Question 1

If capital is not being used efficiently,an economy cannot be operating at a point along its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 2

Figure 2-9
  
-Assume that the publishing industry produces novels and textbooks,as shown in the production possibilities frontier in Figure 2-9.Between points F and G,the opportunity cost of ten more novels equals __________.Between points G and H,the opportunity cost of ten more novels equals __________.

Accepted Answer

A)  0.4 textbooks;0.5 textbooks 
B)  4 textbooks;5 textbooks 
C)  4 million textbooks;5 million textbooks 
D)  2.5 textbooks;2 textbooks 
E)  10 million textbooks;5 million textbooks 
A)  0.4 textbooks;0.5 textbooks 
B)  4 textbooks;5 textbooks 
C)  4 million textbooks;5 million textbooks 
D)  2.5 textbooks;2 textbooks 
E)  10 million textbooks;5 million textbooks

Question 3

Specialization leads to greater production than is otherwise possible

Accepted Answer

A)  only if different workers have different natural abilities 
B)  only if production is organized within business firms 
C)  under capitalism,but not under communism 
D)  even if different workers have identical natural abilities 
E)  under communal ownership,but not under capitalism 
A)  only if different workers have different natural abilities 
B)  only if production is organized within business firms 
C)  under capitalism,but not under communism 
D)  even if different workers have identical natural abilities 
E)  under communal ownership,but not under capitalism

Question 4

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Bill's opportunity cost of mowing the lawn is

Accepted Answer

A)  1/2 of a dinner 
B)  2 dinners 
C)  3/4 of a dinner 
D)  1-1/3 dinners 
E)  2-2/3 dinners 
A)  1/2 of a dinner 
B)  2 dinners 
C)  3/4 of a dinner 
D)  1-1/3 dinners 
E)  2-2/3 dinners

Question 5

Figure 2-13
Total Lives Saved
 $$\begin{array} { | c | c | c | } 
\hline \text { Dollars Invested in Pracedhe } & \text { Procechure 1 } & \text { Pracechure 2 } \
\hline \$ 1,000,000 & 100 & 20 \
\hline \$ 2,000,000 & 150 & 29 \
\hline \$ 3,000,000 & 175 & 37 \
\hline \$ 4,000,000 & 190 & 42 \
\hline \$ 5,000,000 & 192 & 43 \
\hline
\end{array}$$
-Referring to Figure 2-13,if you had to choose how to allocated $5 million and your objective was to save the most lives,you would observe that there is

Accepted Answer

A)  constant opportunity cost between procedures 
B)  increasing opportunity cost between procedures 
C)  no opportunity cost between procedures because human lives are invaluable 
D)  no tradeoff between procedures because Procedure 1 is much better than Procedure 2 
E)  no tradeoff between procedures because Procedure 2 is much better than Procedure 1 
A)  constant opportunity cost between procedures 
B)  increasing opportunity cost between procedures 
C)  no opportunity cost between procedures because human lives are invaluable 
D)  no tradeoff between procedures because Procedure 1 is much better than Procedure 2 
E)  no tradeoff between procedures because Procedure 2 is much better than Procedure 1

Question 6

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Which of the following statements is correct?

Accepted Answer

A)  Bill should specialize in both tasks. 
B)  Bill should specialize in cooking dinner;Eileen should specialize in mowing the lawn. 
C)  Bill should specialize in mowing the lawn;Eileen should specialize in cooking dinner. 
D)  Eileen should specialize in both tasks. 
E)  neither person should specialize. 
A)  Bill should specialize in both tasks. 
B)  Bill should specialize in cooking dinner;Eileen should specialize in mowing the lawn. 
C)  Bill should specialize in mowing the lawn;Eileen should specialize in cooking dinner. 
D)  Eileen should specialize in both tasks. 
E)  neither person should specialize.

Question 7

Specialization of labor typically leads to higher levels of productive inefficiency in an economy.

Accepted Answer

A) True 
 B)False

Question 8

If the Ford Motor Company decides to use more robots in its manufacturing plants,the company is addressing the question of

Accepted Answer

A)  which goods and services should be produced with society's scarce resources 
B)  what production methods should be used to produce goods and services 
C)  how will output be allocated among the individuals in the society 
D)  what prices will be charged for goods and services 
E)  the optimal degree of central planning 
A)  which goods and services should be produced with society's scarce resources 
B)  what production methods should be used to produce goods and services 
C)  how will output be allocated among the individuals in the society 
D)  what prices will be charged for goods and services 
E)  the optimal degree of central planning

Question 9

Combinations of goods on the production possibilities frontier

Accepted Answer

A)  are unattainable without additional resources 
B)  can be produced using currently available resources and technology 
C)  reflect minimum normative value allocations 
D)  will meet society's needs but not its wants 
E)  are attainable only through international trade 
A)  are unattainable without additional resources 
B)  can be produced using currently available resources and technology 
C)  reflect minimum normative value allocations 
D)  will meet society's needs but not its wants 
E)  are attainable only through international trade

Question 10

Every economic system requires a means for determining resource allocation.

Accepted Answer

A) True 
 B)False

Question 11

As a society produces more and more of one good,it must give up increasing amounts of the alternative good.This demonstrates the

Accepted Answer

A)  law of demand 
B)  convexity of the production possibilities frontier 
C)  law of increasing opportunity cost 
D)  principle of productive inefficiency 
E)  effects of shifts in the level of technology 
A)  law of demand 
B)  convexity of the production possibilities frontier 
C)  law of increasing opportunity cost 
D)  principle of productive inefficiency 
E)  effects of shifts in the level of technology

Question 12

A weakness of the market system of resource allocation is that

Accepted Answer

A)  such economies tend to be stagnant 
B)  most participants in such an economy have low standards of living 
C)  there are no limits on an individual's freedom of action 
D)  it does not address the problem of initial inequities in endowments 
E)  its participants are free to act according to their desires 
A)  such economies tend to be stagnant 
B)  most participants in such an economy have low standards of living 
C)  there are no limits on an individual's freedom of action 
D)  it does not address the problem of initial inequities in endowments 
E)  its participants are free to act according to their desires

Question 13

If Bob has an absolute advantage over Pete in both typing and woodworking,then Bob also has a comparative advantage over Pete in both activities.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-7
  
-Which of the following could explain the shift in the production possibilities frontier from AB to AC in Figure 2-7?

Accepted Answer

A)  a productive improvement in petroleum production that has no effect on clothing production 
B)  a productive improvement in clothing production that has no effect on petroleum production 
C)  an increase in the size of the labor force that can produce either petroleum products or clothing 
D)  oil drilling in Alaska is ended in order to protect the environment 
E)  major oil reserves are discovered off the coast of Africa 
A)  a productive improvement in petroleum production that has no effect on clothing production 
B)  a productive improvement in clothing production that has no effect on petroleum production 
C)  an increase in the size of the labor force that can produce either petroleum products or clothing 
D)  oil drilling in Alaska is ended in order to protect the environment 
E)  major oil reserves are discovered off the coast of Africa

Question 15

Figure 2-9
  
-Which of the following statements could explain the concave shape of the production possibilities curve in Figure 2-9?

Accepted Answer

A)  The publishing industry develops improved printing presses. 
B)  Productive efficiency increases as the publishing industry moves from point F to point H 
C)  More editors and writers are employed as the publishing industry moves from point F to point H. 
D)  Some writers are better suited to writing novels;some are better suited to writing textbooks. 
E)  The prices of paper and ink fall as the publishing industry moves from point H to point F. 
A)  The publishing industry develops improved printing presses. 
B)  Productive efficiency increases as the publishing industry moves from point F to point H 
C)  More editors and writers are employed as the publishing industry moves from point F to point H. 
D)  Some writers are better suited to writing novels;some are better suited to writing textbooks. 
E)  The prices of paper and ink fall as the publishing industry moves from point H to point F.

Question 16

Figure 2-10
  
-Movement from point K on the production possibilities curve for food and clothing in Figure 2-10,to point J inside the curve could be the result of

Accepted Answer

A)  an increase in opportunity costs 
B)  supply and demand 
C)  greater efficiency 
D)  a decrease in the population 
E)  an increase in unemployment 
A)  an increase in opportunity costs 
B)  supply and demand 
C)  greater efficiency 
D)  a decrease in the population 
E)  an increase in unemployment

Question 17

The system of resource allocation in the United States is a

Accepted Answer

A)  pure market system 
B)  market system with elements of tradition and command 
C)  market system with elements of tradition,but not command 
D)  traditional system with elements of market,but not command 
E)  pure tradition system 
A)  pure market system 
B)  market system with elements of tradition and command 
C)  market system with elements of tradition,but not command 
D)  traditional system with elements of market,but not command 
E)  pure tradition system

Question 18

Maximizing output by following the principle of comparative advantage requires

Accepted Answer

A)  specialization only 
B)  exchange only 
C)  both specialization and exchange 
D)  neither specialization nor exchange 
E)  either specialization or exchange,but not both 
A)  specialization only 
B)  exchange only 
C)  both specialization and exchange 
D)  neither specialization nor exchange 
E)  either specialization or exchange,but not both

Question 19

The law of increasing opportunity cost says that

Accepted Answer

A)  wages increase as employment increases 
B)  interest rates rise as inflation increases 
C)  the cost of increasing employment opportunities increases with specialization 
D)  the more of something we produce,the less expensive it becomes 
E)  the more of something we produce,the greater is the opportunity cost of producing an additional unit 
A)  wages increase as employment increases 
B)  interest rates rise as inflation increases 
C)  the cost of increasing employment opportunities increases with specialization 
D)  the more of something we produce,the less expensive it becomes 
E)  the more of something we produce,the greater is the opportunity cost of producing an additional unit

Question 20

The principle of comparative advantage states that

Accepted Answer

A)  whoever has a comparative advantage in producing a good or service also has the absolute advantage 
B)  whoever has an absolute advantage in producing a good or service also has the comparative advantage 
C)  whoever can produce a good or service using fewer resources than another individual has the comparative advantage 
D)  total production of every good or service can be greater if individuals specialize according to their comparative advantage 
E)  comparative advantage is maximized if each individual specializes according to his or her absolute advantage 
A)  whoever has a comparative advantage in producing a good or service also has the absolute advantage 
B)  whoever has an absolute advantage in producing a good or service also has the comparative advantage 
C)  whoever can produce a good or service using fewer resources than another individual has the comparative advantage 
D)  total production of every good or service can be greater if individuals specialize according to their comparative advantage 
E)  comparative advantage is maximized if each individual specializes according to his or her absolute advantage

If capital is not being used efficiently,an economy cannot be operating at a point along its production possibilities frontier.

Figure 2-9 -Assume that the publishing industry produces novels and textbooks,as shown in the production possibilities frontier in Figure 2-9.Between points F and G,the opportunity cost of ten more novels equals .Between points G and H,the opportunity cost of ten more novels equals .

Specialization leads to greater production than is otherwise possible

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Bill's opportunity cost of mowing the lawn is

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Which of the following statements is correct?

Specialization of labor typically leads to higher levels of productive inefficiency in an economy.

If the Ford Motor Company decides to use more robots in its manufacturing plants,the company is addressing the question of

Combinations of goods on the production possibilities frontier

Every economic system requires a means for determining resource allocation.

As a society produces more and more of one good,it must give up increasing amounts of the alternative good.This demonstrates the

A weakness of the market system of resource allocation is that

If Bob has an absolute advantage over Pete in both typing and woodworking,then Bob also has a comparative advantage over Pete in both activities.

Figure 2-7 -Which of the following could explain the shift in the production possibilities frontier from AB to AC in Figure 2-7?

Figure 2-9 -Which of the following statements could explain the concave shape of the production possibilities curve in Figure 2-9?

Figure 2-10 -Movement from point K on the production possibilities curve for food and clothing in Figure 2-10,to point J inside the curve could be the result of

The system of resource allocation in the United States is a

Maximizing output by following the principle of comparative advantage requires

The law of increasing opportunity cost says that

The principle of comparative advantage states that

What is Economics?

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 2: Scarcity, Choice, and Economic Systems

If capital is not being used efficiently,an economy cannot be operating at a point along its production possibilities frontier.

Specialization leads to greater production than is otherwise possible

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Bill's opportunity cost of mowing the lawn is

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Which of the following statements is correct?

Specialization of labor typically leads to higher levels of productive inefficiency in an economy.

If the Ford Motor Company decides to use more robots in its manufacturing plants,the company is addressing the question of

Combinations of goods on the production possibilities frontier

Every economic system requires a means for determining resource allocation.

As a society produces more and more of one good,it must give up increasing amounts of the alternative good.This demonstrates the

A weakness of the market system of resource allocation is that

If Bob has an absolute advantage over Pete in both typing and woodworking,then Bob also has a comparative advantage over Pete in both activities.

Figure 2-7 -Which of the following could explain the shift in the production possibilities frontier from AB to AC in Figure 2-7?

Figure 2-9 -Which of the following statements could explain the concave shape of the production possibilities curve in Figure 2-9?

Figure 2-10 -Movement from point K on the production possibilities curve for food and clothing in Figure 2-10,to point J inside the curve could be the result of

The system of resource allocation in the United States is a

Maximizing output by following the principle of comparative advantage requires

The law of increasing opportunity cost says that

The principle of comparative advantage states that

What is Economics?

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters