Question 1

Individuals face scarcity; whole societies do not.

Accepted Answer

A) True 
 B)False

Question 2

Since it is a centrally planned economy, China does not face opportunity costs when economic decisions are made.

Accepted Answer

A) True 
 B)False

Question 3

A society that relies on a market-based economy will always protect the natural environment.

Accepted Answer

A) True 
 B)False

Question 4

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Accepted Answer

A) True 
 B)False

Question 5

A production possibilities frontier shows the combinations of various goods that should be produced.

Accepted Answer

A) True 
 B)False

Question 6

What mechanism assures that firms produce outputs that consumers actually desire?

Accepted Answer

A) governmental regulations on the mix of outputs 
B) altruism 
C) the desire for profit 
D) a desire to serve others without thought of reward 
E) All of the responses are correct. 
A) governmental regulations on the mix of outputs 
B) altruism 
C) the desire for profit 
D) a desire to serve others without thought of reward 
E) All of the responses are correct.

Question 7

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

Accepted Answer

The division of labor means breaking up

Question 8

What mechanism assures that producers use inputs efficiently?

Accepted Answer

A) Governmental regulations determining the allocation of resources 
B) Altruism 
C) The desire for profit 
D) An innate desire to be efficient 
E) All of the responses are correct. 
A) Governmental regulations determining the allocation of resources 
B) Altruism 
C) The desire for profit 
D) An innate desire to be efficient 
E) All of the responses are correct.

Question 9

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home. Is this statement true?

Accepted Answer

This statement can be true. Such imports

Question 10

If a market system is functioning well, we can conclude that goods with

Accepted Answer

A) high opportunity costs tend to have high money costs. 
B) low opportunity costs tend to have high money costs. 
C) high opportunity costs tend to have low money costs. 
D) low opportunity costs tend to have zero money costs. 
E) high opportunity costs tend to have zero money costs. 
A) high opportunity costs tend to have high money costs. 
B) low opportunity costs tend to have high money costs. 
C) high opportunity costs tend to have low money costs. 
D) low opportunity costs tend to have zero money costs. 
E) high opportunity costs tend to have zero money costs.

Question 11

Do all valuable items have price tags?

Accepted Answer

A) No, because some valuable items have no opportunity cost. 
B) Yes, because everything has its price. 
C) Yes, because price is the measure of opportunity cost. 
D) No, some have no explicit price on them. 
E) Yes, because only items that can be sold in markets have value. 
A) No, because some valuable items have no opportunity cost. 
B) Yes, because everything has its price. 
C) Yes, because price is the measure of opportunity cost. 
D) No, some have no explicit price on them. 
E) Yes, because only items that can be sold in markets have value.

Question 12

If the production possibilities frontier for two goods is shown as a straight line, this implies that

Accepted Answer

A) there is no trade-off between the two goods. 
B) the principle of increasing costs is present. 
C) the slope of the production possibilities frontier is increasing. 
D) there are no specialized resources used in the production of these goods. 
A) there is no trade-off between the two goods. 
B) the principle of increasing costs is present. 
C) the slope of the production possibilities frontier is increasing. 
D) there are no specialized resources used in the production of these goods.

Question 13

Voluntary exchange results in mutual gains.

Accepted Answer

A) True 
 B)False

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

The U.S. government spent over $4 trillion in budget year 2018.

Accepted Answer

A) True 
 B)False

Question 16

Hutch Technology makes computer monitors, which sell for $100 each. What is the opportunity cost of 10 monitors?

Accepted Answer

A) $1,000 
B) The other goods that could be produced with the resources that produce the 10 monitors 
C) The profits that Hutch earns when 10 monitors are sold 
D) The lost profits that Hutch if the monitors are not produced 
E) All of the responses are correct. 
A) $1,000 
B) The other goods that could be produced with the resources that produce the 10 monitors 
C) The profits that Hutch earns when 10 monitors are sold 
D) The lost profits that Hutch if the monitors are not produced 
E) All of the responses are correct.

Question 17

Economic growth solves the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the U.S. government has an annual budget of about $4 trillion. Does the U.S. government face the problem of scarcity?

Accepted Answer

A) No, a government with $4 trillion in spending faces no real constraints. 
B) No, scarcity does not apply to governments. 
C) Yes, resources are limited even for the U.S. government. 
D) Yes, although the U.S. government can easily obtain more resources. 
E) Uncertain, economic theory has no answer to this question. 
A) No, a government with $4 trillion in spending faces no real constraints. 
B) No, scarcity does not apply to governments. 
C) Yes, resources are limited even for the U.S. government. 
D) Yes, although the U.S. government can easily obtain more resources. 
E) Uncertain, economic theory has no answer to this question.

Question 19

Optimal decisions are made based upon the concept of opportunity cost.

Accepted Answer

A) True 
 B)False

Question 20

A ticket to an Eric Clapton concert costs $45. If you have a ticket, you can "scalp" it (sell it illegally)for $75. To a ticket holder, the opportunity cost of actually attending the concert is

Accepted Answer

A) $45. 
B) $50. 
C) $75. 
D) $115. 
A) $45. 
B) $50. 
C) $75. 
D) $115.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Individuals face scarcity; whole societies do not.

Since it is a centrally planned economy, China does not face opportunity costs when economic decisions are made.

A society that relies on a market-based economy will always protect the natural environment.

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

A production possibilities frontier shows the combinations of various goods that should be produced.

What mechanism assures that firms produce outputs that consumers actually desire?

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

What mechanism assures that producers use inputs efficiently?

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home. Is this statement true?

If a market system is functioning well, we can conclude that goods with

Do all valuable items have price tags?

If the production possibilities frontier for two goods is shown as a straight line, this implies that

Voluntary exchange results in mutual gains.

Every economic decision involves a trade-off because of

The U.S. government spent over $4 trillion in budget year 2018.

Hutch Technology makes computer monitors, which sell for $100 each. What is the opportunity cost of 10 monitors?

Economic growth solves the problem of scarcity.

Suppose the U.S. government has an annual budget of about $4 trillion. Does the U.S. government face the problem of scarcity?

Optimal decisions are made based upon the concept of opportunity cost.

A ticket to an Eric Clapton concert costs $45. If you have a ticket, you can "scalp" it (sell it illegally)for $75. To a ticket holder, the opportunity cost of actually attending the concert is

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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