Question 1

As resources are not perfectly adaptable to the production of both Good A and Good B, _____.

Accepted Answer

A)  the opportunity cost of Good A increases as the production of Good A increases 
B)  the opportunity cost of Good A decreases as the production of Good A increases 
C)  it is impossible for the economy to produce both Good A and Good B 
D)  the opportunity cost of Good A is constant 
E)  the opportunity cost of Good B is constant 
A)  the opportunity cost of Good A increases as the production of Good A increases 
B)  the opportunity cost of Good A decreases as the production of Good A increases 
C)  it is impossible for the economy to produce both Good A and Good B 
D)  the opportunity cost of Good A is constant 
E)  the opportunity cost of Good B is constant

Question 2

Opportunity cost can also be thought of as _____

Accepted Answer

A)  an opportunity lost. 
B)  an opportunity gained. 
C)  a dollar expenditure. 
D)  the overhead spent. 
E)  a waste of time. 
A)  an opportunity lost. 
B)  an opportunity gained. 
C)  a dollar expenditure. 
D)  the overhead spent. 
E)  a waste of time.

Question 3

Which of the following would cause an outward shift of the production possibilities frontier?

Accepted Answer

A)  a reduction in inefficiency 
B)  a reduction in the size of the labor force 
C)  an improvement in technology 
D)  a change in the combination of goods produced 
E)  an increase in opportunity costs 
A)  a reduction in inefficiency 
B)  a reduction in the size of the labor force 
C)  an improvement in technology 
D)  a change in the combination of goods produced 
E)  an increase in opportunity costs

Question 4

The typical concave (i.e., bowed-out) shape of the production possibilities frontier reflects the law of increasing opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

The direct exchange of one product for another without using money is called _____.

Accepted Answer

A)  illegal. 
B)  efficient. 
C)  specialization. 
D)  e-money. 
E)  barter. 
A)  illegal. 
B)  efficient. 
C)  specialization. 
D)  e-money. 
E)  barter.

Question 6

A system which is characterized by the public ownership of resources and centralized planning is known as a _____

Accepted Answer

A)  traditional system. 
B)  transitional system. 
C)  pure command system. 
D)  mixed system. 
E)  pure capitalist system. 
A)  traditional system. 
B)  transitional system. 
C)  pure command system. 
D)  mixed system. 
E)  pure capitalist system.

Question 7

Opportunity cost is measured in dollar terms, rather than in terms of real goods and services.

Accepted Answer

A) True 
 B)False

Question 8

The term opportunity cost suggests that _____

Accepted Answer

A)  one person must lose when someone else gains in an exchange situation. 
B)  not all individuals make the most of life's opportunities. 
C)  executives do not always recognize opportunities for profit as quickly as they should. 
D)  the only factor that is important in decision making is cost. 
E)  a good must be given up to get some other good in return as resources are scarce. 
A)  one person must lose when someone else gains in an exchange situation. 
B)  not all individuals make the most of life's opportunities. 
C)  executives do not always recognize opportunities for profit as quickly as they should. 
D)  the only factor that is important in decision making is cost. 
E)  a good must be given up to get some other good in return as resources are scarce.

Question 9

What is the total cost of attending school?

Accepted Answer

A)  the cost of tuition, books, etc. 
B)  the value of the best opportunity forgone 
C)  the lost income if the student had been working 
D)  none if someone else is paying all the expenses 
E)  none if the student will earn more after graduating 
A)  the cost of tuition, books, etc. 
B)  the value of the best opportunity forgone 
C)  the lost income if the student had been working 
D)  none if someone else is paying all the expenses 
E)  none if the student will earn more after graduating

Question 10

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Hans's opportunity cost of doing one load of laundry is _____

Accepted Answer

A)  equal to typing 12 papers. 
B)  equal to typing 8 papers. 
C)  equal to typing 1 1/2 pages. 
D)  equal to typing 2/3 of a page. 
E)  impossible to compute without additional information. 
A)  equal to typing 12 papers. 
B)  equal to typing 8 papers. 
C)  equal to typing 1 1/2 pages. 
D)  equal to typing 2/3 of a page. 
E)  impossible to compute without additional information.

Question 11

It is possible for one person to have an absolute advantage in something even if she has no comparative advantage in anything.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following economic questions does the decision to give all of the butter an economy produces to the homeless answer?

Accepted Answer

A)  What to produce? 
B)  How to produce? 
C)  For whom to produce? 
D)  Who has a comparative advantage in butter production? 
E)  Who has an absolute advantage in butter production? 
A)  What to produce? 
B)  How to produce? 
C)  For whom to produce? 
D)  Who has a comparative advantage in butter production? 
E)  Who has an absolute advantage in butter production?

Question 13

Melissa is a self-employed lawyer who chooses a higher-priced restaurant that is 2 miles away from her home over a cheaper restaurant that is 15 miles away from her home. Which of the following is the most likely explanation for her behavior?

Accepted Answer

A)  The opportunity cost of her time is very low. 
B)  She does not take the time taken to travel to the restaurants into consideration. 
C)  She does not like to cook. 
D)  The prices at the more expensive restaurant understate the opportunity cost of eating there. 
E)  The higher cost of the more expensive restaurant is offset by the higher opportunity cost of the cheaper restaurant. 
A)  The opportunity cost of her time is very low. 
B)  She does not take the time taken to travel to the restaurants into consideration. 
C)  She does not like to cook. 
D)  The prices at the more expensive restaurant understate the opportunity cost of eating there. 
E)  The higher cost of the more expensive restaurant is offset by the higher opportunity cost of the cheaper restaurant.

Question 14

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that _____

Accepted Answer

A)  a curve makes it easier to illustrate the concepts of scarcity and prices than does a straight line. 
B)  early economists began drawing them in this way and the convention has continued throughout the years. 
C)  output eventually reaches a maximum and then declines. 
D)  resources are not perfectly adaptable to the production of all goods. 
E)  the frontier shifts outward over time. 
A)  a curve makes it easier to illustrate the concepts of scarcity and prices than does a straight line. 
B)  early economists began drawing them in this way and the convention has continued throughout the years. 
C)  output eventually reaches a maximum and then declines. 
D)  resources are not perfectly adaptable to the production of all goods. 
E)  the frontier shifts outward over time.

Question 15

Exhibit 2.2
​  
-Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point g is efficient because _____

Accepted Answer

A)  the only way to increase the production of Good A is to decrease the production of Good B. 
B)  the economy can increase the production of both Good A and Good B. 
C)  it is impossible to move to any other point along the production possibilities frontier. 
D)  it is impossible to move to any other point inside the production possibilities frontier. 
E)  no other production possibilities frontier exists. 
A)  the only way to increase the production of Good A is to decrease the production of Good B. 
B)  the economy can increase the production of both Good A and Good B. 
C)  it is impossible to move to any other point along the production possibilities frontier. 
D)  it is impossible to move to any other point inside the production possibilities frontier. 
E)  no other production possibilities frontier exists.

Question 16

The production possibilities frontier of an economy can shift inward if there is _____

Accepted Answer

A)  a natural disaster in the economy. 
B)  a stable political environment in the economy. 
C)  an improvement in technology in the economy. 
D)  a larger work force in the economy. 
E)  a larger capital stock in the economy. 
A)  a natural disaster in the economy. 
B)  a stable political environment in the economy. 
C)  an improvement in technology in the economy. 
D)  a larger work force in the economy. 
E)  a larger capital stock in the economy.

Question 17

In a command economy, _____

Accepted Answer

A)  society makes every economic decision. 
B)  owners can sell their resources to the highest bidder. 
C)  no individual or group coordinates the economy. 
D)  individual choices are reflected in collective decisions and decisions are made by central planners. 
E)  public ownership of resources is combined with free markets to direct economic activity. 
A)  society makes every economic decision. 
B)  owners can sell their resources to the highest bidder. 
C)  no individual or group coordinates the economy. 
D)  individual choices are reflected in collective decisions and decisions are made by central planners. 
E)  public ownership of resources is combined with free markets to direct economic activity.

Question 18

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 Option D?

Accepted Answer

A)  $30 in terms of movies 
B)  $10 in terms of restaurant 
C)  $30 in terms of restaurant and $10 in terms of movies 
D)  $40 because you managed to do both 
E)  $0 because you managed to do both 
A)  $30 in terms of movies 
B)  $10 in terms of restaurant 
C)  $30 in terms of restaurant and $10 in terms of movies 
D)  $40 because you managed to do both 
E)  $0 because you managed to do both

Question 19

The division of labor means _____

Accepted Answer

A)  discrimination in labor markets. 
B)  separating a job into smaller tasks to be completed by different people. 
C)  dividing one worker's time among different jobs and duties. 
D)  assigning the same task to different groups of people. 
E)  the fact that two 20-year-olds are more productive than one 40-year-old. 
A)  discrimination in labor markets. 
B)  separating a job into smaller tasks to be completed by different people. 
C)  dividing one worker's time among different jobs and duties. 
D)  assigning the same task to different groups of people. 
E)  the fact that two 20-year-olds are more productive than one 40-year-old.

Question 20

Breaking down the production of a good into separate tasks is known as _____

Accepted Answer

A)  barter. 
B)  a credit transaction. 
C)  a monetary exchange. 
D)  the specialization of labor 
E)  the division of labor. 
A)  barter. 
B)  a credit transaction. 
C)  a monetary exchange. 
D)  the specialization of labor 
E)  the division of labor.

As resources are not perfectly adaptable to the production of both Good A and Good B, _____.

Opportunity cost can also be thought of as _____

Which of the following would cause an outward shift of the production possibilities frontier?

The typical concave (i.e., bowed-out) shape of the production possibilities frontier reflects the law of increasing opportunity cost.

The direct exchange of one product for another without using money is called _____.

A system which is characterized by the public ownership of resources and centralized planning is known as a _____

Opportunity cost is measured in dollar terms, rather than in terms of real goods and services.

The term opportunity cost suggests that _____

What is the total cost of attending school?

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Hans's opportunity cost of doing one load of laundry is _____

It is possible for one person to have an absolute advantage in something even if she has no comparative advantage in anything.

Which of the following economic questions does the decision to give all of the butter an economy produces to the homeless answer?

Melissa is a self-employed lawyer who chooses a higher-priced restaurant that is 2 miles away from her home over a cheaper restaurant that is 15 miles away from her home. Which of the following is the most likely explanation for her behavior?

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that _____

Exhibit 2.2 -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point g is efficient because _____

The production possibilities frontier of an economy can shift inward if there is _____

In a command economy, _____

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 Option D?

The division of labor means _____

Breaking down the production of a good into separate tasks is known as _____

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.

As resources are not perfectly adaptable to the production of both Good A and Good B, _____.

Opportunity cost can also be thought of as _____

Which of the following would cause an outward shift of the production possibilities frontier?

The typical concave (i.e., bowed-out) shape of the production possibilities frontier reflects the law of increasing opportunity cost.

The direct exchange of one product for another without using money is called _____.

A system which is characterized by the public ownership of resources and centralized planning is known as a _____

Opportunity cost is measured in dollar terms, rather than in terms of real goods and services.

The term opportunity cost suggests that _____

What is the total cost of attending school?

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Hans's opportunity cost of doing one load of laundry is _____

It is possible for one person to have an absolute advantage in something even if she has no comparative advantage in anything.

Which of the following economic questions does the decision to give all of the butter an economy produces to the homeless answer?

Melissa is a self-employed lawyer who chooses a higher-priced restaurant that is 2 miles away from her home over a cheaper restaurant that is 15 miles away from her home. Which of the following is the most likely explanation for her behavior?

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that _____

Exhibit 2.2 ​ -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point g is efficient because _____

The production possibilities frontier of an economy can shift inward if there is _____

In a command economy, _____

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 Option D?

The division of labor means _____

Breaking down the production of a good into separate tasks is known as _____

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

Exhibit 2.2 -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point g is efficient because _____