Question 1

Which of the following economic questions does the decision to produce butter instead of guns in an economy answer?

Accepted Answer

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

Question 2

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then _____

Accepted Answer

A)  Monica must have an absolute advantage in baking. 
B)  Monica must have an absolute advantage in sewing. 
C)  George must have an absolute advantage in baking. 
D)  George must have an absolute advantage in sewing. 
E)  we can conclude nothing about absolute advantage. 
A)  Monica must have an absolute advantage in baking. 
B)  Monica must have an absolute advantage in sewing. 
C)  George must have an absolute advantage in baking. 
D)  George must have an absolute advantage in sewing. 
E)  we can conclude nothing about absolute advantage.

Question 3

A straight-line production possibilities frontier indicates that _____

Accepted Answer

A)  the problem of scarcity does not exist. 
B)  resources are imperfect substitutes. 
C)  opportunity costs are constant. 
D)  technology is rapidly expanding. 
E)  some resources are not being used efficiently. 
A)  the problem of scarcity does not exist. 
B)  resources are imperfect substitutes. 
C)  opportunity costs are constant. 
D)  technology is rapidly expanding. 
E)  some resources are not being used efficiently.

Question 4

The production possibilities frontier will shift if there is a change in _____

Accepted Answer

A)  technology. 
B)  the unemployment level. 
C)  product prices. 
D)  society's preferences for goods. 
E)  the quantities of the two goods being produced. 
A)  technology. 
B)  the unemployment level. 
C)  product prices. 
D)  society's preferences for goods. 
E)  the quantities of the two goods being produced.

Question 5

Which of the following would not shift the production possibilities frontier?

Accepted Answer

A)  an increase in capital stock 
B)  a war that destroyed many buildings 
C)  a technological improvement that improved the fuel efficiency of cars 
D)  a decrease in the size of the labor force 
E)  no change in the production process 
A)  an increase in capital stock 
B)  a war that destroyed many buildings 
C)  a technological improvement that improved the fuel efficiency of cars 
D)  a decrease in the size of the labor force 
E)  no change in the production process

Question 6

You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is _____

Accepted Answer

A)  the cost of what you eat. 
B)  the difference between the costs of the book and the food. 
C)  the difference between the opportunity costs of reading and sleeping. 
D)  the net benefit of sleeping. 
E)  impossible to determine because the most preferred alternative is not known. 
A)  the cost of what you eat. 
B)  the difference between the costs of the book and the food. 
C)  the difference between the opportunity costs of reading and sleeping. 
D)  the net benefit of sleeping. 
E)  impossible to determine because the most preferred alternative is not known.

Question 7

The opportunity cost of an activity is best measured _____

Accepted Answer

A)  in terms of the monetary costs of the activity. 
B)  by the number of alternative activities that are forgone by choosing this activity. 
C)  by the difference between the costs of the chosen activity and the next best alternative. 
D)  by the value expected from the best alternative that is forgone. 
E)  by the time wasted choosing among various activities. 
A)  in terms of the monetary costs of the activity. 
B)  by the number of alternative activities that are forgone by choosing this activity. 
C)  by the difference between the costs of the chosen activity and the next best alternative. 
D)  by the value expected from the best alternative that is forgone. 
E)  by the time wasted choosing among various activities.

Question 8

Exhibit 2.4
​  
-Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

Accepted Answer

A)  gains 100 socks. 
B)  loses 30 mufflers. 
C)  is worse off after the change in production. 
D)  is not operating efficiently. 
E)  experiences some unemployment of resources. 
A)  gains 100 socks. 
B)  loses 30 mufflers. 
C)  is worse off after the change in production. 
D)  is not operating efficiently. 
E)  experiences some unemployment of resources.

Question 9

The law of increasing opportunity cost reflects the fact that _____

Accepted Answer

A)  the production possibilities frontier is bowed inward. 
B)  resources are not perfectly substitutable. 
C)  resources cannot always be used efficiently. 
D)  an economy will operate at a point inside its production possibilities frontier. 
E)  an economy will operate at a point along its production possibilities frontier. 
A)  the production possibilities frontier is bowed inward. 
B)  resources are not perfectly substitutable. 
C)  resources cannot always be used efficiently. 
D)  an economy will operate at a point inside its production possibilities frontier. 
E)  an economy will operate at a point along its production possibilities frontier.

Question 10

The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities.

Accepted Answer

A) True 
 B)False

Question 11

Points outside the production possibilities frontier represent _____

Accepted Answer

A)  unemployment of resources. 
B)  inefficient use of resources. 
C)  combinations that are attainable only if all resources are used fully and efficiently. 
D)  currently unattainable combinations of outputs. 
E)  the only currently attainable combinations from which society must choose. 
A)  unemployment of resources. 
B)  inefficient use of resources. 
C)  combinations that are attainable only if all resources are used fully and efficiently. 
D)  currently unattainable combinations of outputs. 
E)  the only currently attainable combinations from which society must choose.

Question 12

Outside of economics, the total cost of an item is measured as _____

Accepted Answer

A)  the dollar cost of the item. 
B)  the time spent obtaining the item. 
C)  what you gave up to get the item. 
D)  the opportunity cost of the item. 
E)  the sunk cost of the item. 
A)  the dollar cost of the item. 
B)  the time spent obtaining the item. 
C)  what you gave up to get the item. 
D)  the opportunity cost of the item. 
E)  the sunk cost of the item.

Question 13

A sunk cost _____

Accepted Answer

A)  can only be measured in monetary terms. 
B)  is a cost that has already been incurred and cannot be recovered. 
C)  should influence a person's choice if that person is a marginal decision maker. 
D)  lowers the efficiency of production. 
E)  should not be considered when making economic decisions. 
A)  can only be measured in monetary terms. 
B)  is a cost that has already been incurred and cannot be recovered. 
C)  should influence a person's choice if that person is a marginal decision maker. 
D)  lowers the efficiency of production. 
E)  should not be considered when making economic decisions.

Question 14

Which of the following is not a gain from the division of labor?

Accepted Answer

A)  Workers' abilities are matched to tasks. 
B)  Workers gain experience from the repetition of the tasks. 
C)  Workers save time by not moving to different tasks. 
D)  Workers' morale increases as tasks become more specialized. 
E)  The introduction of labor-saving machinery is possible. 
A)  Workers' abilities are matched to tasks. 
B)  Workers gain experience from the repetition of the tasks. 
C)  Workers save time by not moving to different tasks. 
D)  Workers' morale increases as tasks become more specialized. 
E)  The introduction of labor-saving machinery is possible.

Question 15

What is the opportunity cost of attending school?

Accepted Answer

A)  the dollar cost of tuition and books 
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 dollar cost of tuition and books 
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 16

Which system is characterized by the public ownership of resources and centralized planning?

Accepted Answer

A)  a pure command system 
B)  a transitional system 
C)  a traditional system 
D)  a pure capitalism system 
E)  a mixed system 
A)  a pure command system 
B)  a transitional system 
C)  a traditional system 
D)  a pure capitalism system 
E)  a mixed system

Question 17

On the production possibilities frontier, the opportunity cost of producing one more unit of a commodity per period is measured by the _____

Accepted Answer

A)  monetary price of the commodity. 
B)  amount of the other commodity that must be sacrificed. 
C)  amount of unemployed resources that must be used. 
D)  amount of satisfaction it gives consumers. 
E)  amount of tax paid to the government for the production, sale, and use of the commodity. 
A)  monetary price of the commodity. 
B)  amount of the other commodity that must be sacrificed. 
C)  amount of unemployed resources that must be used. 
D)  amount of satisfaction it gives consumers. 
E)  amount of tax paid to the government for the production, sale, and use of the commodity.

Question 18

A point outside the production possibilities frontier _____

Accepted Answer

A)  represents unemployment of resources. 
B)  represents full employment of resources. 
C)  would not represent an efficient combination of goods. 
D)  cannot be reached using available technology. 
E)  is less desirable than a point inside the frontier. 
A)  represents unemployment of resources. 
B)  represents full employment of resources. 
C)  would not represent an efficient combination of goods. 
D)  cannot be reached using available technology. 
E)  is less desirable than a point inside the frontier.

Question 19

A system which is characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets 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 20

Exhibit 2.1
​
  
-Refer to Exhibit 2.1, which shows the production for rice and T-shirts for two countries: Costa Rica and the United States. In Costa Rica, the opportunity cost of 1 ton of rice is _____

Accepted Answer

A)  equal to 1/2 of a T-shirt 
B)  equal to 3/4 of a T-shirt 
C)  equal to 1 T-shirt 
D)  equal to 11/2 T-shirts 
E)  equal to 2 T-shirts 
A)  equal to 1/2 of a T-shirt 
B)  equal to 3/4 of a T-shirt 
C)  equal to 1 T-shirt 
D)  equal to 11/2 T-shirts 
E)  equal to 2 T-shirts

Which of the following economic questions does the decision to produce butter instead of guns in an economy answer?

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then _____

A straight-line production possibilities frontier indicates that _____

The production possibilities frontier will shift if there is a change in _____

Which of the following would not shift the production possibilities frontier?

You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is _____

The opportunity cost of an activity is best measured _____

Exhibit 2.4 -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

The law of increasing opportunity cost reflects the fact that _____

The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities.

Points outside the production possibilities frontier represent _____

Outside of economics, the total cost of an item is measured as _____

A sunk cost _____

Which of the following is not a gain from the division of labor?

What is the opportunity cost of attending school?

Which system is characterized by the public ownership of resources and centralized planning?

On the production possibilities frontier, the opportunity cost of producing one more unit of a commodity per period is measured by the _____

A point outside the production possibilities frontier _____

A system which is characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets is known as a _____

Exhibit 2.1 -Refer to Exhibit 2.1, which shows the production for rice and T-shirts for two countries: Costa Rica and the United States. In Costa Rica, the opportunity cost of 1 ton of rice is _____

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.

Which of the following economic questions does the decision to produce butter instead of guns in an economy answer?

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then _____

A straight-line production possibilities frontier indicates that _____

The production possibilities frontier will shift if there is a change in _____

Which of the following would not shift the production possibilities frontier?

You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is _____

The opportunity cost of an activity is best measured _____

Exhibit 2.4 ​ -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

The law of increasing opportunity cost reflects the fact that _____

The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities.

Points outside the production possibilities frontier represent _____

Outside of economics, the total cost of an item is measured as _____

A sunk cost _____

Which of the following is not a gain from the division of labor?

What is the opportunity cost of attending school?

Which system is characterized by the public ownership of resources and centralized planning?

On the production possibilities frontier, the opportunity cost of producing one more unit of a commodity per period is measured by the _____

A point outside the production possibilities frontier _____

A system which is characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets is known as a _____

Exhibit 2.1 ​ -Refer to Exhibit 2.1, which shows the production for rice and T-shirts for two countries: Costa Rica and the United States. In Costa Rica, the opportunity cost of 1 ton of rice is _____

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 2.4 -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

Exhibit 2.1 -Refer to Exhibit 2.1, which shows the production for rice and T-shirts for two countries: Costa Rica and the United States. In Costa Rica, the opportunity cost of 1 ton of rice is _____