Question 1

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Accepted Answer

A)  best alternative foregone by building the park. 
B)  dollar cost of constructing the new park. 
C)  dollar cost of the old park. 
D)  increased taxes necessary to pay for maintenance of the new park. 
A)  best alternative foregone by building the park. 
B)  dollar cost of constructing the new park. 
C)  dollar cost of the old park. 
D)  increased taxes necessary to pay for maintenance of the new park.

Question 2

Mikki decides to work five hours the night before her economics exam.She earns an extra $75,but her exam score is 10 points lower than it would have been had she stayed home and studied.Her opportunity cost is the:

Accepted Answer

A)  five hours she worked. 
B)  $75 she earned. 
C)  10 points she lost on her exam. 
D)  time she could have spent watching television. 
E)  guilt she feels about neglecting her economics studies. 
A)  five hours she worked. 
B)  $75 she earned. 
C)  10 points she lost on her exam. 
D)  time she could have spent watching television. 
E)  guilt she feels about neglecting her economics studies.

Question 3

The law of increasing opportunity costs causes the production possibilities curve to:

Accepted Answer

A)  be a straight line. 
B)  slope upwards. 
C)  have a bowed-out shape. 
D)  shift inward. 
A)  be a straight line. 
B)  slope upwards. 
C)  have a bowed-out shape. 
D)  shift inward.

Question 4

Exhibit 2-15 Production possibilities curve
  
-In Exhibit 2-15,the economy will experience the most future economic growth if it chooses what point now?

Accepted Answer

A)  J. 
B)  K. 
C)  M. 
D)  N. 
E)  P. 
A)  J. 
B)  K. 
C)  M. 
D)  N. 
E)  P.

Question 5

The opportunity cost of attending a movie is the purchase price of a ticket.

Accepted Answer

A) True 
 B)False

Question 6

A nation can accelerate its economic growth by:

Accepted Answer

A)  reducing the number of immigrants allowed into the country. 
B)  adding to its stock of capital. 
C)  printing more money. 
D)  imposing tariffs and quotas on imported goods. 
A)  reducing the number of immigrants allowed into the country. 
B)  adding to its stock of capital. 
C)  printing more money. 
D)  imposing tariffs and quotas on imported goods.

Question 7

In the context of the production possibilities curve,opportunity cost is measured in:

Accepted Answer

A)  dollars paid for the goods. 
B)  the quantity of other goods given up. 
C)  the value of the resources used. 
D)  changing technology. 
E)  units of satisfaction. 
A)  dollars paid for the goods. 
B)  the quantity of other goods given up. 
C)  the value of the resources used. 
D)  changing technology. 
E)  units of satisfaction.

Question 8

What to produce,how to produce,and for who to produce are the three fundamental economic questions.

Accepted Answer

A) True 
 B)False

Question 9

Only socialist economies need to answer the What,How,and For Whom.

Accepted Answer

A) True 
 B)False

Question 10

Discuss the three fundamental economic questions that all nations must address.

Accepted Answer

The three fundamental economic questions

Question 11

Exhibit 2-13 Production possibilities curve
  
-In Exhibit 2-13,point D:

Accepted Answer

A)  is preferred to point A. 
B)  is a point of maximum production for this economy this year. 
C)  is not achievable this year because of limited resources. 
D)  could result from some degree of unemployment of inefficiency. 
E)  is preferred to point H. 
A)  is preferred to point A. 
B)  is a point of maximum production for this economy this year. 
C)  is not achievable this year because of limited resources. 
D)  could result from some degree of unemployment of inefficiency. 
E)  is preferred to point H.

Question 12

Exhibit 2-16 Production possibilities curve
  
-In Exhibit 2-16,which of the following points on the production possibilities curve are full-employment production points?

Accepted Answer

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

Question 13

Which of the following sayings best reflects the concept of opportunity cost?

Accepted Answer

A)  "You can't teach an old dog new tricks." 
B)  "There is no such thing as a free lunch." 
C)  "I have a baker's dozen." 
D)  "There's no business like show business." 
A)  "You can't teach an old dog new tricks." 
B)  "There is no such thing as a free lunch." 
C)  "I have a baker's dozen." 
D)  "There's no business like show business."

Question 14

When making a rational decision which requires the consideration of costs and benefits involved,the opportunity cost of a decision is often not taken into consideration when indeed it should be.

Accepted Answer

A) True 
 B)False

Question 15

Using a production possibilities curve,a technological advance that increases the amount of output for the same amount of inputs would be illustrated as a(n):

Accepted Answer

A)  flattening of the curve. 
B)  movement from one point to another point along the curve. 
C)  outward shift of the curve. 
D)  movement from a point on the curve to a point inside the curve. 
A)  flattening of the curve. 
B)  movement from one point to another point along the curve. 
C)  outward shift of the curve. 
D)  movement from a point on the curve to a point inside the curve.

Question 16

Exhibit 2-16 Production possibilities curve
  
-In Exhibit 2-16,which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Accepted Answer

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

Question 17

Exhibit 2-15 Production possibilities curve
  
-In Exhibit 2-15,if the economy moves from point L to point M,the opportunity cost of producing 10 more capital goods is:

Accepted Answer

A)  40 less consumer goods. 
B)  25 less consumer goods. 
C)  15 less consumer goods. 
D)  15 more consumer goods. 
E)  25 more consumer goods. 
A)  40 less consumer goods. 
B)  25 less consumer goods. 
C)  15 less consumer goods. 
D)  15 more consumer goods. 
E)  25 more consumer goods.

Question 18

Exhibit 2-15 Production possibilities curve
  
-In Exhibit 2-15,if the economy produces no capital goods,what is the maximum number of consumer goods that can be produced?

Accepted Answer

A)  50. 
B)  48. 
C)  40. 
D)  25. 
E)  0. 
A)  50. 
B)  48. 
C)  40. 
D)  25. 
E)  0.

Question 19

Exhibit 2-4 Production possibilities curve data
  
-According to the data in Exhibit 2-4,a total output of 140 units of consumer goods and 10 units of capital goods would:

Accepted Answer

A)  be unobtainable in this economy. 
B)  be an efficient way of using the economy's scarce resources. 
C)  result in the maximum use of the economy's labor force. 
D)  result in a less than maximum rate of growth for this economy. 
A)  be unobtainable in this economy. 
B)  be an efficient way of using the economy's scarce resources. 
C)  result in the maximum use of the economy's labor force. 
D)  result in a less than maximum rate of growth for this economy.

Question 20

The opportunity cost of your college education is:

Accepted Answer

A) c and d. 
B) d and e. 
C) the actual dollar cost of your college education. 
D) your best alternative use of the money you spend for a college education. 
E) money you could have earned working instead of going to college. 
A) c and d. 
B) d and e. 
C) the actual dollar cost of your college education. 
D) your best alternative use of the money you spend for a college education. 
E) money you could have earned working instead of going to college.

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

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Mikki decides to work five hours the night before her economics exam.She earns an extra $75,but her exam score is 10 points lower than it would have been had she stayed home and studied.Her opportunity cost is the:

The law of increasing opportunity costs causes the production possibilities curve to:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15,the economy will experience the most future economic growth if it chooses what point now?

The opportunity cost of attending a movie is the purchase price of a ticket.

A nation can accelerate its economic growth by:

In the context of the production possibilities curve,opportunity cost is measured in:

What to produce,how to produce,and for who to produce are the three fundamental economic questions.

Only socialist economies need to answer the What,How,and For Whom.

Discuss the three fundamental economic questions that all nations must address.

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13,point D:

Exhibit 2-16 Production possibilities curve -In Exhibit 2-16,which of the following points on the production possibilities curve are full-employment production points?

Which of the following sayings best reflects the concept of opportunity cost?

When making a rational decision which requires the consideration of costs and benefits involved,the opportunity cost of a decision is often not taken into consideration when indeed it should be.

Using a production possibilities curve,a technological advance that increases the amount of output for the same amount of inputs would be illustrated as a(n):

Exhibit 2-16 Production possibilities curve -In Exhibit 2-16,which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15,if the economy moves from point L to point M,the opportunity cost of producing 10 more capital goods is:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15,if the economy produces no capital goods,what is the maximum number of consumer goods that can be produced?

Exhibit 2-4 Production possibilities curve data -According to the data in Exhibit 2-4,a total output of 140 units of consumer goods and 10 units of capital goods would:

The opportunity cost of your college education 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