Question 1

The most efficient point on the production possibilities curve is the midpoint on the curve.

Accepted Answer

A) True 
 B)False

Question 2

A source of economic growth is:

Accepted Answer

A)  unemployment. 
B)  inefficiency. 
C)  less resources. 
D)  greater entrepreneurship. 
A)  unemployment. 
B)  inefficiency. 
C)  less resources. 
D)  greater entrepreneurship.

Question 3

Using a production possibilities curve,an economy that produces an output combination less than the maximum possible is depicted by a point located:

Accepted Answer

A)  at the top corner of the curve. 
B)  near the middle of the curve. 
C)  at the bottom corner of the curve. 
D)  outside the curve. 
E)  inside the curve. 
A)  at the top corner of the curve. 
B)  near the middle of the curve. 
C)  at the bottom corner of the curve. 
D)  outside the curve. 
E)  inside the curve.

Question 4

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents,Aaron notices that the restaurant has a value meal containing a cheeseburger,drink,and French fries for $3.For Aaron,the marginal cost of purchasing the French fries:

Accepted Answer

A)  would be zero. 
B)  would be 25 cents. 
C)  would be 50 cents. 
D)  cannot be determined because the information about the price of the French fries is not provided. 
A)  would be zero. 
B)  would be 25 cents. 
C)  would be 50 cents. 
D)  cannot be determined because the information about the price of the French fries is not provided.

Question 5

The production possibilities curve depicts the various combinations of two goods that can be:

Accepted Answer

A)  interchanged among two countries. 
B)  produced with a given technology. 
C)  consumed with a given quantity of resources. 
D)  produced with increments in resources and changes in technology. 
E)  consumed as the resources increase. 
A)  interchanged among two countries. 
B)  produced with a given technology. 
C)  consumed with a given quantity of resources. 
D)  produced with increments in resources and changes in technology. 
E)  consumed as the resources increase.

Question 6

Ralph wants to buy some milk and a box of cereal.If Ralph buys 2 quarts of milk at $1 per quart,the box of cereal costs 75 cents.If he buys 3 quarts of milk at $1 per quart,the box of cereal is free.For Ralph,the marginal cost of the third quart of milk is:

Accepted Answer

A)  zero. 
B)  25 cents. 
C)  75 cents. 
D)  $1. 
A)  zero. 
B)  25 cents. 
C)  75 cents. 
D)  $1.

Question 7

A point outside the production possibilities curve represents a combination of goods that is:

Accepted Answer

A)  inefficient. 
B)  efficient. 
C)  unattainable. 
D)  attainable. 
A)  inefficient. 
B)  efficient. 
C)  unattainable. 
D)  attainable.

Question 8

Exhibit 2-7 Production possibilities curve
  
-For the economy shown in Exhibit 2-7 to operate at point C,it must:

Accepted Answer

A)  be willing to lower the price of grain. 
B)  use its given resources more efficiently than it would at point A. 
C)  experience resource unemployment. 
D)  experience an increase in its resources and/or an improvement in its technology. 
A)  be willing to lower the price of grain. 
B)  use its given resources more efficiently than it would at point A. 
C)  experience resource unemployment. 
D)  experience an increase in its resources and/or an improvement in its technology.

Question 9

All points on the production possibilities curve are:

Accepted Answer

A)  unattainable. 
B)  fair. 
C)  efficient. 
D)  optimal. 
A)  unattainable. 
B)  fair. 
C)  efficient. 
D)  optimal.

Question 10

Marginal analysis examines the effects of additions to or subtractions from a current situation.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 2-18 Production possibilities curves
  
-In Exhibit 2-18,a country is located at point A on its Year X production possibilities curve.In Year Y this same country is located at point B on its Year Y production possibilities curve.Which of the following could have brought about this outward shift in production possibilities curves?

Accepted Answer

A)  More efficient production in Year X. 
B)  A natural disaster in Year X which leads to a destruction of resources. 
C)  Higher unemployment in Year X. 
D)  An advance in technology occurred in Year X. 
A)  More efficient production in Year X. 
B)  A natural disaster in Year X which leads to a destruction of resources. 
C)  Higher unemployment in Year X. 
D)  An advance in technology occurred in Year X.

Question 12

Three basic decisions must be made by all economies.What are they?

Accepted Answer

A)  How much will be produced, when it will be produced, and how much it will cost. 
B)  What the price of each good will be, who will produce each good, and who will consume each good. 
C)  What will be produced, how goods will be produced, and for whom goods will be produced. 
D)  How the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply. 
A)  How much will be produced, when it will be produced, and how much it will cost. 
B)  What the price of each good will be, who will produce each good, and who will consume each good. 
C)  What will be produced, how goods will be produced, and for whom goods will be produced. 
D)  How the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply.

Question 13

Economic growth may be represented by a(n):

Accepted Answer

A)  leftward shift of a production possibilities curve. 
B)  outward shift of a production possibilities curve. 
C)  movement along a production possibilities curve. 
D)  production possibilities curve that remains fixed. 
A)  leftward shift of a production possibilities curve. 
B)  outward shift of a production possibilities curve. 
C)  movement along a production possibilities curve. 
D)  production possibilities curve that remains fixed.

Question 14

When deciding whether to buy a second car,marginal analysis indicates that the purchaser should compare the:

Accepted Answer

A)  benefits expected from two cars with the cost of both. 
B)  additional benefits expected from a second car with the cost of the two cars. 
C)  dollar cost of the two cars with the potential income that the cars will generate. 
D)  additional benefits of the second car with the additional cost of the second car. 
A)  benefits expected from two cars with the cost of both. 
B)  additional benefits expected from a second car with the cost of the two cars. 
C)  dollar cost of the two cars with the potential income that the cars will generate. 
D)  additional benefits of the second car with the additional cost of the second car.

Question 15

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Accepted Answer

A)  A choice of more computers and less education. 
B)  A choice of more education and less computers. 
C)  A reduction in the labor force. 
D)  An increase in the quantity of resources. 
A)  A choice of more computers and less education. 
B)  A choice of more education and less computers. 
C)  A reduction in the labor force. 
D)  An increase in the quantity of resources.

Question 16

Which of the following is not one of the three fundamental economic questions?

Accepted Answer

A)  What happens when you add to or subtract from a current situation? 
B)  For whom to produce? 
C)  How to produce? 
D)  What to produce? 
A)  What happens when you add to or subtract from a current situation? 
B)  For whom to produce? 
C)  How to produce? 
D)  What to produce?

Question 17

The amount of a good that must be given up to produce another good is the concept of:

Accepted Answer

A)  scarcity. 
B)  specialization. 
C)  trade. 
D)  efficiency. 
E)  opportunity cost. 
A)  scarcity. 
B)  specialization. 
C)  trade. 
D)  efficiency. 
E)  opportunity cost.

Question 18

Which of the following is not true about a production possibilities curve? The curve:

Accepted Answer

A)  indicates the combinations of goods and services that can be produced with given technology. 
B)  indicates the efficient production points. 
C)  indicates the non-efficient production points. 
D)  indicates the feasible (attainable) and non-feasible production points. 
E)  indicates which production point will be chosen. 
A)  indicates the combinations of goods and services that can be produced with given technology. 
B)  indicates the efficient production points. 
C)  indicates the non-efficient production points. 
D)  indicates the feasible (attainable) and non-feasible production points. 
E)  indicates which production point will be chosen.

Question 19

Exhibit 2-16 Production possibilities curve
  
-In Exhibit 2-16,to move from U to B,the opportunity cost:

Accepted Answer

A)  would be 4 units of consumption goods. 
B)  would be 2 units of capital goods. 
C)  would be zero. 
D)  would be 5 units of capital goods. 
E)  cannot be estimated. 
A)  would be 4 units of consumption goods. 
B)  would be 2 units of capital goods. 
C)  would be zero. 
D)  would be 5 units of capital goods. 
E)  cannot be estimated.

Question 20

Exhibit 2-13 Production possibilities curve
  
-In Exhibit 2-13,point H is:

Accepted Answer

A)  achievable with today's resource base. 
B)  not achievable today because the economy has not achieved full employment. 
C)  not achievable today because the economy is not at its maximum point of efficiency. 
D)  not achievable today because of waste. 
E)  not achievable today because of inadequate production capacity. 
A)  achievable with today's resource base. 
B)  not achievable today because the economy has not achieved full employment. 
C)  not achievable today because the economy is not at its maximum point of efficiency. 
D)  not achievable today because of waste. 
E)  not achievable today because of inadequate production capacity.

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

The most efficient point on the production possibilities curve is the midpoint on the curve.

A source of economic growth is:

Using a production possibilities curve,an economy that produces an output combination less than the maximum possible is depicted by a point located:

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents,Aaron notices that the restaurant has a value meal containing a cheeseburger,drink,and French fries for $3.For Aaron,the marginal cost of purchasing the French fries:

The production possibilities curve depicts the various combinations of two goods that can be:

Ralph wants to buy some milk and a box of cereal.If Ralph buys 2 quarts of milk at $1 per quart,the box of cereal costs 75 cents.If he buys 3 quarts of milk at $1 per quart,the box of cereal is free.For Ralph,the marginal cost of the third quart of milk is:

A point outside the production possibilities curve represents a combination of goods that is:

Exhibit 2-7 Production possibilities curve -For the economy shown in Exhibit 2-7 to operate at point C,it must:

All points on the production possibilities curve are:

Marginal analysis examines the effects of additions to or subtractions from a current situation.

Three basic decisions must be made by all economies.What are they?

Economic growth may be represented by a(n):

When deciding whether to buy a second car,marginal analysis indicates that the purchaser should compare the:

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Which of the following is not one of the three fundamental economic questions?

The amount of a good that must be given up to produce another good is the concept of:

Which of the following is not true about a production possibilities curve? The curve:

Exhibit 2-16 Production possibilities curve -In Exhibit 2-16,to move from U to B,the opportunity cost:

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13,point H 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