Exam 2: Scarcity, trade-Offs, and Production Possibilities

Which of society's questions does a market system answer?

An economy is producing two goods,ice cream and cookies,and is currently operating efficiently.Under what circumstances can this economy produce more cookies?

High-wage countries like Canada tend to use less labour-intensive production methods than low-wage countries like China.

What is assumed when an economy's production possibilities curve for a year is drawn?

A consulting firm is advising its government clients that their economies really do not need to sacrifice consumption goods today in order to grow.Which of the following options would make it possible for clients to experience growth without making sacrifices?

In a market economy,who will get the goods that are produced?

The opportunity cost of a particular good tends to increase with its rate of output because some resources cannot be easily adapted from the production of one good or service to another.

FIGURE 2-3 -Refer to Figure 2-3.An economy is operating at full employment,and then workers in the bread industry are laid off.How is this change portrayed on the production possibilities curve?

FIGURE 2-3 -Refer to Figure 2-3.What is the most inefficient point depicted?

In the simple circular flow model of the economy,total expenditures on goods and services equal total household income.

FIGURE 2-4 -Refer to Figure 2-4.Currently,which point is impossible to achieve?

When resources are used efficiently,what is the only way you can produce more of one good,ceteris paribus?

Which of the following best describes economic growth?

Other things being constant,an economy must give up some consumer goods and services today to produce more capital goods in order to grow.

Which of the following best illustrates inefficiency?

What could one expect approximately two decades after a "baby boom"?

FIGURE 2-6 -Refer to Figure 2-6.The diagram represents a trade-off in an economy between prison cells and classrooms.Which position represents the choice to allocate the greatest amount of resources to producing prison cells?

Illustrate a production possibilities curve for automobiles and breakfast cereal that is bowed outward.Show what is likely to happen to the production possibilities curve as a result of a devastating war on a country's home soil.

FIGURE 2-3 -Refer to Figure 2-3.At which point is it currently not possible to produce?

How does the fact that resources are not equally substitutable across uses affect the production possibilities curve?