Question 1

Exhibit 2-13 Production possibilities curve
  
-In Exhibit 2-13,the combination of goods given by point H could:

Accepted Answer

A)  never be achieved by this economy. 
B)  be achieved today if the economy achieved full employment. 
C)  be achieved today if the economy achieved maximum efficiency. 
D)  not be achieved today. 
E)  be achieved today with the proper allocation of resources. 
A)  never be achieved by this economy. 
B)  be achieved today if the economy achieved full employment. 
C)  be achieved today if the economy achieved maximum efficiency. 
D)  not be achieved today. 
E)  be achieved today with the proper allocation of resources.

Question 2

All points on the production possibilities curve represent efficient levels of production.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 2-1 Production possibilities curve data
  
-In Exhibit 2-1,according to the information,the opportunity cost of producing 3 units of capital is:

Accepted Answer

A)  3 units of consumption goods. 
B)  4 units of consumption goods. 
C)  6 units of consumption goods. 
D)  7 units of consumption goods. 
A)  3 units of consumption goods. 
B)  4 units of consumption goods. 
C)  6 units of consumption goods. 
D)  7 units of consumption goods.

Question 4

Exhibit 2-2 Production possibilities curve
  
-In Exhibit 2-2,the opportunity cost of coffee when moving from A to B is:

Accepted Answer

A)  2 million bushels of corn. 
B)  6 million bushels of corn. 
C)  8 million bushels of corn. 
D)  14 million bushels of corn. 
E)  it is not possible to determine. 
A)  2 million bushels of corn. 
B)  6 million bushels of corn. 
C)  8 million bushels of corn. 
D)  14 million bushels of corn. 
E)  it is not possible to determine.

Question 5

Exhibit 2-18 Production possibilities curves
  
-In Exhibit 2-18,the production possibilities curves for a country are shown for the years Year X and Year Y.Suppose this country was located at point A in Year X and point B in Year Y.This country:

Accepted Answer

A)  is producing the same number of capital goods in both years. 
B)  is producing the same number of consumption goods in both years. 
C)  has shown no growth between Year X and Year Y. 
D)  has higher unemployment in Year X than in Year Y. 
E)  has higher unemployment in Year Y than in Year X. 
A)  is producing the same number of capital goods in both years. 
B)  is producing the same number of consumption goods in both years. 
C)  has shown no growth between Year X and Year Y. 
D)  has higher unemployment in Year X than in Year Y. 
E)  has higher unemployment in Year Y than in Year X.

Question 6

Compare two economies A and B that start out with identical production possibilities curves.Economy A chooses an efficient point with 6 consumption goods and 3 capital goods,while economy B also chooses an efficient point,but with 4 consumption goods and 5 capital goods.In the future we can predict:

Accepted Answer

A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy A and economy B will grow equally fast. 
D)  economy A will grow faster than economy B. 
E)  economy B will grow faster than economy A. 
A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy A and economy B will grow equally fast. 
D)  economy A will grow faster than economy B. 
E)  economy B will grow faster than economy A.

Question 7

Exhibit 2-10 Production possibilities curve data
  
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are produced,the opportunity cost in terms of sacrificed units of consumption goods ____ because of ____.

Accepted Answer

A)  decreases; greater efficiency in production 
B)  increases; decreasing opportunity cost 
C)  increases; the law of increasing costs 
D)  increases; greater efficiency in production 
E)  decreases; the law of increasing costs 
A)  decreases; greater efficiency in production 
B)  increases; decreasing opportunity cost 
C)  increases; the law of increasing costs 
D)  increases; greater efficiency in production 
E)  decreases; the law of increasing costs

Question 8

A production possibilities curve shows the:

Accepted Answer

A)  dollar costs of producing two different goods. 
B)  amounts of labor and capital needed to produce one good. 
C)  various combinations of goods that can be produced. 
D)  prices of different goods that are produced in an economy. 
E)  inefficient use of available resources and technology. 
A)  dollar costs of producing two different goods. 
B)  amounts of labor and capital needed to produce one good. 
C)  various combinations of goods that can be produced. 
D)  prices of different goods that are produced in an economy. 
E)  inefficient use of available resources and technology.

Question 9

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)  More consumer spending now means more spending in the future. 
D)  If I spend more on clothes, I must spend less on food. 
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)  More consumer spending now means more spending in the future. 
D)  If I spend more on clothes, I must spend less on food.

Question 10

A good or service that is forgone by choosing one alternative over another is called a(n):

Accepted Answer

A)  explicit cost. 
B)  opportunity cost. 
C)  historical cost. 
D)  accounting cost. 
A)  explicit cost. 
B)  opportunity cost. 
C)  historical cost. 
D)  accounting cost.

Question 11

The amount of a good that is given up to produce another good is:

Accepted Answer

A)  its dollar cost. 
B)  its opportunity cost. 
C)  its relative cost. 
D)  its absolute cost. 
E)  all of the above. 
A)  its dollar cost. 
B)  its opportunity cost. 
C)  its relative cost. 
D)  its absolute cost. 
E)  all of the above.

Question 12

Exhibit 2-10 Production possibilities curve data
  
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.If this economy chooses the combination of goods at point A,

Accepted Answer

A)  only capital goods are being produced. 
B)  every resource in the economy is utilized in the production of capital goods. 
C)  no capital goods are being used as factors of production. 
D)  every resource in the economy is being used in the production of consumption goods. 
E)  no consumption goods are being produced. 
A)  only capital goods are being produced. 
B)  every resource in the economy is utilized in the production of capital goods. 
C)  no capital goods are being used as factors of production. 
D)  every resource in the economy is being used in the production of consumption goods. 
E)  no consumption goods are being produced.

Question 13

Over time,an increase in a nation's stock of physical capital will:

Accepted Answer

A)  shift the production possibilities curve inward. 
B)  cause an economy to operate inside its production possibilities curve. 
C)  shift the production possibilities curve outward. 
D)  eliminate the basic economic problem of scarcity. 
A)  shift the production possibilities curve inward. 
B)  cause an economy to operate inside its production possibilities curve. 
C)  shift the production possibilities curve outward. 
D)  eliminate the basic economic problem of scarcity.

Question 14

The opportunity cost of producing a good or service is the good or service that is foregone by choosing to produce another good with the same resources in a given period of time.

Accepted Answer

A) True 
 B)False

Question 15

Which word best completes the following sentence? A rational decision maker always chooses the option for which marginal benefit is ____ marginal cost.

Accepted Answer

A)  less than 
B)  equal to 
C)  unrelated to 
D)  more than 
A)  less than 
B)  equal to 
C)  unrelated to 
D)  more than

Question 16

Exhibit 2-6 Production possibilities curve data
  
-In Exhibit 2-6,the concept of increasing opportunity costs is represented by the fact that:

Accepted Answer

A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero. 
A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero.

Question 17

Along a production possibilities curve showing capital and consumption goods production,which of the following pairs are being held fixed?

Accepted Answer

A)  Unemployment and capital goods production. 
B)  Number of resources and consumption goods production. 
C)  Composition of the economy's output and number of resources. 
D)  Capital and consumption goods production. 
E)  Technology and number of resources. 
A)  Unemployment and capital goods production. 
B)  Number of resources and consumption goods production. 
C)  Composition of the economy's output and number of resources. 
D)  Capital and consumption goods production. 
E)  Technology and number of resources.

Question 18

The opportunity cost of an action is:

Accepted Answer

A)  the monetary payment the action required. 
B)  the total time spent by all parties in carrying out the action. 
C)  the value of the best opportunity that must be sacrificed in order to take the action. 
D)  the cost of all alternative actions that could have been taken, added together. 
A)  the monetary payment the action required. 
B)  the total time spent by all parties in carrying out the action. 
C)  the value of the best opportunity that must be sacrificed in order to take the action. 
D)  the cost of all alternative actions that could have been taken, added together.

Question 19

A nation can accelerate economic growth by increasing its production of consumer goods.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 2-10 Production possibilities curve data
  
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are being produced,the number of consumption goods produced must ____,because ____.

Accepted Answer

A)  increase; the production possibility table shows only the maximum efficiency points 
B)  increase; of the law of increasing costs 
C)  decrease; of the law of increasing costs 
D)  decrease; of the finite nature of the resource base 
E)  increase; capital goods will assist in the production of consumer goods 
A)  increase; the production possibility table shows only the maximum efficiency points 
B)  increase; of the law of increasing costs 
C)  decrease; of the law of increasing costs 
D)  decrease; of the finite nature of the resource base 
E)  increase; capital goods will assist in the production of consumer goods

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

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13,the combination of goods given by point H could:

All points on the production possibilities curve represent efficient levels of production.

Exhibit 2-1 Production possibilities curve data -In Exhibit 2-1,according to the information,the opportunity cost of producing 3 units of capital is:

Exhibit 2-2 Production possibilities curve -In Exhibit 2-2,the opportunity cost of coffee when moving from A to B is:

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18,the production possibilities curves for a country are shown for the years Year X and Year Y.Suppose this country was located at point A in Year X and point B in Year Y.This country:

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are produced,the opportunity cost in terms of sacrificed units of consumption goods ____ because of ____.

A production possibilities curve shows the:

Which of the following does not illustrate opportunity cost?

A good or service that is forgone by choosing one alternative over another is called a(n):

The amount of a good that is given up to produce another good is:

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.If this economy chooses the combination of goods at point A,

Over time,an increase in a nation's stock of physical capital will:

The opportunity cost of producing a good or service is the good or service that is foregone by choosing to produce another good with the same resources in a given period of time.

Which word best completes the following sentence? A rational decision maker always chooses the option for which marginal benefit is ____ marginal cost.

Exhibit 2-6 Production possibilities curve data -In Exhibit 2-6,the concept of increasing opportunity costs is represented by the fact that:

Along a production possibilities curve showing capital and consumption goods production,which of the following pairs are being held fixed?

The opportunity cost of an action is:

A nation can accelerate economic growth by increasing its production of consumer goods.

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are being produced,the number of consumption goods produced must ____,because ____.

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

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are produced,the opportunity cost in terms of sacrificed units of consumption goods because of .

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.As additional units of capital goods are being produced,the number of consumption goods produced must ,because .