Question 1

Which would be least likely to cause the production possibilities curve to shift to the right?

Accepted Answer

A)  An increase in the labor force. 
B)  Improved methods of production. 
C)  An increase in the education and training of the labor force. 
D)  A decrease in unemployment. 
A)  An increase in the labor force. 
B)  Improved methods of production. 
C)  An increase in the education and training of the labor force. 
D)  A decrease in unemployment.

Question 2

An opportunity cost is the highest valued alternative foregone whenever one chooses an alternative.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 2-15  Production possibilities curve   In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?

Accepted Answer

A)  J. 
B)  K. 
C)  M. 
D)  N. 
E)  P. 
A)  J. 
B)  K. 
C)  M. 
D)  N. 
E)  P.

Question 4

Exhibit 2-4  Production possibilities curve data   According to the data given in Exhibit 2-4, the production of 140 units of consumer goods and 10 units of capital goods:

Accepted Answer

A)  is possible but would be inefficient. 
B)  may be a result of unemployment. 
C)  may be a result of unused natural resources. 
D)  all of the above. 
E)  none of the above. 
A)  is possible but would be inefficient. 
B)  may be a result of unemployment. 
C)  may be a result of unused natural resources. 
D)  all of the above. 
E)  none of the above.

Question 5

As production of a good increases, opportunity costs rise because:

Accepted Answer

A)  there will be more inefficiency. 
B)  people always prefer having more goods. 
C)  of inflationary pressures. 
D)  workers are not equally suited to all tasks. 
A)  there will be more inefficiency. 
B)  people always prefer having more goods. 
C)  of inflationary pressures. 
D)  workers are not equally suited to all tasks.

Question 6

Each and every point along a production possibilities curve represents an efficient output option for an economy.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  A major natural disaster 
B)  An increase in consumption goods production this year 
C)  An advance in technology 
D)  An increase in unemployment 
E)  A decrease in consumption goods production this year 
A)  A major natural disaster 
B)  An increase in consumption goods production this year 
C)  An advance in technology 
D)  An increase in unemployment 
E)  A decrease in consumption goods production this year

Question 8

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis. On this diagram, the opportunity cost of good X, in terms of good Y, is represented by the:

Accepted Answer

A)  distance to the curve from the horizontal axis. 
B)  distance to the curve from the vertical axis. 
C)  distance from the origin to the curve. 
D)  change in Y for each change in X along the curve. 
A)  distance to the curve from the horizontal axis. 
B)  distance to the curve from the vertical axis. 
C)  distance from the origin to the curve. 
D)  change in Y for each change in X along the curve.

Question 9

Discuss the three fundamental economic questions that all nations must address.

Accepted Answer

The three fundamental economic questions

Question 10

Which of the following best describes the three fundamental economic questions?

Accepted Answer

A)  ​What to produce, when to produce, and where to produce. 
B)  ​What time to produce, what place to produce, and how to produce. 
C)  ​ What to produce, when to produce, and for whom to produce. 
D)  ​What to produce, how to produce, and for whom to produce. 
A)  ​What to produce, when to produce, and where to produce. 
B)  ​What time to produce, what place to produce, and how to produce. 
C)  ​ What to produce, when to produce, and for whom to produce. 
D)  ​What to produce, how to produce, and for whom to produce.

Question 11

In the context of the production possibilities curve, opportunity cost is measured in:

Accepted Answer

A)  dollars paid for the goods. 
B)  the quantity of other goods given up. 
C)  the value of the resources used. 
D)  changing technology. 
E)  units of satisfaction. 
A)  dollars paid for the goods. 
B)  the quantity of other goods given up. 
C)  the value of the resources used. 
D)  changing technology. 
E)  units of satisfaction.

Question 12

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 13

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

Accepted Answer

A)  would be zero. 
B)  would be 25 cents. 
C)  would be 50 cents. 
D)  cannot be determined because the information about the price of the French fries is not provided. 
A)  would be zero. 
B)  would be 25 cents. 
C)  would be 50 cents. 
D)  cannot be determined because the information about the price of the French fries is not provided.

Question 14

Which of the following is an example of an organization using marginal analysis?

Accepted Answer

A)  ​A hotel manager calculating the average cost per guest for the past year. 
B)  ​A farmer hoping for rain. 
C)  ​A government official considering what effect an increase in military goods production will have on the production of consumer goods. 
D)  ​A business calculating economic profits. 
A)  ​A hotel manager calculating the average cost per guest for the past year. 
B)  ​A farmer hoping for rain. 
C)  ​A government official considering what effect an increase in military goods production will have on the production of consumer goods. 
D)  ​A business calculating economic profits.

Question 15

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 16

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 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

An efficient economy:

Accepted Answer

A)  uses available resources fully. 
B)  uses the best division of labor. 
C)  produces an output combination at some point along the production possibility curve. 
D)  all of the above. 
A)  uses available resources fully. 
B)  uses the best division of labor. 
C)  produces an output combination at some point along the production possibility curve. 
D)  all of the above.

Question 19

Exhibit 2-13  Production possibilities curve   In Exhibit 2-13, if the economy decides to locate at point E, then:

Accepted Answer

A)  this is the best choice for this economy. 
B)  the maximum number of consumption goods is being produced. 
C)  the economy has not achieved full employment. 
D)  the economy could not survive because no food is being produced. 
E)  the economy has not achieved maximum efficiency. 
A)  this is the best choice for this economy. 
B)  the maximum number of consumption goods is being produced. 
C)  the economy has not achieved full employment. 
D)  the economy could not survive because no food is being produced. 
E)  the economy has not achieved maximum efficiency.

Question 20

Exhibit 2-12  Production possibilities curve   In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false?

Accepted Answer

A)  This economy could produce more of both capital and consumption goods. 
B)  This economy is experiencing full employment. 
C)  This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D)  This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E)  Not every resource in this economy is being utilized 
A)  This economy could produce more of both capital and consumption goods. 
B)  This economy is experiencing full employment. 
C)  This economy could produce more capital goods while holding fixed the number of consumption goods produced. 
D)  This economy could produce more consumption goods while holding fixed the number of capital goods produced. 
E)  Not every resource in this economy is being utilized

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

Which would be least likely to cause the production possibilities curve to shift to the right?

An opportunity cost is the highest valued alternative foregone whenever one chooses an alternative.

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?

Exhibit 2-4 Production possibilities curve data According to the data given in Exhibit 2-4, the production of 140 units of consumer goods and 10 units of capital goods:

As production of a good increases, opportunity costs rise because:

Each and every point along a production possibilities curve represents an efficient output option for an economy.

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

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis. On this diagram, the opportunity cost of good X, in terms of good Y, is represented by the:

Discuss the three fundamental economic questions that all nations must address.

Which of the following best describes the three fundamental economic questions?

In the context of the production possibilities curve, opportunity cost is measured in:

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

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

Which of the following is an example of an organization using marginal analysis?

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

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?

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?

An efficient economy:

Exhibit 2-13 Production possibilities curve In Exhibit 2-13, if the economy decides to locate at point E, then:

Exhibit 2-12 Production possibilities curve In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false?

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters