Question 1

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 2

Under market capitalism,resources are allocated primarily through

Accepted Answer

A) government decree 
B) voter consensus 
C) tradition 
D) lottery 
E) prices 
A) government decree 
B) voter consensus 
C) tradition 
D) lottery 
E) prices

Question 3

Under a capitalist economic system,

Accepted Answer

A) the state owns all or most of the resources 
B) people are forced to work for a living 
C) resources are privately owned 
D) the government determines the allocation of resources 
E) prices eventually become unnecessary 
A) the state owns all or most of the resources 
B) people are forced to work for a living 
C) resources are privately owned 
D) the government determines the allocation of resources 
E) prices eventually become unnecessary

Question 4

If China has an absolute advantage over Canada in producing both rice and tires,then

Accepted Answer

A) China should produce both rice and tire and Canada should produce both rice and tires 
B) there are no benefits possible to China from specialization 
C) Canada should produce tires and China should produce rice 
D) China should produce tires and Canada should produce rice 
E) more information is needed to tell whether China or Canada should specialize 
A) China should produce both rice and tire and Canada should produce both rice and tires 
B) there are no benefits possible to China from specialization 
C) Canada should produce tires and China should produce rice 
D) China should produce tires and Canada should produce rice 
E) more information is needed to tell whether China or Canada should specialize

Question 5

Figure 2-9
  
-Assume that the publishing industry produces novels and textbooks,as shown in the production possibilities frontier in Figure 2-9.Between points F and G,the opportunity cost of ten more novels equals __________.Between points G and H,the opportunity cost of ten more novels equals __________.

Accepted Answer

A) 0.4 textbooks;0.5 textbooks 
B) 4 textbooks;5 textbooks 
C) 4 million textbooks;5 million textbooks 
D) 2.5 textbooks;2 textbooks 
E) 10 million textbooks;5 million textbooks 
A) 0.4 textbooks;0.5 textbooks 
B) 4 textbooks;5 textbooks 
C) 4 million textbooks;5 million textbooks 
D) 2.5 textbooks;2 textbooks 
E) 10 million textbooks;5 million textbooks

Question 6

Traditional economies tend to be

Accepted Answer

A) unstable and unpredictable 
B) stable,predictable,and growing 
C) unstable,unpredictable,and stagnant 
D) unstable and unpredictable,but growing 
E) stable and predictable,but stagnant 
A) unstable and unpredictable 
B) stable,predictable,and growing 
C) unstable,unpredictable,and stagnant 
D) unstable and unpredictable,but growing 
E) stable and predictable,but stagnant

Question 7

A person has an absolute advantage in producing a good if he can

Accepted Answer

A) produce it using fewer resources than another person 
B) produce it while sacrificing less than another person in terms of foregone output 
C) corner the market 
D) use other peoples' money to produce it 
E) work out some long term payment plan for financing the good 
A) produce it using fewer resources than another person 
B) produce it while sacrificing less than another person in terms of foregone output 
C) corner the market 
D) use other peoples' money to produce it 
E) work out some long term payment plan for financing the good

Question 8

A person has a comparative advantage if

Accepted Answer

A) she can produce everything more cheaply than her co-worker can 
B) she can produce everything at a faster rate than her co-worker can 
C) she can produce a good with a smaller opportunity cost than her co-worker can 
D) she sees through corporate and government manipulation 
E) she gets rich through inheritance 
A) she can produce everything more cheaply than her co-worker can 
B) she can produce everything at a faster rate than her co-worker can 
C) she can produce a good with a smaller opportunity cost than her co-worker can 
D) she sees through corporate and government manipulation 
E) she gets rich through inheritance

Question 9

Figure 2-12
  
-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 they should

Accepted Answer

A) have Bob specialize in both political and celebrity jokes 
B) have Tom specialize in both political and celebrity jokes 
C) cooperate on the writing of both political and celebrity jokes 
D) have Bob write political jokes and Tom write celebrity jokes 
E) have Tom write political jokes and Bob write celebrity jokes 
A) have Bob specialize in both political and celebrity jokes 
B) have Tom specialize in both political and celebrity jokes 
C) cooperate on the writing of both political and celebrity jokes 
D) have Bob write political jokes and Tom write celebrity jokes 
E) have Tom write political jokes and Bob write celebrity jokes

Question 10

A concave production possibilities frontier exhibits

Accepted Answer

A) increasing opportunity cost 
B) decreasing opportunity cost 
C) constant opportunity cost 
D) diminishing returns 
E) returns to scale 
A) increasing opportunity cost 
B) decreasing opportunity cost 
C) constant opportunity cost 
D) diminishing returns 
E) returns to scale

Question 11

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.Which of the following statements is true?

Accepted Answer

A) Production of both wheat and grapes can be increased by shifting tracts of land to their best uses. 
B) Production of both wheat and grapes can be increased only if more land becomes available. 
C) production of wheat can increase only if production of grapes decreases. 
D) Production of grapes can increase only if more labor and machinery become available. 
E) Production of neither wheat nor grapes is possible without more land becoming available. 
A) Production of both wheat and grapes can be increased by shifting tracts of land to their best uses. 
B) Production of both wheat and grapes can be increased only if more land becomes available. 
C) production of wheat can increase only if production of grapes decreases. 
D) Production of grapes can increase only if more labor and machinery become available. 
E) Production of neither wheat nor grapes is possible without more land becoming available.

Question 12

If Mary has an absolute advantage over Bill in performing each of two tasks,then

Accepted Answer

A) Mary must have a comparative advantage in both tasks 
B) Mary cannot benefit by specializing in one and trading with Bill for the other 
C) Mary should specialize in both tasks 
D) Mary cannot have a comparative advantage in either task 
E) Mary should specialize in the one in which she has a comparative advantage 
A) Mary must have a comparative advantage in both tasks 
B) Mary cannot benefit by specializing in one and trading with Bill for the other 
C) Mary should specialize in both tasks 
D) Mary cannot have a comparative advantage in either task 
E) Mary should specialize in the one in which she has a comparative advantage

Question 13

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 14

Suppose that the country of Utopia produces only steel and coffee.In 1998,Utopia produced 900 tons of steel and 500 pounds of coffee,while in 1999,it produced 1,000 tons of steel and 550 pounds of coffee.Assume that no technological changes occurred in the production of either good and the resource endowment of Utopia did not change.Which of the following is true?

Accepted Answer

A) Utopia's opportunity cost of producing additional steel is 50 pounds of coffee. 
B) Utopia's production must have been productively inefficient in 1998. 
C) Utopia's opportunity cost of producing additional steel is 1/2 pound of coffee per ton of steel. 
D) Utopia's opportunity cost of producing additional coffee is 100 tons of steel. 
E) The production point in 1998 was unattainable given then-current resources and technology. 
A) Utopia's opportunity cost of producing additional steel is 50 pounds of coffee. 
B) Utopia's production must have been productively inefficient in 1998. 
C) Utopia's opportunity cost of producing additional steel is 1/2 pound of coffee per ton of steel. 
D) Utopia's opportunity cost of producing additional coffee is 100 tons of steel. 
E) The production point in 1998 was unattainable given then-current resources and technology.

Question 15

Which of the following is an example of productive inefficiency?

Accepted Answer

A) Scientists discover a new substance that dramatically increases potential steel production. 
B) A demographic boom leads to a rise in the number of workers in the labor force. 
C) The rate of unemployment falls to zero. 
D) Computer technicians are forced to answer telephones rather than perform their normal duties. 
E) Due to economic growth,the economy reaches a new point along its production possibilities frontier. 
A) Scientists discover a new substance that dramatically increases potential steel production. 
B) A demographic boom leads to a rise in the number of workers in the labor force. 
C) The rate of unemployment falls to zero. 
D) Computer technicians are forced to answer telephones rather than perform their normal duties. 
E) Due to economic growth,the economy reaches a new point along its production possibilities frontier.

Question 16

Production is productively efficient when

Accepted Answer

A) the maximum possible output is being produced from a given collection of inputs 
B) people are working their hardest 
C) no more capital can be substituted for labor 
D) technological innovation is no longer desirable 
E) workers perform their duties at the expected level,even if they are physically capable of doing more 
A) the maximum possible output is being produced from a given collection of inputs 
B) people are working their hardest 
C) no more capital can be substituted for labor 
D) technological innovation is no longer desirable 
E) workers perform their duties at the expected level,even if they are physically capable of doing more

Question 17

Production possibilities frontiers are typically concave (bowed out)from the origin because

Accepted Answer

A) of the law of supply 
B) there is usually a one-for-one trade-off in resources used in production 
C) economies of scale enable firms to reduce the average costs of production as output rises 
D) the opportunity cost of a good rises as the quantity of the good produced increases 
E) resources are often left idle in the firm 
A) of the law of supply 
B) there is usually a one-for-one trade-off in resources used in production 
C) economies of scale enable firms to reduce the average costs of production as output rises 
D) the opportunity cost of a good rises as the quantity of the good produced increases 
E) resources are often left idle in the firm

Question 18

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 19

Under a market system of resource allocation,the most important limitations on individual freedom of action are imposed by

Accepted Answer

A) tradition 
B) the government 
C) the scarcity of resources 
D) the stagnation of the economy 
E) the rigidity of the economy's rules 
A) tradition 
B) the government 
C) the scarcity of resources 
D) the stagnation of the economy 
E) the rigidity of the economy's rules

Question 20

World War II led to a dramatic increase in economic growth in the United States because

Accepted Answer

A) the war caused the U.S.to move along its production possibilities frontier away from consumer goods and towards military goods 
B) the economy was already at close to full employment 
C) there were unemployed resources in the U.S.economy prior to the war 
D) the economy shifted production towards more profitable consumer goods during the war 
E) the opportunity cost of producing military goods increased considerably during the war years 
A) the war caused the U.S.to move along its production possibilities frontier away from consumer goods and towards military goods 
B) the economy was already at close to full employment 
C) there were unemployed resources in the U.S.economy prior to the war 
D) the economy shifted production towards more profitable consumer goods during the war 
E) the opportunity cost of producing military goods increased considerably during the war years

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,

Under market capitalism,resources are allocated primarily through

Under a capitalist economic system,

If China has an absolute advantage over Canada in producing both rice and tires,then

Figure 2-9 -Assume that the publishing industry produces novels and textbooks,as shown in the production possibilities frontier in Figure 2-9.Between points F and G,the opportunity cost of ten more novels equals .Between points G and H,the opportunity cost of ten more novels equals .

Traditional economies tend to be

A person has an absolute advantage in producing a good if he can

A person has a comparative advantage if

Figure 2-12 -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 they should

A concave production possibilities frontier exhibits

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.Which of the following statements is true?

If Mary has an absolute advantage over Bill in performing each of two tasks,then

The three problems of resource allocation are faced by

Which of the following is an example of productive inefficiency?

Production is productively efficient when

Production possibilities frontiers are typically concave (bowed out)from the origin because

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

Under a market system of resource allocation,the most important limitations on individual freedom of action are imposed by

World War II led to a dramatic increase in economic growth in the United States because

What Is Economics

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 2: Scarcity, choice, and Economic Systems

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,

Under market capitalism,resources are allocated primarily through

Under a capitalist economic system,

If China has an absolute advantage over Canada in producing both rice and tires,then

Traditional economies tend to be

A person has an absolute advantage in producing a good if he can

A person has a comparative advantage if

Figure 2-12 -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 they should

A concave production possibilities frontier exhibits

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.Which of the following statements is true?

If Mary has an absolute advantage over Bill in performing each of two tasks,then

The three problems of resource allocation are faced by

Which of the following is an example of productive inefficiency?

Production is productively efficient when

Production possibilities frontiers are typically concave (bowed out)from the origin because

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

Under a market system of resource allocation,the most important limitations on individual freedom of action are imposed by

World War II led to a dramatic increase in economic growth in the United States because

What Is Economics

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters