Question 1

If a life can be saved for $250 using Method A and $260 using Method B,

Accepted Answer

A)  it would be efficient to shift resources from A to B 
B)  it would be efficient to shift resources from B to A 
C)  both methods should be pursued to the maximum extent possible 
D)  neither method should be used if methods with higher dollar values are available 
E)  both methods are on the economy's production possibilities frontier 
A)  it would be efficient to shift resources from A to B 
B)  it would be efficient to shift resources from B to A 
C)  both methods should be pursued to the maximum extent possible 
D)  neither method should be used if methods with higher dollar values are available 
E)  both methods are on the economy's production possibilities frontier

Question 2

According to the law of increasing opportunity cost,

Accepted Answer

A)  opportunity cost rises as technology improves 
B)  the production possibilities frontier is a straight line 
C)  opportunity cost rises as society produces more of a good or service 
D)  the production possibilities frontier is convex with respect to the origin (that is bowed toward the origin) 
E)  monetary costs rise as opportunity cost rises 
A)  opportunity cost rises as technology improves 
B)  the production possibilities frontier is a straight line 
C)  opportunity cost rises as society produces more of a good or service 
D)  the production possibilities frontier is convex with respect to the origin (that is bowed toward the origin) 
E)  monetary costs rise as opportunity cost rises

Question 3

In a market economy,

Accepted Answer

A)  the government primarily determines the distribution of resources 
B)  prices determine the allocation of resources 
C)  what society produces is what it produced in the past 
D)  resource costs increase as specialization increases 
E)  absolute advantage is the primary determinant of resource allocation 
A)  the government primarily determines the distribution of resources 
B)  prices determine the allocation of resources 
C)  what society produces is what it produced in the past 
D)  resource costs increase as specialization increases 
E)  absolute advantage is the primary determinant of resource allocation

Question 4

Under a socialist system,

Accepted Answer

A)  most resources are owned by the state 
B)  most resources are shared with the whole community 
C)  market prices determine how resources are distributed 
D)  conflicts are usually resolved by consensus 
E)  most resources are privately owned 
A)  most resources are owned by the state 
B)  most resources are shared with the whole community 
C)  market prices determine how resources are distributed 
D)  conflicts are usually resolved by consensus 
E)  most resources are privately owned

Question 5

Figure 2-1
  
-Figure 2-1 illustrates the trade-off for a particular student between time spent studying per week and income per week from working part-time.What is the opportunity cost for this person of moving from point a to point b?

Accepted Answer

A)  $5 of income per week 
B)  $10 of income per week 
C)  two hours of studying per week 
D)  $10 per hour of studying per week 
E)  $20 of income per week 
A)  $5 of income per week 
B)  $10 of income per week 
C)  two hours of studying per week 
D)  $10 per hour of studying per week 
E)  $20 of income per week

Question 6

Under a market system of resource allocation

Accepted Answer

A)  prices determine what consumers buy while the government determines what firms produce 
B)  prices determine what firms produce while the government determines what consumers buy 
C)  prices determine both what firms produce and what consumers buy 
D)  the government determines both what firms produce and what consumers buy 
E)  the government allocates resources while prices allocate goods and services 
A)  prices determine what consumers buy while the government determines what firms produce 
B)  prices determine what firms produce while the government determines what consumers buy 
C)  prices determine both what firms produce and what consumers buy 
D)  the government determines both what firms produce and what consumers buy 
E)  the government allocates resources while prices allocate goods and services

Question 7

Figure 2-6
  
-A shift in the production possibilities frontier from DC to EC in Figure 2-6 could be due to a

Accepted Answer

A)  technological improvement in the production of ice cream 
B)  reduction in the rate of unemployment 
C)  rise in the rate of unemployment 
D)  technological improvement in the production of frozen yogurt 
E)  fall in the demand for frozen yogurt 
A)  technological improvement in the production of ice cream 
B)  reduction in the rate of unemployment 
C)  rise in the rate of unemployment 
D)  technological improvement in the production of frozen yogurt 
E)  fall in the demand for frozen yogurt

Question 8

If Alicia limits the range of her productive activities rather than trying to be self-sufficient,she is engaging in

Accepted Answer

A)  specialization 
B)  exchange 
C)  absolute advantage 
D)  increasing opportunity costs 
E)  reducing her standard of living 
A)  specialization 
B)  exchange 
C)  absolute advantage 
D)  increasing opportunity costs 
E)  reducing her standard of living

Question 9

If Indiana has an absolute advantage over Maine in producing both corn and ball bearings,then

Accepted Answer

A)  Indiana should produce both corn and ball bearings 
B)  there are no benefits possible from specialization 
C)  Maine should produce ball bearings and Indiana should produce corn 
D)  Indiana should produce ball bearings and Maine should produce corn 
E)  they still may benefit from specialization,but more information is needed to determine which state should specialize in each 
A)  Indiana should produce both corn and ball bearings 
B)  there are no benefits possible from specialization 
C)  Maine should produce ball bearings and Indiana should produce corn 
D)  Indiana should produce ball bearings and Maine should produce corn 
E)  they still may benefit from specialization,but more information is needed to determine which state should specialize in each

Question 10

$$\begin{array} { | c c c } 
\hline & \text { Fiejura 2-11 } \
\hline \text { Jails Fetched } & \text { Jack } & \text { Jill } \
\text { Per Hau } & & \
\text { Boards Sawed } & 20 & 4 \
\text { Per Hau } & 10 & 8 \
\hline
\end{array}$$
-Using the information in Figure 2-11,Jill's opportunity cost of fetching each additional pail is

Accepted Answer

A)  2 boards sawed 
B)  1/2 of a board sawed 
C)  8 boards sawed 
D)  1/5 of a board sawed 
E)  10 boards sawed 
A)  2 boards sawed 
B)  1/2 of a board sawed 
C)  8 boards sawed 
D)  1/5 of a board sawed 
E)  10 boards sawed

Question 11

Figure 2-3
  
-Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.At which point would the plant be under-utilizing its resources?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 12

A country currently is using all its land to produce wheat and grapes.However,the land most suited to growing grapes is being used to produce wheat,and the land most suited to growing wheat is being used to produce grapes.This is an example of

Accepted Answer

A)  increasing opportunity costs 
B)  involuntary unemployment 
C)  productive inefficiency 
D)  central planning 
E)  communal ownership 
A)  increasing opportunity costs 
B)  involuntary unemployment 
C)  productive inefficiency 
D)  central planning 
E)  communal ownership

Question 13

Under market capitalism,resources are allocated by

Accepted Answer

A)  command and owned privately 
B)  the market and owned privately 
C)  command and owned by the state 
D)  the market and owned by the state 
E)  tradition and owned by all 
A)  command and owned privately 
B)  the market and owned privately 
C)  command and owned by the state 
D)  the market and owned by the state 
E)  tradition and owned by all

Question 14

Two reasons why an economy might operate inside of its production possibilities frontier are

Accepted Answer

A)  productive efficiency and technological change 
B)  depressions and inflation 
C)  recessions and productive inefficiency 
D)  opportunity costs and substitutability of resources used in production 
E)  productive inefficiency and a decrease in the state of technology 
A)  productive efficiency and technological change 
B)  depressions and inflation 
C)  recessions and productive inefficiency 
D)  opportunity costs and substitutability of resources used in production 
E)  productive inefficiency and a decrease in the state of technology

Question 15

An economic system includes

Accepted Answer

A)  money,stocks and bonds 
B)  a mechanism for allocating resources and a mode of resource ownership 
C)  a mechanism for dividing up resources and a way to ensure that technology advances 
D)  a mechanism for allocating stocks,bonds and money and a mode of technology 
E)  government ownership,labor time,and machines 
A)  money,stocks and bonds 
B)  a mechanism for allocating resources and a mode of resource ownership 
C)  a mechanism for dividing up resources and a way to ensure that technology advances 
D)  a mechanism for allocating stocks,bonds and money and a mode of technology 
E)  government ownership,labor time,and machines

Question 16

Specialization and exchange result in

Accepted Answer

A)  lower production levels than would otherwise be possible 
B)  higher living standards than would otherwise be possible 
C)  more down-time as workers switch activities more frequently 
D)  the assignment of workers to activities according to their preferences 
E)  self-sufficiency 
A)  lower production levels than would otherwise be possible 
B)  higher living standards than would otherwise be possible 
C)  more down-time as workers switch activities more frequently 
D)  the assignment of workers to activities according to their preferences 
E)  self-sufficiency

Question 17

Figure 2-12
 $$\begin{array} { | c | c | c | } 
\hline & \text { Bob } & \text { Tam } \
\hline \text { Political Jokes per day } & 10 & 11 \
\hline \text { Celebrity Jakes per day } & 2 & 12 \
\hline
\end{array}$$
-Suppose Bob and Tom are writing jokes for a their new TV show.Suppose there are two types of jokes,political jokes and jokes about celebrities.The number of jokes that can be produced by each person in each category are listed in Figure 2-12.From this table you can tell that

Accepted Answer

A)  Bob has an absolute advantage in both political and celebrity jokes 
B)  Tom has an absolute advantage in both political and celebrity jokes but a comparative advantage in political jokes only 
C)  Bob has an comparative advantage in both political and celebrity jokes 
D)  Tom has an comparative advantage in both political and celebrity jokes 
E)  Tom has an absolute advantage in both political and celebrity jokes but a comparative advantage in celebrity jokes only 
A)  Bob has an absolute advantage in both political and celebrity jokes 
B)  Tom has an absolute advantage in both political and celebrity jokes but a comparative advantage in political jokes only 
C)  Bob has an comparative advantage in both political and celebrity jokes 
D)  Tom has an comparative advantage in both political and celebrity jokes 
E)  Tom has an absolute advantage in both political and celebrity jokes but a comparative advantage in celebrity jokes only

Question 18

Figure 2-3
  
-Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.The opportunity cost of moving from point B to C is

Accepted Answer

A)  20 cassettes 
B)  120 compact disks 
C)  100 cassettes 
D)  60 compact disks 
E)  180 compact disks 
A)  20 cassettes 
B)  120 compact disks 
C)  100 cassettes 
D)  60 compact disks 
E)  180 compact disks

Question 19

One explanation for the drop in the standard of living in the Soviet Union during World War II is that

Accepted Answer

A)  the war led to a movement along its production possibilities frontier away from civilian goods and towards military goods 
B)  the war led to an outward shift in the production possibilities frontier due to a rise in the level of technology 
C)  prior to the war,there was much productive inefficiency in the Soviet Union 
D)  the opportunity cost of producing military goods was zero in their economic system 
E)  resources used to produce civilian goods were equally capable of producing military goods 
A)  the war led to a movement along its production possibilities frontier away from civilian goods and towards military goods 
B)  the war led to an outward shift in the production possibilities frontier due to a rise in the level of technology 
C)  prior to the war,there was much productive inefficiency in the Soviet Union 
D)  the opportunity cost of producing military goods was zero in their economic system 
E)  resources used to produce civilian goods were equally capable of producing military goods

Question 20

Figure 2-3
  
-Which point in Figure 2-3 is not possible for this society to produce?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

If a life can be saved for $250 using Method A and $260 using Method B,

According to the law of increasing opportunity cost,

In a market economy,

Under a socialist system,

Figure 2-1 -Figure 2-1 illustrates the trade-off for a particular student between time spent studying per week and income per week from working part-time.What is the opportunity cost for this person of moving from point a to point b?

Under a market system of resource allocation

Figure 2-6 -A shift in the production possibilities frontier from DC to EC in Figure 2-6 could be due to a

If Alicia limits the range of her productive activities rather than trying to be self-sufficient,she is engaging in

If Indiana has an absolute advantage over Maine in producing both corn and ball bearings,then

Fiejura 2-11 Jails Fetched Jack Jill Per Hau Boards Sawed 20 4 Per Hau 10 8 -Using the information in Figure 2-11,Jill's opportunity cost of fetching each additional pail is

Figure 2-3 -Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.At which point would the plant be under-utilizing its resources?

A country currently is using all its land to produce wheat and grapes.However,the land most suited to growing grapes is being used to produce wheat,and the land most suited to growing wheat is being used to produce grapes.This is an example of

Under market capitalism,resources are allocated by

Two reasons why an economy might operate inside of its production possibilities frontier are

An economic system includes

Specialization and exchange result in

Figure 2-3 -Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.The opportunity cost of moving from point B to C is

One explanation for the drop in the standard of living in the Soviet Union during World War II is that

Figure 2-3 -Which point in Figure 2-3 is not possible for this society to produce?

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 a life can be saved for $250 using Method A and $260 using Method B,

According to the law of increasing opportunity cost,

In a market economy,

Under a socialist system,

Figure 2-1 -Figure 2-1 illustrates the trade-off for a particular student between time spent studying per week and income per week from working part-time.What is the opportunity cost for this person of moving from point a to point b?

Under a market system of resource allocation

Figure 2-6 -A shift in the production possibilities frontier from DC to EC in Figure 2-6 could be due to a

If Alicia limits the range of her productive activities rather than trying to be self-sufficient,she is engaging in

If Indiana has an absolute advantage over Maine in producing both corn and ball bearings,then

Fiejura 2-11 Jails Fetched Jack Jill Per Hau Boards Sawed 20 4 Per Hau 10 8 -Using the information in Figure 2-11,Jill's opportunity cost of fetching each additional pail is

Figure 2-3 -Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.At which point would the plant be under-utilizing its resources?

A country currently is using all its land to produce wheat and grapes.However,the land most suited to growing grapes is being used to produce wheat,and the land most suited to growing wheat is being used to produce grapes.This is an example of

Under market capitalism,resources are allocated by

Two reasons why an economy might operate inside of its production possibilities frontier are

An economic system includes

Specialization and exchange result in

Figure 2-3 -Figure 2-3 shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes.The opportunity cost of moving from point B to C is

One explanation for the drop in the standard of living in the Soviet Union during World War II is that

Figure 2-3 -Which point in Figure 2-3 is not possible for this society to produce?

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