Question 1

Opportunity cost:

Accepted Answer

A) represents the best alternative sacrificed for a chosen alternative. 
B) has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. 
C) represents the worst alternative sacrificed for a chosen alternative. 
D) Represents all possible alternatives sacrificed for a chosen alternative. 
A) represents the best alternative sacrificed for a chosen alternative. 
B) has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. 
C) represents the worst alternative sacrificed for a chosen alternative. 
D) Represents all possible alternatives sacrificed for a chosen alternative.

Question 2

A good or service that is forgone by choosing one alternative over another is called a(n):

Accepted Answer

A) explicit cost. 
B) opportunity cost. 
C) historical cost. 
D) accounting cost. 
A) explicit cost. 
B) opportunity cost. 
C) historical cost. 
D) accounting cost.

Question 3

Exhibit 2-15 Production possibilities curve   In Exhibit 2-15, what can we conclude about point Q?

Accepted Answer

A) It is efficient. 
B) It is inefficient. 
C) It is unattainable. 
D) It gives maximum future growth. 
E) It shows underemployed resources. 
A) It is efficient. 
B) It is inefficient. 
C) It is unattainable. 
D) It gives maximum future growth. 
E) It shows underemployed resources.

Question 4

A production possibilities curve shows the various:

Accepted Answer

A) prices that can be charged for capital and consumption goods. 
B) combinations of prices and outputs that can be produced. 
C) combinations of goods the economy has the capacity to produce. 
D) combinations of resources and prices that the economy can produce. 
A) prices that can be charged for capital and consumption goods. 
B) combinations of prices and outputs that can be produced. 
C) combinations of goods the economy has the capacity to produce. 
D) combinations of resources and prices that the economy can produce.

Question 5

Which of the following cause(s)economic growth?

Accepted Answer

A) c and d. 
B) d and e. 
C) The production of more scarce goods 
D) A technological improvement 
E) The production of more capital goods 
A) c and d. 
B) d and e. 
C) The production of more scarce goods 
D) A technological improvement 
E) The production of more capital goods

Question 6

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) the same as moving from A to C. 
B) the same as moving from A to D. 
C) the same as moving from B to D. 
D) the same as moving from B to C. 
E) it is not possible to determine. 
A) the same as moving from A to C. 
B) the same as moving from A to D. 
C) the same as moving from B to D. 
D) the same as moving from B to C. 
E) it is not possible to determine.

Question 7

If some resources were used inefficiently, the economy would operate outside its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would most likely cause the production possibilities curve for DVDs and food to shift outward?

Accepted Answer

A) A choice of more food and more DVDs. 
B) A choice of more food and less DVDs. 
C) A choice of more DVDs and less food. 
D) An increase in the quantity of natural resources. 
A) A choice of more food and more DVDs. 
B) A choice of more food and less DVDs. 
C) A choice of more DVDs and less food. 
D) An increase in the quantity of natural resources.

Question 9

One of the assumptions underlying the production possibilities curve for any given economy is that:

Accepted Answer

A) the state of technology changes. 
B) there is an unlimited supply of resources. 
C) there is full employment of resources when the economy is on the curve. 
D) goods can be produced outside the curve. 
A) the state of technology changes. 
B) there is an unlimited supply of resources. 
C) there is full employment of resources when the economy is on the curve. 
D) goods can be produced outside the curve.

Question 10

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. Which of the following could have caused a shift for Year X to Year Y in production possibilities curves?

Accepted Answer

A) An increase in unemployment. 
B) A decline in technology. 
C) An increase in the stock of capital goods. 
D) A natural disaster. 
E) More efficient production. 
A) An increase in unemployment. 
B) A decline in technology. 
C) An increase in the stock of capital goods. 
D) A natural disaster. 
E) More efficient production.

Question 11

Adding more resources causes:

Accepted Answer

A) downward movement along a production possibilities curve. 
B) the production possibilities curve to shift in. 
C) upward movement along a production possibilities curve. 
D) the production possibilities curve to shift out. 
E) the production possibilities curve to become positively sloped. 
A) downward movement along a production possibilities curve. 
B) the production possibilities curve to shift in. 
C) upward movement along a production possibilities curve. 
D) the production possibilities curve to shift out. 
E) the production possibilities curve to become positively sloped.

Question 12

Exhibit 2-11 Production possibilities curves   In Exhibit 2-11, which of the following could have caused the production possibilities curve to shift from the one labeled B to the one labeled A?

Accepted Answer

A) A major natural disaster. 
B) An increase in resources. 
C) An advance in technology. 
D) A decrease in unemployment. 
E) An improvement in literacy. 
A) A major natural disaster. 
B) An increase in resources. 
C) An advance in technology. 
D) A decrease in unemployment. 
E) An improvement in literacy.

Question 13

In order for an economy to shift its production possibilities curve rightward, it must:

Accepted Answer

A) suffer resource unemployment. 
B) experience an increase in its resources and\or an improvement in its technology. 
C) use its resources more efficiently than at points along the curve. 
D) all of these. 
A) suffer resource unemployment. 
B) experience an increase in its resources and\or an improvement in its technology. 
C) use its resources more efficiently than at points along the curve. 
D) all of these.

Question 14

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Accepted Answer

A) best alternative foregone by building the park. 
B) dollar cost of constructing the new park. 
C) dollar cost of the old park. 
D) increased taxes necessary to pay for maintenance of the new park. 
A) best alternative foregone by building the park. 
B) dollar cost of constructing the new park. 
C) dollar cost of the old park. 
D) increased taxes necessary to pay for maintenance of the new park.

Question 15

A point inside a production possibilities curve reflects:

Accepted Answer

A) the law of increasing costs. 
B) technological innovation. 
C) less than full use of resources and technology. 
D) economic efficiency. 
E) a way to increase future economic growth. 
A) the law of increasing costs. 
B) technological innovation. 
C) less than full use of resources and technology. 
D) economic efficiency. 
E) a way to increase future economic growth.

Question 16

An outward shift of an economy's production possibilities curve is caused by:

Accepted Answer

A) an increase in capital. 
B) an increase in labor. 
C) an advance in technology. 
D) all of these. 
A) an increase in capital. 
B) an increase in labor. 
C) an advance in technology. 
D) all of these.

Question 17

Exhibit 2-6 Production possibilities curve data
  In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Accepted Answer

A) the quantity of capital goods produced must be less than 150. 
B) the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C) greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D) the amount of consumer goods produced must be greater than zero. 
A) the quantity of capital goods produced must be less than 150. 
B) the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C) greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D) the amount of consumer goods produced must be greater than zero.

Question 18

Exhibit 2-15 Production possibilities curve   In Exhibit 2-15, the production possibilities curve demonstrates:

Accepted Answer

A) changing prices. 
B) economic growth. 
C) decreases in resources. 
D) the law of increasing opportunity costs. 
E) changing technology. 
A) changing prices. 
B) economic growth. 
C) decreases in resources. 
D) the law of increasing opportunity costs. 
E) changing technology.

Question 19

Exhibit 2-16 Production possibilities curve   From the information in Exhibit 2-16, which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

Accepted Answer

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

Question 20

The production possibilities curve demonstrates the basic economic principle that:

Accepted Answer

A) market-based economies are more efficient. 
B) supply will determine demand in the economy. 
C) the production of more capital goods this year will cause the economy to produce less consumption goods next year. 
D) to produce more of any one thing, assuming full employment, the economy must produce less of something else. 
E) to produce more consumption goods this year requires the production of more capital goods this year. 
A) market-based economies are more efficient. 
B) supply will determine demand in the economy. 
C) the production of more capital goods this year will cause the economy to produce less consumption goods next year. 
D) to produce more of any one thing, assuming full employment, the economy must produce less of something else. 
E) to produce more consumption goods this year requires the production of more capital goods this year.

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

Opportunity cost:

A good or service that is forgone by choosing one alternative over another is called a(n):

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, what can we conclude about point Q?

A production possibilities curve shows the various:

Which of the following cause(s)economic growth?

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

If some resources were used inefficiently, the economy would operate outside its production possibilities curve.

Which of the following would most likely cause the production possibilities curve for DVDs and food to shift outward?

One of the assumptions underlying the production possibilities curve for any given economy is that:

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. Which of the following could have caused a shift for Year X to Year Y in production possibilities curves?

Adding more resources causes:

Exhibit 2-11 Production possibilities curves In Exhibit 2-11, which of the following could have caused the production possibilities curve to shift from the one labeled B to the one labeled A?

In order for an economy to shift its production possibilities curve rightward, it must:

The opportunity cost to a city for using local tax revenues to construct a new park is the:

A point inside a production possibilities curve reflects:

An outward shift of an economy's production possibilities curve is caused by:

Exhibit 2-6 Production possibilities curve data In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, the production possibilities curve demonstrates:

Exhibit 2-16 Production possibilities curve From the information in Exhibit 2-16, which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

The production possibilities curve demonstrates the basic economic principle that:

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

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