of consumption goods. 
B) 4 units of consumption goods. 
C) 6 units of consumption goods. 
D) 7 units of consumption goods.

Question 11

In economics, the term marginal refers to:

Accepted Answer

A) the change or difference from a current situation. 
B) man-made resources as opposed to natural resources. 
C) the satisfaction a consumer receives from a good. 
D) holding everything else constant in the analysis. 
A) the change or difference from a current situation. 
B) man-made resources as opposed to natural resources. 
C) the satisfaction a consumer receives from a good. 
D) holding everything else constant in the analysis.

Question 12

A local restaurant offers an "all you can eat" Sunday brunch for $12. Susan eats four servings, but leaves half of a fifth helping uneaten. Why?

Accepted Answer

A) Her marginal value of a serving of brunch has fallen below $12. 
B) Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings). 
C) Her marginal value of food has fallen to zero. 
D) The total value she places on brunch today exactly equals $12. 
A) Her marginal value of a serving of brunch has fallen below $12. 
B) Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings). 
C) Her marginal value of food has fallen to zero. 
D) The total value she places on brunch today exactly equals $12.

Question 13

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Accepted Answer

A) A choice of more computers and less education. 
B) A choice of more education and less computers. 
C) A reduction in the labor force. 
D) An increase in the quantity of resources. 
A) A choice of more computers and less education. 
B) A choice of more education and less computers. 
C) A reduction in the labor force. 
D) An increase in the quantity of resources.

Question 14

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

Accepted Answer

A) If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. 
B) If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods. 
C) Over time, it is generally impossible for a country to expand its production of goods. 
D) An economy will automatically move toward a point that lies outside of the production possibilities constraint unless proper government policy constrains production. 
A) If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. 
B) If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods. 
C) Over time, it is generally impossible for a country to expand its production of goods. 
D) An economy will automatically move toward a point that lies outside of the production possibilities constraint unless proper government policy constrains production.

Question 15

If an economy is operating at a point inside the production possibilities curve,

Accepted Answer

A) its resources are not being used efficiently. 
B) the curve will begin to shift inward. 
C) the curve will begin to shift outward. 
D) This is a trick question because an economy cannot produce at a point inside the curve. 
A) its resources are not being used efficiently. 
B) the curve will begin to shift inward. 
C) the curve will begin to shift outward. 
D) This is a trick question because an economy cannot produce at a point inside the curve.

Question 16

The opportunity cost of an action is:

Accepted Answer

A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the value of the best opportunity that must be sacrificed in order to take the action. 
D) the cost of all alternative actions that could have been taken, added together. 
A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the value of the best opportunity that must be sacrificed in order to take the action. 
D) the cost of all alternative actions that could have been taken, added together.

Question 17

Exhibit 2-9 Production possibilities curve   Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

Accepted Answer

A) Z to W. 
B) W to Y. 
C) W to X. 
D) X to Y. 
A) Z to W. 
B) W to Y. 
C) W to X. 
D) X to Y.

Question 18

Marginal analysis examines the effects of additions to or subtractions from a current situation.

Accepted Answer

A) True 
 B)False

Question 19

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:

Accepted Answer

A) we will have to give up the production of other goods that could have been produced with these resources. 
B) we will be able to produce the same amount of other goods as before. 
C) the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift. 
D) we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology. 
A) we will have to give up the production of other goods that could have been produced with these resources. 
B) we will be able to produce the same amount of other goods as before. 
C) the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift. 
D) we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology.

Question 20

The law of increasing costs holds that the opportunity cost:

Accepted Answer

A) of a good decreases as the quantity of the good produced increases. 
B) of a good is proportional to the resources used in its production. 
C) of a good increases as more of the good is produced. 
D) of a good does not change with the resources used its production. 
E) changes as more of the good is produced. 
A) of a good decreases as the quantity of the good produced increases. 
B) of a good is proportional to the resources used in its production. 
C) of a good increases as more of the good is produced. 
D) of a good does not change with the resources used its production. 
E) changes as more of the good is produced.

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

Exhibit 2-13 Production possibilities curve In Exhibit 2-13, point H is:

Other things being equal, a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

The amount of a good that is given up to produce another good is:

A production possibility graph slopes down because of:

Which fundamental economic question requires society to choose the technological and resource mix used to produce goods?

Which of the following does not illustrate opportunity cost?

The basic approach in marginal analysis is to compare a policy's total benefits with its total costs.

Exhibit 2-10 Production possibilities curve data Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must ____, because ____.

All points on the production possibilities curve are:

Exhibit 2-1 Production possibilities curve data In Exhibit 2-1, according to the information, the opportunity cost of producing 3 units of capital is:

In economics, the term marginal refers to:

A local restaurant offers an "all you can eat" Sunday brunch for $12. Susan eats four servings, but leaves half of a fifth helping uneaten. Why?

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

If an economy is operating at a point inside the production possibilities curve,

The opportunity cost of an action is:

Exhibit 2-9 Production possibilities curve Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

Marginal analysis examines the effects of additions to or subtractions from a current situation.

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:

The law of increasing costs holds that the opportunity cost:

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

Exhibit 2-10 Production possibilities curve data Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must , because .