Question 1

A market system is not considered an effective way of controlling self-interest.

Accepted Answer

A) True 
 B)False

Question 2

Voluntary exchange

Accepted Answer

A) is usually beneficial to one party, but not the other. 
B) is always beneficial to both parties. 
C) is occasionally beneficial to both parties. 
D) occurs only between nations, not between individuals. 
A) is usually beneficial to one party, but not the other. 
B) is always beneficial to both parties. 
C) is occasionally beneficial to both parties. 
D) occurs only between nations, not between individuals.

Question 3

An optimal choice can be characterized as a decision made by someone who is satisficing.

Accepted Answer

A) True 
 B)False

Question 4

As a general rule, an increase in the capital available to a society

Accepted Answer

A) reduces the slope of the production possibilities frontier, making it shallower. 
B) increases the slope of the production possibilities frontier, making it steeper. 
C) shifts the production possibilities frontier outward, away from the origin. 
D) shifts the production possibilities frontier inward, toward the origin. 
E) makes the production possibilities frontier more bowed out. 
A) reduces the slope of the production possibilities frontier, making it shallower. 
B) increases the slope of the production possibilities frontier, making it steeper. 
C) shifts the production possibilities frontier outward, away from the origin. 
D) shifts the production possibilities frontier inward, toward the origin. 
E) makes the production possibilities frontier more bowed out.

Question 5

The statement "Resources employed in producing X are better suited to making Y" is another way of saying resources

Accepted Answer

A) are specialized. 
B) are scarce. 
C) are used inefficiently. 
D) are unproductive. 
E) have no opportunity cost. 
A) are specialized. 
B) are scarce. 
C) are used inefficiently. 
D) are unproductive. 
E) have no opportunity cost.

Question 6

According to the principle of increasing costs, as the production of one good expands, the opportunity cost of producing another unit of the good tends to increase.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following events create an outward shift of the production possibilities curve?

Accepted Answer

A) The United States moves resources from the production of goods for domestic production to the production of goods for export. 
B) Tax reductions reduce the cost and increase the amount of investment in factories, machinery, and research and development. 
C) There is an migration of young people to another country where there is more political freedom. 
D) The unemployment rate falls from 33 percent to 12 percent. 
A) The United States moves resources from the production of goods for domestic production to the production of goods for export. 
B) Tax reductions reduce the cost and increase the amount of investment in factories, machinery, and research and development. 
C) There is an migration of young people to another country where there is more political freedom. 
D) The unemployment rate falls from 33 percent to 12 percent.

Question 8

Economics examines the options open to households, business firms, governments, and entire societies by the limited resources at their command.

Accepted Answer

A) True 
 B)False

Question 9

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Accepted Answer

A) True 
 B)False

Question 10

Opportunity cost is the combined value of all of the other alternatives that go unselected.

Accepted Answer

A) True 
 B)False

Question 11

Karl Marx was critical of markets on the grounds that they are not efficient.

Accepted Answer

A) True 
 B)False

Question 12

The concavity or bowed-out shape of the production possibilities frontier is the result of

Accepted Answer

A) the law of downward-sloping demand. 
B) the law of upward-sloping demand. 
C) the principle of increasing cost. 
D) complementarity in consumption. 
A) the law of downward-sloping demand. 
B) the law of upward-sloping demand. 
C) the principle of increasing cost. 
D) complementarity in consumption.

Question 13

Figure 3-2 
  
-In Figure 3-2, a point such as A

Accepted Answer

A) is preferable over B. 
B) is an efficient use of resources. 
C) represents a misallocation of resources. 
D) is not obtainable. 
A) is preferable over B. 
B) is an efficient use of resources. 
C) represents a misallocation of resources. 
D) is not obtainable.

Question 14

At various times, the United States has undergone the painful process of reducing military spending. Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close. How can one rationally decide which bases to shut down, given the necessity of jobs?

Accepted Answer

One must examine the opportunity cost of

Question 15

Which of the following does not determine the position and shape of a society's production possibilities frontier?

Accepted Answer

A) Physical resources 
B) Price level 
C) Skills and technology 
D) Past investment in factories and in research 
A) Physical resources 
B) Price level 
C) Skills and technology 
D) Past investment in factories and in research

Question 16

A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.

Accepted Answer

The market deals with efficiency in prod

Question 17

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

Accepted Answer

A) True 
 B)False

Question 18

While specialization and exchange were very important to Adam Smith in 1776, they have largely lost their importance in the 21st century.

Accepted Answer

A) True 
 B)False

Question 19

What determines the position and shape of a society's production possibilities frontier?

Accepted Answer

A) The physical resources of that society 
B) The skills of the workforce 
C) The level of technology of the society 
D) The amount of factories in the society 
E) All of the responses are correct. 
A) The physical resources of that society 
B) The skills of the workforce 
C) The level of technology of the society 
D) The amount of factories in the society 
E) All of the responses are correct.

Question 20

The opportunity cost and the money cost of a good

Accepted Answer

A) can be the same in a well-functioning free market. 
B) are never the same. 
C) matter only to the purchaser of the good. 
D) are not reflected in its price. 
A) can be the same in a well-functioning free market. 
B) are never the same. 
C) matter only to the purchaser of the good. 
D) are not reflected in its price.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A market system is not considered an effective way of controlling self-interest.

Voluntary exchange

An optimal choice can be characterized as a decision made by someone who is satisficing.

As a general rule, an increase in the capital available to a society

The statement "Resources employed in producing X are better suited to making Y" is another way of saying resources

According to the principle of increasing costs, as the production of one good expands, the opportunity cost of producing another unit of the good tends to increase.

Which of the following events create an outward shift of the production possibilities curve?

Economics examines the options open to households, business firms, governments, and entire societies by the limited resources at their command.

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Opportunity cost is the combined value of all of the other alternatives that go unselected.

Karl Marx was critical of markets on the grounds that they are not efficient.

The concavity or bowed-out shape of the production possibilities frontier is the result of

Figure 3-2 -In Figure 3-2, a point such as A

At various times, the United States has undergone the painful process of reducing military spending. Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close. How can one rationally decide which bases to shut down, given the necessity of jobs?

Which of the following does not determine the position and shape of a society's production possibilities frontier?

A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

While specialization and exchange were very important to Adam Smith in 1776, they have largely lost their importance in the 21st century.

What determines the position and shape of a society's production possibilities frontier?

The opportunity cost and the money cost of a good

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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