Question 1

The production possibilities curve illustrates all of the following concepts except:

Accepted Answer

A)  the law of increasing costs. 
B)  unlimited wants. 
C)  scarcity. 
D)  opportunity cost. 
E)  availability of resources. 
A)  the law of increasing costs. 
B)  unlimited wants. 
C)  scarcity. 
D)  opportunity cost. 
E)  availability of resources.

Question 2

Exhibit 2-10 Production possibilities curve data
  
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.The second unit of capital goods production will cost ____ units of consumption goods,and the third unit of capital goods production will cost ____ units of consumption goods.

Accepted Answer

A)  4; 6 
B)  25; 23 
C)  23; 19 
D)  1; 23 
E)  2; 19 
A)  4; 6 
B)  25; 23 
C)  23; 19 
D)  1; 23 
E)  2; 19

Question 3

When an economy's resources are not fully employed,then it must be true that the:

Accepted Answer

A)  production point is located outside and to the right of the production possibilities curve. 
B)  production point is located along the production possibilities curve. 
C)  production point is located inside and to the left of the production possibilities curve. 
D)  production possibilities curve shifts to the right. 
E)  production possibilities curve shifts to the left. 
A)  production point is located outside and to the right of the production possibilities curve. 
B)  production point is located along the production possibilities curve. 
C)  production point is located inside and to the left of the production possibilities curve. 
D)  production possibilities curve shifts to the right. 
E)  production possibilities curve shifts to the left.

Question 4

A production possibilities curve shows the various:

Accepted Answer

A)  prices that can be charged for capital and consumption goods. 
B)  combinations of prices and outputs that can be produced. 
C)  combinations of goods the economy has the capacity to produce. 
D)  combinations of resources and prices that the economy can produce. 
A)  prices that can be charged for capital and consumption goods. 
B)  combinations of prices and outputs that can be produced. 
C)  combinations of goods the economy has the capacity to produce. 
D)  combinations of resources and prices that the economy can produce.

Question 5

Which of the following would most likely cause the production possibilities curve for DVDs and food to shift outward?

Accepted Answer

A)  A choice of more food and more DVDs. 
B)  A choice of more food and less DVDs. 
C)  A choice of more DVDs and less food. 
D)  An increase in the quantity of natural resources. 
A)  A choice of more food and more DVDs. 
B)  A choice of more food and less DVDs. 
C)  A choice of more DVDs and less food. 
D)  An increase in the quantity of natural resources.

Question 6

Technological innovations will cause:

Accepted Answer

A)  the production possibilities curve to stay the same. 
B)  the production possibilities curve to shift to the left. 
C)  the production possibilities curve to shift to the right. 
D)  an economy to operate below its production possibilities curve. 
E)  the production possibilities curve to increase or decrease. 
A)  the production possibilities curve to stay the same. 
B)  the production possibilities curve to shift to the left. 
C)  the production possibilities curve to shift to the right. 
D)  an economy to operate below its production possibilities curve. 
E)  the production possibilities curve to increase or decrease.

Question 7

After the terrorist attacks on September 11,2001,the United States began devoting substantial resources toward the War on Terrorism,homeland security,and relief efforts.As long as our resources were being used efficiently,the production possibilities curve would suggest that:

Accepted Answer

A)  we will have to give up the production of other goods that could have been produced with these resources. 
B)  we will be able to produce the same amount of other goods as before. 
C)  the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift. 
D)  we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology. 
A)  we will have to give up the production of other goods that could have been produced with these resources. 
B)  we will be able to produce the same amount of other goods as before. 
C)  the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift. 
D)  we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology.

Question 8

Exhibit 2-2 Production possibilities curve
  
-In Exhibit 2-2,the slope of the production possibilities curve indicates that the opportunity cost of:

Accepted Answer

A)  coffee is constant. 
B)  coffee is increasing. 
C)  coffee is decreasing. 
D)  corn is increasing. 
E)  corn is decreasing, 
A)  coffee is constant. 
B)  coffee is increasing. 
C)  coffee is decreasing. 
D)  corn is increasing. 
E)  corn is decreasing,

Question 9

Suppose that an economy can produce various combinations of fish and bread.If more people with strong fishing skills became employed in this economy,how would the production possibilities curve (PPC)change?

Accepted Answer

A)  The PPC would shift outward on the fish axis, but would not change on the bread axis. 
B)  The PPC would shift outward equally along both the fish and the bread axes. 
C)  The PPC would shift inward on the bread axis, but would not change on the fish axis. 
D)  The PPC would shift inward equally along both the fish and the bread axes. 
A)  The PPC would shift outward on the fish axis, but would not change on the bread axis. 
B)  The PPC would shift outward equally along both the fish and the bread axes. 
C)  The PPC would shift inward on the bread axis, but would not change on the fish axis. 
D)  The PPC would shift inward equally along both the fish and the bread axes.

Question 10

Which would be least likely to cause the production possibilities curve to shift to the right?

Accepted Answer

A)  An increase in the labor force. 
B)  Improved methods of production. 
C)  An increase in the education and training of the labor force. 
D)  A decrease in unemployment. 
A)  An increase in the labor force. 
B)  Improved methods of production. 
C)  An increase in the education and training of the labor force. 
D)  A decrease in unemployment.

Question 11

Opportunity cost:

Accepted Answer

A)  represents the best alternative sacrificed for a chosen alternative. 
B)  has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. 
C)  represents the worst alternative sacrificed for a chosen alternative. 
D)  Represents all possible alternatives sacrificed for a chosen alternative. 
A)  represents the best alternative sacrificed for a chosen alternative. 
B)  has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. 
C)  represents the worst alternative sacrificed for a chosen alternative. 
D)  Represents all possible alternatives sacrificed for a chosen alternative.

Question 12

With time,which one of the following strategies would most likely result in an outward shift in the production possibilities curve of an economy?

Accepted Answer

A)  passage of legislation reducing the workweek to 30 hours. 
B)  instituting a tax policy encouraging consumption at the expense of investment. 
C)  instituting a tax policy encouraging investment at the expense of consumption. 
D)  an increase in the marginal income tax rate, which would reduce the work effort of individuals. 
A)  passage of legislation reducing the workweek to 30 hours. 
B)  instituting a tax policy encouraging consumption at the expense of investment. 
C)  instituting a tax policy encouraging investment at the expense of consumption. 
D)  an increase in the marginal income tax rate, which would reduce the work effort of individuals.

Question 13

A point outside a production possibilities curve reflects:

Accepted Answer

A)  efficiency. 
B)  specialization. 
C)  inefficiency. 
D)  unemployment. 
E)  an impossible choice. 
A)  efficiency. 
B)  specialization. 
C)  inefficiency. 
D)  unemployment. 
E)  an impossible choice.

Question 14

The ability of an economy to produce greater levels of output in the same period of time is called:

Accepted Answer

A)  positive economics. 
B)  negative economics. 
C)  economic growth. 
D)  marginal productivity. 
A)  positive economics. 
B)  negative economics. 
C)  economic growth. 
D)  marginal productivity.

Question 15

An outward shift of an economy's production possibilities curve is caused by:

Accepted Answer

A)  an increase in capital. 
B)  an increase in labor. 
C)  an advance in technology. 
D)  all of the above. 
A)  an increase in capital. 
B)  an increase in labor. 
C)  an advance in technology. 
D)  all of the above.

Question 16

Exhibit 2-13 Production possibilities curve
  
-In Exhibit 2-13,which of the following is not true regarding point H? Point H:

Accepted Answer

A)  cannot be achieved by this economy today. 
B)  could be achieved today if the economy only achieved full employment. 
C)  could be achieved in the future by an enlargement of the economy's resource base. 
D)  could be achieved in the future by an advancement in technology. 
E)  could be achieved in the future by growth in the economy. 
A)  cannot be achieved by this economy today. 
B)  could be achieved today if the economy only achieved full employment. 
C)  could be achieved in the future by an enlargement of the economy's resource base. 
D)  could be achieved in the future by an advancement in technology. 
E)  could be achieved in the future by growth in the economy.

Question 17

A nation's current location on its production possibilities curve can determine the future location of that nation's production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 18

Robinson Crusoe's decision to produce more capital goods and fewer consumer goods in a given period causes:

Accepted Answer

A)  a decrease in the resources available in its economy. 
B)  an increase in economic growth in future periods. 
C)  a decrease in economic growth in future periods. 
D)  no change in the availability of resources in its economy. 
E)  a decrease in the ability to produce goods in the next period. 
A)  a decrease in the resources available in its economy. 
B)  an increase in economic growth in future periods. 
C)  a decrease in economic growth in future periods. 
D)  no change in the availability of resources in its economy. 
E)  a decrease in the ability to produce goods in the next period.

Question 19

Which of the following does not illustrate opportunity cost?

Accepted Answer

A)  If I study, I must give up going to the football game. 
B)  If I buy a computer, I must do without a 35" television. 
C)  If I spend more on clothes, I must spend less on food. 
D)  All of the above illustrate opportunity cost. 
A)  If I study, I must give up going to the football game. 
B)  If I buy a computer, I must do without a 35" television. 
C)  If I spend more on clothes, I must spend less on food. 
D)  All of the above illustrate opportunity cost.

Question 20

The production possibilities curve for the nation of Economagic shifts to the left.This could have been caused by:

Accepted Answer

A)  an increase in Economagic's labor supply. 
B)  innovation in the production of goods in Economagic. 
C)  a war that destroyed some of Economagic's resource base. 
D)  unemployment among Economagic's workers. 
E)  Economagic's choice of more consumption and less capital last period. 
A)  an increase in Economagic's labor supply. 
B)  innovation in the production of goods in Economagic. 
C)  a war that destroyed some of Economagic's resource base. 
D)  unemployment among Economagic's workers. 
E)  Economagic's choice of more consumption and less capital last period.

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

The production possibilities curve illustrates all of the following concepts except:

When an economy's resources are not fully employed,then it must be true that the:

A production possibilities curve shows the various:

Which of the following would most likely cause the production possibilities curve for DVDs and food to shift outward?

Technological innovations will cause:

After the terrorist attacks on September 11,2001,the United States began devoting substantial resources toward the War on Terrorism,homeland security,and relief efforts.As long as our resources were being used efficiently,the production possibilities curve would suggest that:

Exhibit 2-2 Production possibilities curve -In Exhibit 2-2,the slope of the production possibilities curve indicates that the opportunity cost of:

Suppose that an economy can produce various combinations of fish and bread.If more people with strong fishing skills became employed in this economy,how would the production possibilities curve (PPC)change?

Which would be least likely to cause the production possibilities curve to shift to the right?

Opportunity cost:

With time,which one of the following strategies would most likely result in an outward shift in the production possibilities curve of an economy?

A point outside a production possibilities curve reflects:

The ability of an economy to produce greater levels of output in the same period of time is called:

An outward shift of an economy's production possibilities curve is caused by:

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13,which of the following is not true regarding point H? Point H:

A nation's current location on its production possibilities curve can determine the future location of that nation's production possibilities curve.

Robinson Crusoe's decision to produce more capital goods and fewer consumer goods in a given period causes:

Which of the following does not illustrate opportunity cost?

The production possibilities curve for the nation of Economagic shifts to the left.This could have been caused by:

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