Question 1

Opportunity cost is objective; therefore, its value does not change as circumstances change.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the line you are standing in at a grocery checkout counter has not moved for 10 minutes. You notice a cashier opening a new one and inviting you to check out. Do you switch to the new cashier or stay put because you have already waited for 10 minutes?

Accepted Answer

A)  stay, because you have already waited for 10 minutes 
B)  decide to wait for another 5 minutes in case your line speeds up 
C)  walk out of the store without buying anything because of the wait times 
D)  be patient and read a magazine while you are waiting 
E)  switch, because the 10 minutes you waited is a sunk cost 
A)  stay, because you have already waited for 10 minutes 
B)  decide to wait for another 5 minutes in case your line speeds up 
C)  walk out of the store without buying anything because of the wait times 
D)  be patient and read a magazine while you are waiting 
E)  switch, because the 10 minutes you waited is a sunk cost

Question 3

The opportunity cost of going to college is the same for all students who receive full-tuition scholarships.

Accepted Answer

A) True 
 B)False

Question 4

Along a bowed-out production possibilities frontier, as more of one good is produced, _____

Accepted Answer

A)  the opportunity cost of producing that good remains constant. 
B)  the opportunity cost of producing that good decreases. 
C)  efficiency decreases. 
D)  the opportunity cost of producing both goods remains constant. 
E)  the quantity produced of the other good will be reduced. 
A)  the opportunity cost of producing that good remains constant. 
B)  the opportunity cost of producing that good decreases. 
C)  efficiency decreases. 
D)  the opportunity cost of producing both goods remains constant. 
E)  the quantity produced of the other good will be reduced.

Question 5

In economics, specialization means _____

Accepted Answer

A)  producing something using only one type of a natural resource. 
B)  focusing only on one type of product. 
C)  focusing efforts on a particular product or a single task. 
D)  producing only one unit of output. 
E)  producing something using only one unit of a variable resource. 
A)  producing something using only one type of a natural resource. 
B)  focusing only on one type of product. 
C)  focusing efforts on a particular product or a single task. 
D)  producing only one unit of output. 
E)  producing something using only one unit of a variable resource.

Question 6

An improvement in technology, all other things remaining constant, _____

Accepted Answer

A)  will always result in a parallel shift of the production possibilities frontier. 
B)  will never result in a parallel shift of the production possibilities frontier. 
C)  will be indicated by a movement along the production possibilities frontier. 
D)  will shift the production possibilities frontier outward but not necessarily to a parallel position. 
E)  may not shift the production possibilities frontier. 
A)  will always result in a parallel shift of the production possibilities frontier. 
B)  will never result in a parallel shift of the production possibilities frontier. 
C)  will be indicated by a movement along the production possibilities frontier. 
D)  will shift the production possibilities frontier outward but not necessarily to a parallel position. 
E)  may not shift the production possibilities frontier.

Question 7

A production possibilities frontier will be bowed out if _____

Accepted Answer

A)  resources are scarce. 
B)  resources are used efficiently. 
C)  the production of only one good involves an opportunity cost. 
D)  resources are not perfectly adaptable to the production of each good. 
E)  technology improves. 
A)  resources are scarce. 
B)  resources are used efficiently. 
C)  the production of only one good involves an opportunity cost. 
D)  resources are not perfectly adaptable to the production of each good. 
E)  technology improves.

Question 8

Comparative advantage is based on opportunity costs.

Accepted Answer

A) True 
 B)False

Question 9

Yourealize that total output would increase if you did all the typing and your roommate did all the ironing. You are each _____

Accepted Answer

A)  diversifying. 
B)  good producers. 
C)  better off as a result of specialization and exchange. 
D)  doing so because you get something in return. 
E)  acting out of concern for the other. 
A)  diversifying. 
B)  good producers. 
C)  better off as a result of specialization and exchange. 
D)  doing so because you get something in return. 
E)  acting out of concern for the other.

Question 10

If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, Josh's opportunity cost of baking one cake is _____

Accepted Answer

A)  painting one room. 
B)  painting 1/40 of a room. 
C)  painting 1/60 of a room. 
D)  painting 2/3 of a room. 
E)  painting 3/2 of a room. 
A)  painting one room. 
B)  painting 1/40 of a room. 
C)  painting 1/60 of a room. 
D)  painting 2/3 of a room. 
E)  painting 3/2 of a room.

Question 11

If one person has an absolute advantage in producing two goods, then that person _____

Accepted Answer

A)  must also have a comparative advantage in producing both the goods. 
B)  cannot benefit from trade. 
C)  cannot have a comparative advantage in producing either good. 
D)  will have a comparative advantage in producing only one good. 
E)  should specialize in the production of both the goods. 
A)  must also have a comparative advantage in producing both the goods. 
B)  cannot benefit from trade. 
C)  cannot have a comparative advantage in producing either good. 
D)  will have a comparative advantage in producing only one good. 
E)  should specialize in the production of both the goods.

Question 12

The economic question of what to produce is often referred to as the distribution question.

Accepted Answer

A) True 
 B)False

Question 13

Barter occurs when _____

Accepted Answer

A)  two people share everything. 
B)  one product is exchanged directly for another product. 
C)  money is used to buy goods. 
D)  money in different currencies is exchanged directly. 
E)  goods are used to buy money. 
A)  two people share everything. 
B)  one product is exchanged directly for another product. 
C)  money is used to buy goods. 
D)  money in different currencies is exchanged directly. 
E)  goods are used to buy money.

Question 14

An economic system _____

Accepted Answer

A)  must choose socialism to adequately answer the three basic economic questions. 
B)  is one that does not depend on an established legal system. 
C)  must choose pure capitalism to adequately answer the three basic economic questions. 
D)  is a set of social institutions and mechanisms organized to answer society's three primary economic questions. 
E)  can address the problem of scarcity only by embracing the social institution of private property. 
A)  must choose socialism to adequately answer the three basic economic questions. 
B)  is one that does not depend on an established legal system. 
C)  must choose pure capitalism to adequately answer the three basic economic questions. 
D)  is a set of social institutions and mechanisms organized to answer society's three primary economic questions. 
E)  can address the problem of scarcity only by embracing the social institution of private property.

Question 15

Table 2.2
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Option } & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } & \mathrm { E } \
\hline \text { Amount } & \$ 100 & \$ 50 & \$ 25 & \$ 15 & \$ 0 \
\hline
\end{array}$$
-Refer to Table 2.2. You have $100 to spend and five options to choose from. What is the opportunity cost if you decided to save the money and spend $0?

Accepted Answer

A)  $100 
B)  $0 in terms of E 
C)  $25 in terms in terms of B 
D)  The total value of all the options 
E)  The value of the option given up if E were not chosen 
A)  $100 
B)  $0 in terms of E 
C)  $25 in terms in terms of B 
D)  The total value of all the options 
E)  The value of the option given up if E were not chosen

Question 16

Table 2.1
 $$\begin{array}{l}
\text { Table } 2.1\
\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Item } & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } & \mathrm { E } \
\hline \text { Movie } & \$ 0 & \$ 10 & \$ 20 & \$ 30 & \$ 40 \
\hline \text { Restaurant } & \$ 40 & \$ 30 & \$ 20 & \$ 10 & \$ 0 \
\hline
\end{array}
\end{array}$$
-Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the movies?

Accepted Answer

A)  $0 
B)  $10 
C)  $202 
D)  $30 
E)  $40 
A)  $0 
B)  $10 
C)  $202 
D)  $30 
E)  $40

Question 17

Exhibit 2.6
  
-Refer to Exhibit 2.7, which shows the production possibilities frontier for capital goods and consumer goods. Identify the correct statement.

Accepted Answer

A)  If the economy is initially at point b, an increase in capital stock will lead to a movement to point c. 
B)  If the economy is initially at point c, an increase in capital stock will lead to a movement to point b. 
C)  Economic growth will allow the economy to produce at a point that lies on a higher production possibilities frontier. 
D)  Economic growth will allow the economy to produce at a point that lies on a lower production possibilities frontier. 
E)  If the economy is initially at point a, an improvement in the rules of the game will lead to a movement to point c. 
A)  If the economy is initially at point b, an increase in capital stock will lead to a movement to point c. 
B)  If the economy is initially at point c, an increase in capital stock will lead to a movement to point b. 
C)  Economic growth will allow the economy to produce at a point that lies on a higher production possibilities frontier. 
D)  Economic growth will allow the economy to produce at a point that lies on a lower production possibilities frontier. 
E)  If the economy is initially at point a, an improvement in the rules of the game will lead to a movement to point c.

Question 18

Recognizing the incentive power of property rights and markets, some of the most die-hard central planners are now allowing _____

Accepted Answer

A)  influence from custom or religion. 
B)  family relations to play significant economic roles. 
C)  a role for markets. 
D)  communal ownership of property. 
E)  the basic economic questions to be decided by the government. 
A)  influence from custom or religion. 
B)  family relations to play significant economic roles. 
C)  a role for markets. 
D)  communal ownership of property. 
E)  the basic economic questions to be decided by the government.

Question 19

Which of the following is not a characteristic of pure capitalism?

Accepted Answer

A)  private property rights 
B)  competitive product markets 
C)  laissez-faire policies 
D)  central planning 
E)  competitive labor markets 
A)  private property rights 
B)  competitive product markets 
C)  laissez-faire policies 
D)  central planning 
E)  competitive labor markets

Question 20

Efficiency involves _____

Accepted Answer

A)  producing output using a large amount of labor. 
B)  producing output using a large amount of capital. 
C)  producing at a point inside the production possibilities frontier. 
D)  producing only one out of many possible commodities. 
E)  getting the maximum possible output from available resources. 
A)  producing output using a large amount of labor. 
B)  producing output using a large amount of capital. 
C)  producing at a point inside the production possibilities frontier. 
D)  producing only one out of many possible commodities. 
E)  getting the maximum possible output from available resources.

Opportunity cost is objective; therefore, its value does not change as circumstances change.

Suppose the line you are standing in at a grocery checkout counter has not moved for 10 minutes. You notice a cashier opening a new one and inviting you to check out. Do you switch to the new cashier or stay put because you have already waited for 10 minutes?

The opportunity cost of going to college is the same for all students who receive full-tuition scholarships.

Along a bowed-out production possibilities frontier, as more of one good is produced, _____

In economics, specialization means _____

An improvement in technology, all other things remaining constant, _____

A production possibilities frontier will be bowed out if _____

Comparative advantage is based on opportunity costs.

Yourealize that total output would increase if you did all the typing and your roommate did all the ironing. You are each _____

If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, Josh's opportunity cost of baking one cake is _____

If one person has an absolute advantage in producing two goods, then that person _____

The economic question of what to produce is often referred to as the distribution question.

Barter occurs when _____

An economic system _____

Table 2.2 Option Amount \ 100 \ 50 \ 25 \ 15 \ 0 -Refer to Table 2.2. You have $100 to spend and five options to choose from. What is the opportunity cost if you decided to save the money and spend $0?

Table 2.1 Table 2.1 Item Movie \ 0 \ 10 \ 20 \ 30 \ 40 Restaurant \ 40 \ 30 \ 20 \ 10 \ 0 -Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the movies?

Exhibit 2.6 -Refer to Exhibit 2.7, which shows the production possibilities frontier for capital goods and consumer goods. Identify the correct statement.

Recognizing the incentive power of property rights and markets, some of the most die-hard central planners are now allowing _____

Which of the following is not a characteristic of pure capitalism?

Efficiency involves _____

The Art and Science of Economic Analysis.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 2: Economic Tools and Economic Systems.

Opportunity cost is objective; therefore, its value does not change as circumstances change.

Suppose the line you are standing in at a grocery checkout counter has not moved for 10 minutes. You notice a cashier opening a new one and inviting you to check out. Do you switch to the new cashier or stay put because you have already waited for 10 minutes?

The opportunity cost of going to college is the same for all students who receive full-tuition scholarships.

Along a bowed-out production possibilities frontier, as more of one good is produced, _____

In economics, specialization means _____

An improvement in technology, all other things remaining constant, _____

A production possibilities frontier will be bowed out if _____

Comparative advantage is based on opportunity costs.

Yourealize that total output would increase if you did all the typing and your roommate did all the ironing. You are each _____

If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes, Josh's opportunity cost of baking one cake is _____

If one person has an absolute advantage in producing two goods, then that person _____

The economic question of what to produce is often referred to as the distribution question.

Barter occurs when _____

An economic system _____

Table 2.2 Option Amount \ 100 \ 50 \ 25 \ 15 \ 0 -Refer to Table 2.2. You have $100 to spend and five options to choose from. What is the opportunity cost if you decided to save the money and spend $0?

Table 2.1 Table 2.1 Item Movie \ 0 \ 10 \ 20 \ 30 \ 40 Restaurant \ 40 \ 30 \ 20 \ 10 \ 0 -Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the movies?

Exhibit 2.6 -Refer to Exhibit 2.7, which shows the production possibilities frontier for capital goods and consumer goods. Identify the correct statement.

Recognizing the incentive power of property rights and markets, some of the most die-hard central planners are now allowing _____

Which of the following is not a characteristic of pure capitalism?

Efficiency involves _____

The Art and Science of Economic Analysis.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters