Question 1

A principle that economists emphasize is that the ____ of decision makers are always limited.

Accepted Answer

A)  ideas 
B)  goals 
C)  resources 
D)  opportunities 
E)  offices 
A)  ideas 
B)  goals 
C)  resources 
D)  opportunities 
E)  offices

Question 2

See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

Accepted Answer

Production exhibits increasing cost. The

Question 3

What is the division of labor? How does it raise efficiency and productivity?

Accepted Answer

The division of labor means breaking up

Question 4

In order to make an optimal choice, we must use

Accepted Answer

A)  percentage analysis. 
B)  total analysis. 
C)  average analysis. 
D)  marginal analysis. 
A)  percentage analysis. 
B)  total analysis. 
C)  average analysis. 
D)  marginal analysis.

Question 5

The law of comparative advantage explains why

Accepted Answer

A)  individuals choose specialized careers. 
B)  firms specialize in the production of certain goods. 
C)  nations develop strengths in certain industries. 
D)  All of the responses are correct. 
A)  individuals choose specialized careers. 
B)  firms specialize in the production of certain goods. 
C)  nations develop strengths in certain industries. 
D)  All of the responses are correct.

Question 6

Figure 3-1
 
According to Figure 3-1, the opportunity cost of one more bushel of wheat is

Accepted Answer

A)  higher at B than at D. 
B)  lower at B than at D. 
C)  equal at B and D. 
D)  impossible to determine from the information given. 
A)  higher at B than at D. 
B)  lower at B than at D. 
C)  equal at B and D. 
D)  impossible to determine from the information given.

Question 7

Although specialization of labor increases efficiency of production, another step is necessary

Accepted Answer

A)  to exchange goods among producers. 
B)  to remain fully employed. 
C)  to a reallocation of natural resources. 
D)  to assure that exchange leads to mutual gains. 
E)  All of the responses are correct. 
A)  to exchange goods among producers. 
B)  to remain fully employed. 
C)  to a reallocation of natural resources. 
D)  to assure that exchange leads to mutual gains. 
E)  All of the responses are correct.

Question 8

Adam Smith believed that markets coordinated the self-interests of consumers.

Accepted Answer

A) True 
 B)False

Question 9

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

Accepted Answer

A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan. 
A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan.

Question 10

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  bowed inward. 
D)  bowed outward. 
E)  undefined, because no market will exist in this case. 
A)  downward sloping. 
B)  upward sloping. 
C)  bowed inward. 
D)  bowed outward. 
E)  undefined, because no market will exist in this case.

Question 11

Whenever two individuals trade with each other, one will benefit and the other will lose.

Accepted Answer

A) True 
 B)False

Question 12

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

Accepted Answer

A)  No, an economy can also expand by invention and innovation. 
B)  No, an economy can also grow by investment instead of capital spending. 
C)  Yes, more capital is the only way to expand its production possibilities frontier. 
D)  Yes, although more capital clearly has a high opportunity cost. 
E)  Yes, because capital is the only constraining resource that limits growth. 
A)  No, an economy can also expand by invention and innovation. 
B)  No, an economy can also grow by investment instead of capital spending. 
C)  Yes, more capital is the only way to expand its production possibilities frontier. 
D)  Yes, although more capital clearly has a high opportunity cost. 
E)  Yes, because capital is the only constraining resource that limits growth.

Question 13

An optimal decision is one that chooses

Accepted Answer

A)  the most desirable alternative among the possibilities permitted by the resources available. 
B)  the lowest cost method of meeting goals, without regard to quality or any other feature. 
C)  among various possible goals and offends no one, so that all are equally happy. 
D)  among equally important goals, and thereby avoids the "indispensable necessity" syndrome. 
E)  among possible goals in such a way that spends as little money as possible. 
A)  the most desirable alternative among the possibilities permitted by the resources available. 
B)  the lowest cost method of meeting goals, without regard to quality or any other feature. 
C)  among various possible goals and offends no one, so that all are equally happy. 
D)  among equally important goals, and thereby avoids the "indispensable necessity" syndrome. 
E)  among possible goals in such a way that spends as little money as possible.

Question 14

Every economic decision involves a trade-off because of

Accepted Answer

A)  theory. 
B)  opportunism. 
C)  consumption. 
D)  scarcity. 
E)  efficiency. 
A)  theory. 
B)  opportunism. 
C)  consumption. 
D)  scarcity. 
E)  efficiency.

Question 15

According to Baumol, Blinder, and Solow, recognition of the usefulness of markets

Accepted Answer

A)  labels a person as an apologist (defender) of capital. 
B)  extends to some socialist countries, for example, China. 
C)  should make totally free markets good for any society. 
D)  makes one a radical. 
A)  labels a person as an apologist (defender) of capital. 
B)  extends to some socialist countries, for example, China. 
C)  should make totally free markets good for any society. 
D)  makes one a radical.

Question 16

Figure 3-5
 
At present, faculty in the Economics Department teach introductory and upper-level courses. Which graph in Figure 3-5 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 17

Which of the following quotations best captures the idea of opportunity cost?

Accepted Answer

A)  "Opportunity knocks but once." 
B)  "Every choice involves a sacrifice." 
C)  "Let's not ask for the moon; we have the stars." 
D)  "Fools rush in where wise men fear to tread." 
E)  "All that glitters is not gold." 
A)  "Opportunity knocks but once." 
B)  "Every choice involves a sacrifice." 
C)  "Let's not ask for the moon; we have the stars." 
D)  "Fools rush in where wise men fear to tread." 
E)  "All that glitters is not gold."

Question 18

A student has a chance to see Katy Perry in concert. The student also has a major economics exam the next day. If the student goes to the concert,

Accepted Answer

A)  attending the concert may impact her grade on the economics exam. 
B)  one opportunity cost of attending the concert is the time that could have been used to study. 
C)  this decision involves a trade-off. 
D)  All of the responses are correct. 
A)  attending the concert may impact her grade on the economics exam. 
B)  one opportunity cost of attending the concert is the time that could have been used to study. 
C)  this decision involves a trade-off. 
D)  All of the responses are correct.

Question 19

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Accepted Answer

A) True 
 B)False

Question 20

Scarcity is the fundamental problem of the economy.

Accepted Answer

A) True 
 B)False

A principle that economists emphasize is that the ____ of decision makers are always limited.

See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

What is the division of labor? How does it raise efficiency and productivity?

In order to make an optimal choice, we must use

The law of comparative advantage explains why

Figure 3-1 According to Figure 3-1, the opportunity cost of one more bushel of wheat is

Although specialization of labor increases efficiency of production, another step is necessary

Adam Smith believed that markets coordinated the self-interests of consumers.

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Whenever two individuals trade with each other, one will benefit and the other will lose.

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

An optimal decision is one that chooses

Every economic decision involves a trade-off because of

According to Baumol, Blinder, and Solow, recognition of the usefulness of markets

Which of the following quotations best captures the idea of opportunity cost?

A student has a chance to see Katy Perry in concert. The student also has a major economics exam the next day. If the student goes to the concert,

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Scarcity is the fundamental problem of the economy.

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

Filters

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A principle that economists emphasize is that the ____ of decision makers are always limited.

See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

What is the division of labor? How does it raise efficiency and productivity?

In order to make an optimal choice, we must use

The law of comparative advantage explains why

Figure 3-1 According to Figure 3-1, the opportunity cost of one more bushel of wheat is

Although specialization of labor increases efficiency of production, another step is necessary

Adam Smith believed that markets coordinated the self-interests of consumers.

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Whenever two individuals trade with each other, one will benefit and the other will lose.

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

An optimal decision is one that chooses

Every economic decision involves a trade-off because of

According to Baumol, Blinder, and Solow, recognition of the usefulness of markets

Which of the following quotations best captures the idea of opportunity cost?

A student has a chance to see Katy Perry in concert. The student also has a major economics exam the next day. If the student goes to the concert,

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Scarcity is the fundamental problem of the economy.

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

Filters