Question 1

Which of the following is NOT a service?

Accepted Answer

A) physical labor purchased by a producer 
B) things purchased by a consumer that do not have physical characteristics 
C) a diamond used in an engagement ring 
D) tasks performed by someone else 
A) physical labor purchased by a producer 
B) things purchased by a consumer that do not have physical characteristics 
C) a diamond used in an engagement ring 
D) tasks performed by someone else

Question 2

Opportunity cost exists because

Accepted Answer

A) of scarcity. 
B) prices must adjust to eliminate shortages. 
C) production could not occur without the opportunity cost of using resources. 
D) the value of economic goods is positive while the value of goods is zero. 
A) of scarcity. 
B) prices must adjust to eliminate shortages. 
C) production could not occur without the opportunity cost of using resources. 
D) the value of economic goods is positive while the value of goods is zero.

Question 3

When productive activities are organized according to the principle of the division of labor

Accepted Answer

A) scarcity is eliminated. 
B) we do not devote enough resources for capital investment. 
C) total output increases due to the advantages of specialization. 
D) an inefficient outcome results. 
A) scarcity is eliminated. 
B) we do not devote enough resources for capital investment. 
C) total output increases due to the advantages of specialization. 
D) an inefficient outcome results.

Question 4

For every choice a person makes it can be assumed that

Accepted Answer

A) the chooser has full knowledge of the situation. 
B) some opportunity cost was involved. 
C) there is a fifty-fifty chance the choice was the wrong one. 
D) a good is involved and satisfaction is gained. 
A) the chooser has full knowledge of the situation. 
B) some opportunity cost was involved. 
C) there is a fifty-fifty chance the choice was the wrong one. 
D) a good is involved and satisfaction is gained.

Question 5

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

Accepted Answer

A) Irene has the absolute advantage in the production of tables. 
B) Greg has the absolute advantage in the production of chairs. 
C) Irene has the comparative advantage in the production of chairs. 
D) Greg has the comparative advantage in the production of chairs. 
A) Irene has the absolute advantage in the production of tables. 
B) Greg has the absolute advantage in the production of chairs. 
C) Irene has the comparative advantage in the production of chairs. 
D) Greg has the comparative advantage in the production of chairs.

Question 6

Physical capital is distinguished from human capital because

Accepted Answer

A) physical capital refers to trained people. 
B) physical capital refers to equipment and machinery, whereas human capital refers to trained people. 
C) human capital refers only to day laborers. 
D) physical capital refers to trained people, whereas human capital refers to equipment and machinery. 
A) physical capital refers to trained people. 
B) physical capital refers to equipment and machinery, whereas human capital refers to trained people. 
C) human capital refers only to day laborers. 
D) physical capital refers to trained people, whereas human capital refers to equipment and machinery.

Question 7

Comparative advantage implies that you

Accepted Answer

A) can produce more units of a good or service than another. 
B) can produce a good or service at a lower opportunity cost. 
C) can produce goods with more capital resources. 
D) can produce goods with more human resources. 
A) can produce more units of a good or service than another. 
B) can produce a good or service at a lower opportunity cost. 
C) can produce goods with more capital resources. 
D) can produce goods with more human resources.

Question 8

The production possibilities curve represents the maximum feasible production combinations resulting from

Accepted Answer

A) the mix of current resources that utilizes all available inputs using current technology. 
B) a fixed amount of demand by consumers. 
C) the lack of trade-offs in production. 
D) the lack of technology used in production. 
A) the mix of current resources that utilizes all available inputs using current technology. 
B) a fixed amount of demand by consumers. 
C) the lack of trade-offs in production. 
D) the lack of technology used in production.

Question 9

All of the following are examples of physical capital EXCEPT

Accepted Answer

A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant. 
A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant.

Question 10

Specialization can occur because

Accepted Answer

A) governments pass laws that require it. 
B) varying skills differentiate workers. 
C) absolute advantage creates specialization among laborers. 
D) managers and laborers share job tasks. 
A) governments pass laws that require it. 
B) varying skills differentiate workers. 
C) absolute advantage creates specialization among laborers. 
D) managers and laborers share job tasks.

Question 11

Explain how comparative advantage, specialization and division of labor are related.

Accepted Answer

Comparative advantage is the ability to

Question 12

-In the above figure, the farmer faces a trade-off between beans and wheat equal to

Accepted Answer

A) one-to-one. 
B) three-to-one. 
C) one-to-two. 
D) one-to-four. 
A) one-to-one. 
B) three-to-one. 
C) one-to-two. 
D) one-to-four.

Question 13

Which of the following statements about scarcity is TRUE?

Accepted Answer

A) Scarcity is no longer a problem for industrialized countries. 
B) Scarcity exists in all societies. 
C) Scarcity is a problem only for greedy people. 
D) Scarcity is a problem only in countries that do not use markets to organize economic activity. 
A) Scarcity is no longer a problem for industrialized countries. 
B) Scarcity exists in all societies. 
C) Scarcity is a problem only for greedy people. 
D) Scarcity is a problem only in countries that do not use markets to organize economic activity.

Question 14

Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later he quits football to make movies for $3 million a year. His opportunity cost at graduation was ________ and eight years later was ________.

Accepted Answer

A) $50,000; $2 million 
B) $2 million; $2 million 
C) $2 million; $3 million 
D) $50,000; $50,000 
A) $50,000; $2 million 
B) $2 million; $2 million 
C) $2 million; $3 million 
D) $50,000; $50,000

Question 15

At a zero price, which of the following conditions is TRUE for an economic good?

Accepted Answer

A) Its quantity supplied exceeds its quantity demanded. 
B) Its quantity demanded exceeds its quantity supplied. 
C) Its quantity demanded equals its quantity supplied. 
D) Scarcity disappears. 
A) Its quantity supplied exceeds its quantity demanded. 
B) Its quantity demanded exceeds its quantity supplied. 
C) Its quantity demanded equals its quantity supplied. 
D) Scarcity disappears.

Question 16

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

Accepted Answer

A) production possibilities curve. 
B) substitution options curve. 
C) demand curve. 
D) opportunity cost curve. 
A) production possibilities curve. 
B) substitution options curve. 
C) demand curve. 
D) opportunity cost curve.

Question 17

One opportunity cost associated with going to college is

Accepted Answer

A) purchasing text books. 
B) paying tuition. 
C) giving up employment possibilities while in college. 
D) paying for room, board, and other living expenses. 
A) purchasing text books. 
B) paying tuition. 
C) giving up employment possibilities while in college. 
D) paying for room, board, and other living expenses.

Question 18

A point outside a production possibilities curve indicates

Accepted Answer

A) that resources are not being used efficiently. 
B) an output combination that society cannot attain given its current level of resources and technology. 
C) that resources are being used very efficiently. 
D) that both goods are characterized by increasing costs. 
A) that resources are not being used efficiently. 
B) an output combination that society cannot attain given its current level of resources and technology. 
C) that resources are being used very efficiently. 
D) that both goods are characterized by increasing costs.

Question 19

Division of labor increases the output of society by

Accepted Answer

A) eliminating scarcity. 
B) reducing the choices people have to make to a more manageable number. 
C) ensuring that people are happier in performing their work. 
D) allowing resources to specialize in the tasks for which they have a comparative advantage. 
A) eliminating scarcity. 
B) reducing the choices people have to make to a more manageable number. 
C) ensuring that people are happier in performing their work. 
D) allowing resources to specialize in the tasks for which they have a comparative advantage.

Question 20

What does a production possibilities curve show?

Accepted Answer

A production possibilities cur

Which of the following is NOT a service?

Opportunity cost exists because

When productive activities are organized according to the principle of the division of labor

For every choice a person makes it can be assumed that

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

Physical capital is distinguished from human capital because

Comparative advantage implies that you

The production possibilities curve represents the maximum feasible production combinations resulting from

All of the following are examples of physical capital EXCEPT

Specialization can occur because

Explain how comparative advantage, specialization and division of labor are related.

-In the above figure, the farmer faces a trade-off between beans and wheat equal to

Which of the following statements about scarcity is TRUE?

At a zero price, which of the following conditions is TRUE for an economic good?

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

One opportunity cost associated with going to college is

A point outside a production possibilities curve indicates

Division of labor increases the output of society by

What does a production possibilities curve show?

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 2: Scarcity and the World of Trade-Offs

Which of the following is NOT a service?

Opportunity cost exists because

When productive activities are organized according to the principle of the division of labor

For every choice a person makes it can be assumed that

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

Physical capital is distinguished from human capital because

Comparative advantage implies that you

The production possibilities curve represents the maximum feasible production combinations resulting from

All of the following are examples of physical capital EXCEPT

Specialization can occur because

Explain how comparative advantage, specialization and division of labor are related.

-In the above figure, the farmer faces a trade-off between beans and wheat equal to

Which of the following statements about scarcity is TRUE?

At a zero price, which of the following conditions is TRUE for an economic good?

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

One opportunity cost associated with going to college is

A point outside a production possibilities curve indicates

Division of labor increases the output of society by

What does a production possibilities curve show?

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters