Question 1

Because of the problem of scarcity,each economic system must make which of the following choices?

Accepted Answer

A)  How to produce? 
B)  What to produce? 
C)  For whom to produce? 
D)  All of the above. 
A)  How to produce? 
B)  What to produce? 
C)  For whom to produce? 
D)  All of the above. D

Question 2

Exhibit 2-17 Production possibilities curve
  
-In Exhibit 2-17,if countries A and B currently have the same production possibilities curve (PPC)as given in the figure,but this year country A locates at point A on its PPC and country B locates at point B on its PPC,then country A:

Accepted Answer

A)  is better off than country B. 
B)  will grow at a faster rate than country B. 
C)  will grow at a slower rate than country B. 
D)  is producing more capital goods than country B. 
E)  is more efficient than country B. 
A)  is better off than country B. 
B)  will grow at a faster rate than country B. 
C)  will grow at a slower rate than country B. 
D)  is producing more capital goods than country B. 
E)  is more efficient than country B. C

Question 3

A major technological advance would be represented on a production possibilities curve by a(n):

Accepted Answer

A)  movement off the production possibilities curve toward a point outside the curve. 
B)  movement toward the curve from a point inside the curve. 
C)  outward shift of the entire curve. 
D)  movement to the left along the curve to a higher point. 
A)  movement off the production possibilities curve toward a point outside the curve. 
B)  movement toward the curve from a point inside the curve. 
C)  outward shift of the entire curve. 
D)  movement to the left along the curve to a higher point. C

Question 4

Exhibit 2-9 Production possibilities curve
  
-Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

Accepted Answer

A)  Z to W. 
B)  W to Y. 
C)  W to X. 
D)  X to Y. 
A)  Z to W. 
B)  W to Y. 
C)  W to X. 
D)  X to Y.

Question 5

Each and every point along a production possibilities curve represents an efficient output option for an economy.

Accepted Answer

A) True 
 B)False

Question 6

On a production possibilities curve,the opportunity cost of good X,in terms of good Y,is represented by the:

Accepted Answer

A)  distance to the curve from the vertical axis. 
B)  distance to the curve from the horizontal axis. 
C)  movement along the curve. 
D)  all of the above. 
A)  distance to the curve from the vertical axis. 
B)  distance to the curve from the horizontal axis. 
C)  movement along the curve. 
D)  all of the above.

Question 7

A production possibility graph slopes down because of:

Accepted Answer

A)  the law of increasing costs. 
B)  nonhomogeneous resources. 
C)  inefficiency. 
D)  improper output mix. 
E)  unemployment. 
A)  the law of increasing costs. 
B)  nonhomogeneous resources. 
C)  inefficiency. 
D)  improper output mix. 
E)  unemployment.

Question 8

Which fundamental economic question requires society to choose the technological and resource mix used to produce goods?

Accepted Answer

A)  The What to Produce question. 
B)  The Why to Produce question. 
C)  The How to Produce question. 
D)  The For Whom to Produce question. 
A)  The What to Produce question. 
B)  The Why to Produce question. 
C)  The How to Produce question. 
D)  The For Whom to Produce question.

Question 9

An opportunity cost is the highest valued alternative foregone whenever one chooses an alternative.

Accepted Answer

A) True 
 B)False

Question 10

If an economy is producing at full employment,it means that:

Accepted Answer

A)  there are idle resources in this economy. 
B)  the production is not efficient. 
C)  the economy is producing along its production possibilities curve. 
D)  the economy is producing at a point that is to the left of the production possibilities curve. 
E)  the economy is producing at a point that is to the right of the production possibilities curve. 
A)  there are idle resources in this economy. 
B)  the production is not efficient. 
C)  the economy is producing along its production possibilities curve. 
D)  the economy is producing at a point that is to the left of the production possibilities curve. 
E)  the economy is producing at a point that is to the right of the production possibilities curve.

Question 11

Exhibit 2-8 Production possibilities curve data
  
-As shown in Exhibit 2-8,the concept of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)  the quantity of consumer goods produced can never be zero. 
B)  the labor force in the economy is homogeneous. 
C)  greater amounts of capital goods must be sacrificed to produce an additional 2 units of consumer goods. 
D)  a graph of the production data is a downward-sloping straight line. 
A)  the quantity of consumer goods produced can never be zero. 
B)  the labor force in the economy is homogeneous. 
C)  greater amounts of capital goods must be sacrificed to produce an additional 2 units of consumer goods. 
D)  a graph of the production data is a downward-sloping straight line.

Question 12

One of the assumptions underlying the production possibilities curve for any given economy is that:

Accepted Answer

A)  the state of technology changes. 
B)  there is an unlimited supply of resources. 
C)  there is full employment of resources when the economy is on the curve. 
D)  goods can be produced outside the curve. 
A)  the state of technology changes. 
B)  there is an unlimited supply of resources. 
C)  there is full employment of resources when the economy is on the curve. 
D)  goods can be produced outside the curve.

Question 13

A local restaurant offers an "all you can eat" Sunday brunch for $12.Susan eats four servings,but leaves half of a fifth helping uneaten.Why?

Accepted Answer

A)  Her marginal value of a serving of brunch has fallen below $12. 
B)  Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings). 
C)  Her marginal value of food has fallen to zero. 
D)  The total value she places on brunch today exactly equals $12. 
A)  Her marginal value of a serving of brunch has fallen below $12. 
B)  Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings). 
C)  Her marginal value of food has fallen to zero. 
D)  The total value she places on brunch today exactly equals $12.

Question 14

Bill has $10 to spend on a Superman,Batman,or an X-Men T-shirt.Bill buys the Superman T-shirt and the Batman shirt was a close second choice.What is the opportunity cost?

Accepted Answer

A)  The amount he spent, $10. 
B)  Nothing, since he got his preferred choice. 
C)  The Batman T-shirt. 
D)  The X-Men T-shirt. 
A)  The amount he spent, $10. 
B)  Nothing, since he got his preferred choice. 
C)  The Batman T-shirt. 
D)  The X-Men T-shirt.

Question 15

The production possibilities curve demonstrates the basic economic principle that:

Accepted Answer

A)  market-based economies are more efficient. 
B)  supply will determine demand in the economy. 
C)  the production of more capital goods this year will cause the economy to produce less consumption goods next year. 
D)  to produce more of any one thing, assuming full employment, the economy must produce less of something else. 
E)  to produce more consumption goods this year requires the production of more capital goods this year. 
A)  market-based economies are more efficient. 
B)  supply will determine demand in the economy. 
C)  the production of more capital goods this year will cause the economy to produce less consumption goods next year. 
D)  to produce more of any one thing, assuming full employment, the economy must produce less of something else. 
E)  to produce more consumption goods this year requires the production of more capital goods this year.

Question 16

Other things being equal,a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Accepted Answer

A)  movement off the curve to a point inside the curve. 
B)  movement down along the curve. 
C)  movement up along the curve. 
D)  inward shift of the entire curve. 
A)  movement off the curve to a point inside the curve. 
B)  movement down along the curve. 
C)  movement up along the curve. 
D)  inward shift of the entire curve.

Question 17

Exhibit 2-16 Production possibilities curve
  
-From the information in Exhibit 2-16,which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

Accepted Answer

A)  A, B, C, E, U 
B)  A, B, C, D, W 
C)  E, U, W 
D)  B, C, D, U 
E)  A, B, C, E 
A)  A, B, C, E, U 
B)  A, B, C, D, W 
C)  E, U, W 
D)  B, C, D, U 
E)  A, B, C, E

Question 18

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3.For Jordan,the marginal cost of the third taco would be:

Accepted Answer

A)  zero. 
B)  50 cents. 
C)  80 cents. 
D)  $1. 
A)  zero. 
B)  50 cents. 
C)  80 cents. 
D)  $1.

Question 19

Exhibit 2-14 Production possibilities curve
  
-In Exhibit 2-14,this economy was located at point E but has now moved to point F.

Accepted Answer

A)  This would be an impossible move because the economy does not have sufficient resources. 
B)  The rate of unemployment in this economy would have increased. 
C)  Consumption goods production has increased, but capital goods production has decreased. 
D)  The economy has decreased unemployment, but some degree of unemployment still exists. 
E)  This economy has achieved full employment. 
A)  This would be an impossible move because the economy does not have sufficient resources. 
B)  The rate of unemployment in this economy would have increased. 
C)  Consumption goods production has increased, but capital goods production has decreased. 
D)  The economy has decreased unemployment, but some degree of unemployment still exists. 
E)  This economy has achieved full employment.

Question 20

One source of economic growth is:

Accepted Answer

A)  producing inside the production possibilities curve. 
B)  producing outside the production possibilities curve. 
C)  increasing capital. 
D)  discouraging profit-seeking entrepreneurs. 
A)  producing inside the production possibilities curve. 
B)  producing outside the production possibilities curve. 
C)  increasing capital. 
D)  discouraging profit-seeking entrepreneurs.

Exam 2: Production Possibilities,Opportunity Cost,and Economic Growth

Because of the problem of scarcity,each economic system must make which of the following choices?

Exhibit 2-17 Production possibilities curve -In Exhibit 2-17,if countries A and B currently have the same production possibilities curve (PPC)as given in the figure,but this year country A locates at point A on its PPC and country B locates at point B on its PPC,then country A:

A major technological advance would be represented on a production possibilities curve by a(n):

Exhibit 2-9 Production possibilities curve -Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

Each and every point along a production possibilities curve represents an efficient output option for an economy.

On a production possibilities curve,the opportunity cost of good X,in terms of good Y,is represented by the:

A production possibility graph slopes down because of:

Which fundamental economic question requires society to choose the technological and resource mix used to produce goods?

An opportunity cost is the highest valued alternative foregone whenever one chooses an alternative.

If an economy is producing at full employment,it means that:

Exhibit 2-8 Production possibilities curve data -As shown in Exhibit 2-8,the concept of increasing opportunity costs is reflected in the fact that:

One of the assumptions underlying the production possibilities curve for any given economy is that:

A local restaurant offers an "all you can eat" Sunday brunch for $12.Susan eats four servings,but leaves half of a fifth helping uneaten.Why?

Bill has $10 to spend on a Superman,Batman,or an X-Men T-shirt.Bill buys the Superman T-shirt and the Batman shirt was a close second choice.What is the opportunity cost?

The production possibilities curve demonstrates the basic economic principle that:

Other things being equal,a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Exhibit 2-16 Production possibilities curve -From the information in Exhibit 2-16,which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents,Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3.For Jordan,the marginal cost of the third taco would be:

Exhibit 2-14 Production possibilities curve -In Exhibit 2-14,this economy was located at point E but has now moved to point F.

One source of economic growth is:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters