Question 1

In the production of goods and services, trade-offs exist because

Accepted Answer

A) not all production is efficient. 
B) society has only a limited amount of productive resources. 
C) buyers and sellers often must negotiate prices. 
D) human wants and needs are limited at a particular point in time. 
A) not all production is efficient. 
B) society has only a limited amount of productive resources. 
C) buyers and sellers often must negotiate prices. 
D) human wants and needs are limited at a particular point in time.

Question 2

Carlos is an executive of a major corporation. Boris is a baker. Carlos earns a salary ten times as large as the salary Boris earns, and Carlos has a much larger oven for baking break. Carlos can make a loaf of bread that tastes better than Boris's bread but Boris can bake faster.

Accepted Answer

A) Carlos has an absolute and comparative advantage over Boris in making bread. 
B) Carlos has an absolute but not comparative advantage over Boris in making bread. 
C) Carlos had a comparative but not absolute advantage over Boris in making bread. 
D) Carlos does not have an absolute or comparative advantage over Boris in making bread. 
A) Carlos has an absolute and comparative advantage over Boris in making bread. 
B) Carlos has an absolute but not comparative advantage over Boris in making bread. 
C) Carlos had a comparative but not absolute advantage over Boris in making bread. 
D) Carlos does not have an absolute or comparative advantage over Boris in making bread.

Question 3

The reason that most of the coffee that is consumed in the United States comes from Colombia is that

Accepted Answer

A) Colombia has an absolute advantage in producing coffee relative to the United States. 
B) Colombia has a comparative advantage in producing coffee relative to the United States. 
C) coffee cannot be grown in the United States. 
D) government trade disincentives regarding Colombian coffee make such trade possible. 
A) Colombia has an absolute advantage in producing coffee relative to the United States. 
B) Colombia has a comparative advantage in producing coffee relative to the United States. 
C) coffee cannot be grown in the United States. 
D) government trade disincentives regarding Colombian coffee make such trade possible.

Question 4

When an economy sacrifices production of consumption goods to produce more capital goods, we would expect that the production possibilities curve will

Accepted Answer

A) shift outward. 
B) shift inward. 
C) become a straight line. 
D) shift about in random fashion. 
A) shift outward. 
B) shift inward. 
C) become a straight line. 
D) shift about in random fashion.

Question 5

Explain the concept of the law of increasing additional cost.

Accepted Answer

The law of increasing relative cost is t

Question 6

-In the above figure, points u, v, y, and z show

Accepted Answer

A) an inefficient allocation of society's scarce resources. 
B) possible combinations of televisions and personal computers. 
C) a constant trade-off between televisions and personal computers. 
D) that society prefers more televisions than computers. 
A) an inefficient allocation of society's scarce resources. 
B) possible combinations of televisions and personal computers. 
C) a constant trade-off between televisions and personal computers. 
D) that society prefers more televisions than computers.

Question 7

The trade-off between current consumption and the production of capital goods is also a trade-off between

Accepted Answer

A) the future cost for capital goods and future cost of consumption goods. 
B) having fewer needs and more wants in the future. 
C) satisfying the needs of the poor and the wants of the wealthy. 
D) current consumption and future consumption. 
A) the future cost for capital goods and future cost of consumption goods. 
B) having fewer needs and more wants in the future. 
C) satisfying the needs of the poor and the wants of the wealthy. 
D) current consumption and future consumption.

Question 8

If a country is currently producing inside its production possibilities curve

Accepted Answer

A) it can increase the production of both goods by putting unemployed resources to work. 
B) it can increase the production of one of the goods only if it reduces the production of the other good. 
C) it is experiencing efficient production of one good but not the other. 
D) None of the above are correct. 
A) it can increase the production of both goods by putting unemployed resources to work. 
B) it can increase the production of one of the goods only if it reduces the production of the other good. 
C) it is experiencing efficient production of one good but not the other. 
D) None of the above are correct.

Question 9

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Accepted Answer

A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve. 
A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve.

Question 10

Why is a point below the production possibilities curve less efficient than a point on that curve?

Accepted Answer

A point on the production possibilities

Question 11

The concept of opportunity cost exists because

Accepted Answer

A) of scarcity. 
B) goods have different prices. 
C) of shortages. 
D) the value of services is hard to determine. 
A) of scarcity. 
B) goods have different prices. 
C) of shortages. 
D) the value of services is hard to determine.

Question 12

In every economic system, choices must be made because resources

Accepted Answer

A) are unlimited, but human desires and wants are limited. 
B) are limited, but human desires and wants are unlimited. 
C) are unlimited, and so are human desires and wants. 
D) are limited, and so are human desires and wants. 
A) are unlimited, but human desires and wants are limited. 
B) are limited, but human desires and wants are unlimited. 
C) are unlimited, and so are human desires and wants. 
D) are limited, and so are human desires and wants.

Question 13

-In the above figure, what is the opportunity cost of one bushel of corn?

Accepted Answer

A) 1 bushel of soybeans 
B) 0.5 bushel of soybeans 
C) 2 bushels of soybeans 
D) unable to determine 
A) 1 bushel of soybeans 
B) 0.5 bushel of soybeans 
C) 2 bushels of soybeans 
D) unable to determine

Question 14

The above table shows the daily production possibilities for a bakery.
Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C.
-Using the above table, what is the opportunity cost of moving from alternative C to alternative B?

Accepted Answer

A) 1/2 a pizza pie 
B) 60 pizza pies 
C) 90 pizza pies 
D) 30 pizza pies 
A) 1/2 a pizza pie 
B) 60 pizza pies 
C) 90 pizza pies 
D) 30 pizza pies

Question 15

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know that

Accepted Answer

A) the farmer is not using his resources efficiently. 
B) the farmer is using his land to produce a crop other than soybeans or corn. 
C) the farmer must be using more land than was used in constructing the production possibilities curve. 
D) the farmer is using his resources efficiently. 
A) the farmer is not using his resources efficiently. 
B) the farmer is using his land to produce a crop other than soybeans or corn. 
C) the farmer must be using more land than was used in constructing the production possibilities curve. 
D) the farmer is using his resources efficiently.

Question 16

Opportunity cost can best be defined as

Accepted Answer

A) the interest cost of financing a business loan at the bank. 
B) the value of all of the alternatives sacrificed. 
C) the value of the next-highest-ranked alternative. 
D) There is no real definition for opportunity cost. 
A) the interest cost of financing a business loan at the bank. 
B) the value of all of the alternatives sacrificed. 
C) the value of the next-highest-ranked alternative. 
D) There is no real definition for opportunity cost.

Question 17

-Refer to the above figure. Which of the following points indicates an unobtainable point of production?

Accepted Answer

A) a 
B) d 
C) e 
D) More information is needed to answer the question. 
A) a 
B) d 
C) e 
D) More information is needed to answer the question.

Question 18

The above table shows the daily production possibilities for a bakery.
Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C.
-Using the above table, what is the opportunity cost of moving from alternative C to alternative D?

Accepted Answer

A) 60 loaves of bread 
B) 2 loaves of bread 
C) 30 loaves of bread 
D) 1/2 loaf of bread 
A) 60 loaves of bread 
B) 2 loaves of bread 
C) 30 loaves of bread 
D) 1/2 loaf of bread

Question 19

The production possibilities curve bows outward because

Accepted Answer

A) opportunity costs are decreasing as the production of a good increases. 
B) opportunity costs are increasing as the production of a good increases. 
C) opportunity costs are fixed as the production of a good increases. 
D) resources are of uniform quality. 
A) opportunity costs are decreasing as the production of a good increases. 
B) opportunity costs are increasing as the production of a good increases. 
C) opportunity costs are fixed as the production of a good increases. 
D) resources are of uniform quality.

Question 20

The above table shows the daily production possibilities for a nation.
-Given the production possibilities schedule in the above table, a combination of 60 televisions and 40 personal computers

Accepted Answer

A) is attainable but involves an inefficient use of society's resources. 
B) would be attainable only if a new technology of producing televisions or computers were introduced. 
C) is not attainable because it is not listed in the schedule. 
D) is not attainable because society does not have enough resources to produce this combination. 
A) is attainable but involves an inefficient use of society's resources. 
B) would be attainable only if a new technology of producing televisions or computers were introduced. 
C) is not attainable because it is not listed in the schedule. 
D) is not attainable because society does not have enough resources to produce this combination.

In the production of goods and services, trade-offs exist because

Carlos is an executive of a major corporation. Boris is a baker. Carlos earns a salary ten times as large as the salary Boris earns, and Carlos has a much larger oven for baking break. Carlos can make a loaf of bread that tastes better than Boris's bread but Boris can bake faster.

The reason that most of the coffee that is consumed in the United States comes from Colombia is that

When an economy sacrifices production of consumption goods to produce more capital goods, we would expect that the production possibilities curve will

Explain the concept of the law of increasing additional cost.

-In the above figure, points u, v, y, and z show

The trade-off between current consumption and the production of capital goods is also a trade-off between

If a country is currently producing inside its production possibilities curve

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Why is a point below the production possibilities curve less efficient than a point on that curve?

The concept of opportunity cost exists because

In every economic system, choices must be made because resources

-In the above figure, what is the opportunity cost of one bushel of corn?

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative B?

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know that

Opportunity cost can best be defined as

-Refer to the above figure. Which of the following points indicates an unobtainable point of production?

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative D?

The production possibilities curve bows outward because

The above table shows the daily production possibilities for a nation. -Given the production possibilities schedule in the above table, a combination of 60 televisions and 40 personal computers

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

In the production of goods and services, trade-offs exist because

Carlos is an executive of a major corporation. Boris is a baker. Carlos earns a salary ten times as large as the salary Boris earns, and Carlos has a much larger oven for baking break. Carlos can make a loaf of bread that tastes better than Boris's bread but Boris can bake faster.

The reason that most of the coffee that is consumed in the United States comes from Colombia is that

When an economy sacrifices production of consumption goods to produce more capital goods, we would expect that the production possibilities curve will

Explain the concept of the law of increasing additional cost.

-In the above figure, points u, v, y, and z show

The trade-off between current consumption and the production of capital goods is also a trade-off between

If a country is currently producing inside its production possibilities curve

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Why is a point below the production possibilities curve less efficient than a point on that curve?

The concept of opportunity cost exists because

In every economic system, choices must be made because resources

-In the above figure, what is the opportunity cost of one bushel of corn?

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative B?

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know that

Opportunity cost can best be defined as

-Refer to the above figure. Which of the following points indicates an unobtainable point of production?

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative D?

The production possibilities curve bows outward because

The above table shows the daily production possibilities for a nation. -Given the production possibilities schedule in the above table, a combination of 60 televisions and 40 personal computers

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