Question 1

A country operates inside its production possibilities curve; this may be caused by

Accepted Answer

A)  unemployed resources. 
B)  total efficiency in industry. 
C)  a new resource being discovered. 
D)  a lack of modern products being produced. 
A)  unemployed resources. 
B)  total efficiency in industry. 
C)  a new resource being discovered. 
D)  a lack of modern products being produced. A

Question 2

Division of labor increases the output of society by

Accepted Answer

A)  eliminating scarcity. 
B)  reducing the choices people have to make to a more manageable number. 
C)  ensuring that people are happier in performing their work. 
D)  allowing resources to specialize in the tasks for which they have a comparative advantage. 
A)  eliminating scarcity. 
B)  reducing the choices people have to make to a more manageable number. 
C)  ensuring that people are happier in performing their work. 
D)  allowing resources to specialize in the tasks for which they have a comparative advantage. D

Question 3

In 2006, hurricanes damaged many parts of Texas, destroying homes, businesses, schools, and infrastructure. In strictly economic terminology, these hurricanes are said to have caused

Accepted Answer

A)  scarcity, because the damages made food and shelter scarce. 
B)  scarcity, because some goods were difficult to get. 
C)  shortages, because supplies were cut off and goods were destroyed. 
D)  tradeoffs, because some areas of the country were damaged when others were not. 
A)  scarcity, because the damages made food and shelter scarce. 
B)  scarcity, because some goods were difficult to get. 
C)  shortages, because supplies were cut off and goods were destroyed. 
D)  tradeoffs, because some areas of the country were damaged when others were not. C

Question 4

The concept of opportunity cost exists because

Accepted Answer

A)  of scarcity. 
B)  goods have different prices. 
C)  of shortages. 
D)  the value of services is hard to determine. 
A)  of scarcity. 
B)  goods have different prices. 
C)  of shortages. 
D)  the value of services is hard to determine.

Question 5

Opportunity cost is best defined as

Accepted Answer

A)  the sum of the dollar values of all alternatives given up when choices are made. 
B)  the cost of producing the purchased goods. 
C)  the next highest valued alternative when a choice is made. 
D)  the dollar price of the purchased item. 
A)  the sum of the dollar values of all alternatives given up when choices are made. 
B)  the cost of producing the purchased goods. 
C)  the next highest valued alternative when a choice is made. 
D)  the dollar price of the purchased item.

Question 6

-Refer to the above figure. The Law of Increasing Additional Costs applies in

Accepted Answer

A)  Panel A only. 
B)  Panel B only. 
C)  Panels A and B. 
D)  neither Panel A nor B. 
A)  Panel A only. 
B)  Panel B only. 
C)  Panels A and B. 
D)  neither Panel A nor B.

Question 7

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

Accepted Answer

A)  physical capital. 
B)  entrepreneurship. 
C)  a service. 
D)  land. 
A)  physical capital. 
B)  entrepreneurship. 
C)  a service. 
D)  land.

Question 8

Which is the best example of an intangible good?

Accepted Answer

A)  The car you dream of owning but cannot afford. 
B)  The suit you hope will make a good impression when you go on job interviews. 
C)  The textbook study guide you hope will prepare you to perform well on examinations. 
D)  The advice and expertise provided by the music store clerk who sold you that CD. 
A)  The car you dream of owning but cannot afford. 
B)  The suit you hope will make a good impression when you go on job interviews. 
C)  The textbook study guide you hope will prepare you to perform well on examinations. 
D)  The advice and expertise provided by the music store clerk who sold you that CD.

Question 9

Which of the following would result in a movement along the production possibilities curve?

Accepted Answer

A)  A fall in the unemployment rate 
B)  Growth in the capital stock 
C)  Population growth 
D)  A change in the outputs of two goods that a society chooses to produce 
A)  A fall in the unemployment rate 
B)  Growth in the capital stock 
C)  Population growth 
D)  A change in the outputs of two goods that a society chooses to produce

Question 10

Which of the following is NOT a service?

Accepted Answer

A)  Physical labor purchased by a producer 
B)  Things purchased by a consumer that do not have physical characteristics 
C)  A diamond used in an engagement ring 
D)  Tasks performed by someone else 
A)  Physical labor purchased by a producer 
B)  Things purchased by a consumer that do not have physical characteristics 
C)  A diamond used in an engagement ring 
D)  Tasks performed by someone else

Question 11

Trading off capital goods for increasing amounts of consumer goods today will most likely result in

Accepted Answer

A)  increased long-term growth. 
B)  decreased long-term growth. 
C)  decreased prices in consumer goods. 
D)  increases in the quantity of consumer goods. 
A)  increased long-term growth. 
B)  decreased long-term growth. 
C)  decreased prices in consumer goods. 
D)  increases in the quantity of consumer goods.

Question 12

Steve and Karen decide to attend the same concert when they are each given free tickets to it. We know that

Accepted Answer

A)  both bear the same opportunity cost because they are seeing the same thing. 
B)  both bear the same opportunity cost because the tickets have the same face value. 
C)  both bear an opportunity cost that depends on what each person is giving up to attend the concert. 
D)  neither bears an opportunity cost since the tickets were given free to them. 
A)  both bear the same opportunity cost because they are seeing the same thing. 
B)  both bear the same opportunity cost because the tickets have the same face value. 
C)  both bear an opportunity cost that depends on what each person is giving up to attend the concert. 
D)  neither bears an opportunity cost since the tickets were given free to them.

Question 13

"Economics deals with human needs." Do you agree or disagree? Why?

Accepted Answer

Disagree. The concept of needs

Question 14

-Refer to the above figure. We are currently producing at point c. Which of the following statements is true?

Accepted Answer

A)  Resources are not being efficiently utilized. 
B)  Resources are being efficiently utilized. 
C)  The only way to produce more of Goods X or Y is to have an increase in the amount of resources. 
D)  The Law of Increasing Additional Cost does not hold. 
A)  Resources are not being efficiently utilized. 
B)  Resources are being efficiently utilized. 
C)  The only way to produce more of Goods X or Y is to have an increase in the amount of resources. 
D)  The Law of Increasing Additional Cost does not hold.

Question 15

Scarcity refers to

Accepted Answer

A)  the ability of society to employ all of its resources. 
B)  the ability of society to consume all that it produces. 
C)  the inability of society to satisfy all human wants because of limited resources. 
D)  the inability of society to eliminate poverty. 
A)  the ability of society to employ all of its resources. 
B)  the ability of society to consume all that it produces. 
C)  the inability of society to satisfy all human wants because of limited resources. 
D)  the inability of society to eliminate poverty.

Question 16

A technological improvement can cause the production possibilities curve to shift outward because

Accepted Answer

A)  it increases costs and contributes to lower production rates. 
B)  maximum feasible outputs of both goods increase. 
C)  production will fall, but jobs will be saved. 
D)  it causes increases in unemployment. 
A)  it increases costs and contributes to lower production rates. 
B)  maximum feasible outputs of both goods increase. 
C)  production will fall, but jobs will be saved. 
D)  it causes increases in unemployment.

Question 17

The bowed shape of the traditional production possibilities curve reflects the

Accepted Answer

A)  negative side effects of economic growth. 
B)  fact that not all resources are equally well-suited to producing all goods. 
C)  costs of unemployment. 
D)  problems of inequality. 
A)  negative side effects of economic growth. 
B)  fact that not all resources are equally well-suited to producing all goods. 
C)  costs of unemployment. 
D)  problems of inequality.

Question 18

If Vice President Smith is a better typist than his assistant, he is said to have a(n) ________ advantage in typing over his assistant.

Accepted Answer

A)  absolute 
B)  unusual 
C)  relative 
D)  overwhelming 
A)  absolute 
B)  unusual 
C)  relative 
D)  overwhelming

Question 19

Explain: "The law of increasing additional cost is an inevitable phenomenon in economics."

Accepted Answer

Economic resources are seldom suitable f

Question 20

A tractor used to prepare land for planting is called

Accepted Answer

A)  land. 
B)  labor. 
C)  physical capital. 
D)  human capital. 
A)  land. 
B)  labor. 
C)  physical capital. 
D)  human capital.

Exam 2: Scarcity and the World of Trade-Offs

A country operates inside its production possibilities curve; this may be caused by

Division of labor increases the output of society by

In 2006, hurricanes damaged many parts of Texas, destroying homes, businesses, schools, and infrastructure. In strictly economic terminology, these hurricanes are said to have caused

The concept of opportunity cost exists because

Opportunity cost is best defined as

-Refer to the above figure. The Law of Increasing Additional Costs applies in

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

Which is the best example of an intangible good?

Which of the following would result in a movement along the production possibilities curve?

Which of the following is NOT a service?

Trading off capital goods for increasing amounts of consumer goods today will most likely result in

Steve and Karen decide to attend the same concert when they are each given free tickets to it. We know that

"Economics deals with human needs." Do you agree or disagree? Why?

-Refer to the above figure. We are currently producing at point c. Which of the following statements is true?

Scarcity refers to

A technological improvement can cause the production possibilities curve to shift outward because

The bowed shape of the traditional production possibilities curve reflects the

If Vice President Smith is a better typist than his assistant, he is said to have a(n) ________ advantage in typing over his assistant.

Explain: "The law of increasing additional cost is an inevitable phenomenon in economics."

A tractor used to prepare land for planting is called

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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