Question 1

Economies organize according to the principle of specialization and exchange because doing so

Accepted Answer

A)  enables the government to exercise greater control than would otherwise be possible 
B)  forces people to work longer hours than they would do normally 
C)  eliminates the "law of increasing opportunity costs" 
D)  enables workers to move up to management in the least amount of time 
E)  enables greater production and higher standards of living to be realized than would otherwise be possible 
A)  enables the government to exercise greater control than would otherwise be possible 
B)  forces people to work longer hours than they would do normally 
C)  eliminates the "law of increasing opportunity costs" 
D)  enables workers to move up to management in the least amount of time 
E)  enables greater production and higher standards of living to be realized than would otherwise be possible

Question 2

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

Accepted Answer

A)  technical improvements in both petroleum and clothing production 
B)  a productive improvement in clothing production that has no effect on petroleum production 
C)  a decrease in the size of the labor force that can produce either petroleum products or clothing 
D)  major oil reserves in Alaska are declared off-limits to producers in order to protect the environment 
E)  major oil reserves are discovered off the coast of Africa 
A)  technical improvements in both petroleum and clothing production 
B)  a productive improvement in clothing production that has no effect on petroleum production 
C)  a decrease in the size of the labor force that can produce either petroleum products or clothing 
D)  major oil reserves in Alaska are declared off-limits to producers in order to protect the environment 
E)  major oil reserves are discovered off the coast of Africa

Question 3

If the labor force in an economy is not fully employed,then

Accepted Answer

A)  the economy is operating outside of its production possibilities frontier 
B)  the economy is operating on its production possibilities frontier 
C)  there must have been an increase in technology to compensate for the labor shortage 
D)  the opportunity cost of producing more of one good is negative 
E)  the economy is operating inside its production possibilities frontier 
A)  the economy is operating outside of its production possibilities frontier 
B)  the economy is operating on its production possibilities frontier 
C)  there must have been an increase in technology to compensate for the labor shortage 
D)  the opportunity cost of producing more of one good is negative 
E)  the economy is operating inside its production possibilities frontier

Question 4

The production possibilities frontier illustrates

Accepted Answer

A)  the combinations of goods that could be produced with resources and technology constant 
B)  how technology influences opportunity costs 
C)  the law of diminishing returns 
D)  how price changes affect decision making of individuals 
E)  the law of demand 
A)  the combinations of goods that could be produced with resources and technology constant 
B)  how technology influences opportunity costs 
C)  the law of diminishing returns 
D)  how price changes affect decision making of individuals 
E)  the law of demand

Question 5

Specialization and exchange

Accepted Answer

A)  generally leads to increased production of some goods at the cost of decreased production of other goods 
B)  causes the production possibilities frontier to shift inward 
C)  increases total production of every good only if the total amount of resources also increases 
D)  alters the allocation of production among individuals or nations,but does not alter total production levels 
E)  allows greater total production of every good without an increase in the total amount of resources 
A)  generally leads to increased production of some goods at the cost of decreased production of other goods 
B)  causes the production possibilities frontier to shift inward 
C)  increases total production of every good only if the total amount of resources also increases 
D)  alters the allocation of production among individuals or nations,but does not alter total production levels 
E)  allows greater total production of every good without an increase in the total amount of resources

Question 6

Assume that society is operating on its concave production possibilities frontier.As more and more units of the good on the horizontal axis are produced,

Accepted Answer

A)  more and more total resources are employed in the two industries combined 
B)  larger and larger amounts of the good on the vertical axis must be sacrificed 
C)  fewer and fewer total resources are employed in the two industries combined 
D)  more and more units of the good on the vertical axis will be produced 
E)  smaller and smaller amounts of the good on the vertical axis must be sacrificed 
A)  more and more total resources are employed in the two industries combined 
B)  larger and larger amounts of the good on the vertical axis must be sacrificed 
C)  fewer and fewer total resources are employed in the two industries combined 
D)  more and more units of the good on the vertical axis will be produced 
E)  smaller and smaller amounts of the good on the vertical axis must be sacrificed

Question 7

In a traditional economy,decisions about what to produce,how to produce,and who should get society's output are made by

Accepted Answer

A)  the market 
B)  the government 
C)  repeating what was done in the past 
D)  business firms 
E)  nonprofit firms 
A)  the market 
B)  the government 
C)  repeating what was done in the past 
D)  business firms 
E)  nonprofit firms

Question 8

The three primary systems for allocating resources are

Accepted Answer

A)  tradition,command,and central planning 
B)  tradition,central planning,and communal 
C)  command,market,and socialism 
D)  tradition,command,and market 
E)  communal,command,and capitalism 
A)  tradition,command,and central planning 
B)  tradition,central planning,and communal 
C)  command,market,and socialism 
D)  tradition,command,and market 
E)  communal,command,and capitalism

Question 9

Figure 2-8
  
-The production possibility frontier in Figure 2-8 assumes that U.S.agricultural land is used either to raise cotton for clothing or to grow wheat.This is an example of a(n)

Accepted Answer

A)  critical assumption 
B)  optimizing assumption 
C)  assumption of scarcity 
D)  simplifying assumption 
E)  realistic assumption 
A)  critical assumption 
B)  optimizing assumption 
C)  assumption of scarcity 
D)  simplifying assumption 
E)  realistic assumption

Question 10

One of the concepts that is illustrated by a downward sloping production possibilities frontier is that

Accepted Answer

A)  technology must change in order to produce more of a particular good 
B)  to produce more of one good,some of the alternative goods must be given up 
C)  opportunity cost generally declines as more of a good is produced 
D)  specialization leads to gains in overall utility for society 
E)  opportunity cost generally does not vary as more of a good is produced 
A)  technology must change in order to produce more of a particular good 
B)  to produce more of one good,some of the alternative goods must be given up 
C)  opportunity cost generally declines as more of a good is produced 
D)  specialization leads to gains in overall utility for society 
E)  opportunity cost generally does not vary as more of a good is produced

Question 11

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

Accepted Answer

A)  allocate all $5 million to Procedure 1 
B)  allocate all $5 million to Procedure 2 
C)  allocate $1 million to Procedure 1 and $4 million to Procedure 2 
D)  allocate $2 million to Procedure 1 and $3 million to Procedure 2 
E)  allocate $3 million to Procedure 1 and $2 million to Procedure 2 
A)  allocate all $5 million to Procedure 1 
B)  allocate all $5 million to Procedure 2 
C)  allocate $1 million to Procedure 1 and $4 million to Procedure 2 
D)  allocate $2 million to Procedure 1 and $3 million to Procedure 2 
E)  allocate $3 million to Procedure 1 and $2 million to Procedure 2

Question 12

Figure 2-2
  
-Assume that U.S.agricultural land is used either to raise cattle for beef or to grow wheat.Figure 2-2 represents the production possibility frontier for beef and wheat.The opportunity cost of moving from point G to point F equals

Accepted Answer

A)  0.25 million bushels of wheat 
B)  1.75 million bushels of wheat 
C)  0.125 bushels of wheat 
D)  8 bushels of wheat 
E)  2 bushels of wheat 
A)  0.25 million bushels of wheat 
B)  1.75 million bushels of wheat 
C)  0.125 bushels of wheat 
D)  8 bushels of wheat 
E)  2 bushels of wheat

Question 13

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 
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)  there are no gains from specialization 
A)  Bob has an absolute advantage in both political and celebrity jokes 
B)  Tom has an absolute advantage in both political and celebrity jokes 
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)  there are no gains from specialization

Question 14

Which of the following could lead to an inward shift of the production possibilities frontier?

Accepted Answer

A)  an increase in the cost of one good 
B)  an increase in the utilization of resources 
C)  a rise in the level of technology 
D)  a law is passed whereby a mandatory retirement age of 60 is imposed 
E)  a decrease in the utilization of resources 
A)  an increase in the cost of one good 
B)  an increase in the utilization of resources 
C)  a rise in the level of technology 
D)  a law is passed whereby a mandatory retirement age of 60 is imposed 
E)  a decrease in the utilization of resources

Question 15

Which of the following best defines the specialization of resources?

Accepted Answer

A)  Workers are compensated as individuals. 
B)  Special resources are needed to produce most goods. 
C)  Each resource is paid for in full. 
D)  Each resource is paid the most if it is specialized. 
E)  Each resource is focused on a limited number of productive activities. 
A)  Workers are compensated as individuals. 
B)  Special resources are needed to produce most goods. 
C)  Each resource is paid for in full. 
D)  Each resource is paid the most if it is specialized. 
E)  Each resource is focused on a limited number of productive activities.

Question 16

According to the law of comparative advantage,individuals and economies should specialize in producing those goods and services in which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 17

The three problems of resource allocation are faced by

Accepted Answer

A)  traditional societies 
B)  command systems 
C)  centrally planned economies 
D)  market economies 
E)  all types of societies 
A)  traditional societies 
B)  command systems 
C)  centrally planned economies 
D)  market economies 
E)  all types of societies

Question 18

In deciding where to operate along its production possibilities frontier,a society is answering the question of

Accepted Answer

A)  which goods and services should be produced with its 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)  how much will it trade with other societies in the world 
A)  which goods and services should be produced with its 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)  how much will it trade with other societies in the world

Question 19

We say that a particular life saving method is efficient

Accepted Answer

A)  if it requires very few resources 
B)  if it requires many resources 
C)  if total expenditures on that method are low 
D)  if the cost per life year saved is very high 
E)  if the cost per life year saved is very low 
A)  if it requires very few resources 
B)  if it requires many resources 
C)  if total expenditures on that method are low 
D)  if the cost per life year saved is very high 
E)  if the cost per life year saved is very low

Question 20

If a society is on its production possibilities frontier,and decides to produce more health care,

Accepted Answer

A)  the cost of producing an additional unit of health care will rise 
B)  it must employ some previously unemployed resources 
C)  its standard of living will rise 
D)  some kind of inefficiency will occur 
E)  the cost of producing an additional unit of some other good will rise 
A)  the cost of producing an additional unit of health care will rise 
B)  it must employ some previously unemployed resources 
C)  its standard of living will rise 
D)  some kind of inefficiency will occur 
E)  the cost of producing an additional unit of some other good will rise

Economies organize according to the principle of specialization and exchange because doing so

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

If the labor force in an economy is not fully employed,then

The production possibilities frontier illustrates

Specialization and exchange

Assume that society is operating on its concave production possibilities frontier.As more and more units of the good on the horizontal axis are produced,

In a traditional economy,decisions about what to produce,how to produce,and who should get society's output are made by

The three primary systems for allocating resources are

Figure 2-8 -The production possibility frontier in Figure 2-8 assumes that U.S.agricultural land is used either to raise cotton for clothing or to grow wheat.This is an example of a(n)

One of the concepts that is illustrated by a downward sloping production possibilities frontier is that

Figure 2-2 -Assume that U.S.agricultural land is used either to raise cattle for beef or to grow wheat.Figure 2-2 represents the production possibility frontier for beef and wheat.The opportunity cost of moving from point G to point F equals

Which of the following could lead to an inward shift of the production possibilities frontier?

Which of the following best defines the specialization of resources?

According to the law of comparative advantage,individuals and economies should specialize in producing those goods and services in which they have a comparative advantage.

The three problems of resource allocation are faced by

In deciding where to operate along its production possibilities frontier,a society is answering the question of

We say that a particular life saving method is efficient

If a society is on its production possibilities frontier,and decides to produce more health care,

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

Economies organize according to the principle of specialization and exchange because doing so

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

If the labor force in an economy is not fully employed,then

The production possibilities frontier illustrates

Specialization and exchange

Assume that society is operating on its concave production possibilities frontier.As more and more units of the good on the horizontal axis are produced,

In a traditional economy,decisions about what to produce,how to produce,and who should get society's output are made by

The three primary systems for allocating resources are

Figure 2-8 -The production possibility frontier in Figure 2-8 assumes that U.S.agricultural land is used either to raise cotton for clothing or to grow wheat.This is an example of a(n)

One of the concepts that is illustrated by a downward sloping production possibilities frontier is that

Figure 2-2 -Assume that U.S.agricultural land is used either to raise cattle for beef or to grow wheat.Figure 2-2 represents the production possibility frontier for beef and wheat.The opportunity cost of moving from point G to point F equals

Which of the following could lead to an inward shift of the production possibilities frontier?

Which of the following best defines the specialization of resources?

According to the law of comparative advantage,individuals and economies should specialize in producing those goods and services in which they have a comparative advantage.

The three problems of resource allocation are faced by

In deciding where to operate along its production possibilities frontier,a society is answering the question of

We say that a particular life saving method is efficient

If a society is on its production possibilities frontier,and decides to produce more health care,

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