Question 1

What does a production possibilities curve show?

Accepted Answer

A production possibilities cur

Question 2

Look at the following production possibilities table for smartphones and tablets. The table shows the maximum combination of smartphones and tablets of corn that can be produced, when all resources are fully employed. Production Possibilities
Good A B C D E   Based on the above information,

Accepted Answer

A)  there is no trade-off between smartphones and tablets. 
B)  the opportunity cost of producing 30 instead of 20 smartphones is 120 tablets. 
C)  the opportunity cost of producing 40 instead of 30 smartphones is 30 tablets. 
D)  the opportunity cost of producing 90 instead of 50 tablets is 50 smartphones. 
A)  there is no trade-off between smartphones and tablets. 
B)  the opportunity cost of producing 30 instead of 20 smartphones is 120 tablets. 
C)  the opportunity cost of producing 40 instead of 30 smartphones is 30 tablets. 
D)  the opportunity cost of producing 90 instead of 50 tablets is 50 smartphones.

Question 3

If a person can make $70,000 as an accountant, $60,000 as a chef, $20,000 as a mechanic, and nothing as an opera singer, he or she has a comparative advantage in

Accepted Answer

A)  accounting. 
B)  being a chef. 
C)  being a mechanic. 
D)  opera singing. 
A)  accounting. 
B)  being a chef. 
C)  being a mechanic. 
D)  opera singing.

Question 4

The existence of scarcity means that

Accepted Answer

A)  there are not enough resources to satisfy unlimited human wants. 
B)  firms will increase their production to eliminate the scarcity. 
C)  the government will step in to eliminate the scarcity. 
D)  firms working with the government will allocate resources to eliminate the scarcity. 
A)  there are not enough resources to satisfy unlimited human wants. 
B)  firms will increase their production to eliminate the scarcity. 
C)  the government will step in to eliminate the scarcity. 
D)  firms working with the government will allocate resources to eliminate the scarcity.

Question 5

Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?

Accepted Answer

A)  an outcome in which wages are roughly equal around the world 
B)  an outcome in which the standard of living is roughly equal around the world 
C)  an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement 
D)  an outcome in which resources are devoted to their most efficient use 
A)  an outcome in which wages are roughly equal around the world 
B)  an outcome in which the standard of living is roughly equal around the world 
C)  an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement 
D)  an outcome in which resources are devoted to their most efficient use

Question 6

If the quantity desired of something exceeds the amount available at zero price, that item is called

Accepted Answer

A)  a service. 
B)  an economic good. 
C)  an intangible good. 
D)  a bad. 
A)  a service. 
B)  an economic good. 
C)  an intangible good. 
D)  a bad.

Question 7

One of the assumptions underlying the production possibilities curve is that

Accepted Answer

A)  at least one of the factors of production is a free good. 
B)  the quantity of the resources available for the production of economic goods is fixed over a given time period. 
C)  there is at least one factor of production that is employed inefficiently. 
D)  some of the factors of production are not being used. 
A)  at least one of the factors of production is a free good. 
B)  the quantity of the resources available for the production of economic goods is fixed over a given time period. 
C)  there is at least one factor of production that is employed inefficiently. 
D)  some of the factors of production are not being used.

Question 8

Scarcity is

Accepted Answer

A)  a shortage of goods and services. 
B)  poverty and misery. 
C)  a situation in which the resources for producing the goods and services that people desire are sufficient to satisfy people's desires. 
D)  a situation in which the resources required to produce the goods and services that people desire are insufficient to satisfy all wants. 
A)  a shortage of goods and services. 
B)  poverty and misery. 
C)  a situation in which the resources for producing the goods and services that people desire are sufficient to satisfy people's desires. 
D)  a situation in which the resources required to produce the goods and services that people desire are insufficient to satisfy all wants.

Question 9

All mutually beneficial trades have taken place. This implies that

Accepted Answer

A)  the production possibilities curve is bowed out. 
B)  society is inside the production possibilities curve. 
C)  economic efficiency prevails in the society. 
D)  society is on the constant cost portion of its production possibilities curve. 
A)  the production possibilities curve is bowed out. 
B)  society is inside the production possibilities curve. 
C)  economic efficiency prevails in the society. 
D)  society is on the constant cost portion of its production possibilities curve.

Question 10

Distinguish between scarcity and shortages.

Accepted Answer

Scarcity exists because the wants of hum

Question 11

-Refer to the above figure. If the farmer has 50 acres of land, the farmer is producing at point a, and an acre of land yields 400 bushels of beans or 800 bushels of wheat, how much land is devoted to the production of wheat?

Accepted Answer

A)  8.5 acres 
B)  10 acres 
C)  12.5 acres 
D)  15 acres 
A)  8.5 acres 
B)  10 acres 
C)  12.5 acres 
D)  15 acres

Question 12

If a CEO can type faster than her secretary, then

Accepted Answer

A)  the CEO has a comparative advantage in typing. 
B)  the CEO has neither a comparative advantage in typing, nor in management. 
C)  the CEO should still continue performing CEO duties since the CEO has a comparative advantage in management, and the secretary should continue typing. 
D)  the CEO should still continue performing CEO duties as well as typing since he has a comparative advantage in both management, and typing. 
A)  the CEO has a comparative advantage in typing. 
B)  the CEO has neither a comparative advantage in typing, nor in management. 
C)  the CEO should still continue performing CEO duties since the CEO has a comparative advantage in management, and the secretary should continue typing. 
D)  the CEO should still continue performing CEO duties as well as typing since he has a comparative advantage in both management, and typing.

Question 13

Which factor of production includes water?

Accepted Answer

A)  physical capital 
B)  human capital 
C)  land 
D)  entrepreneurship 
A)  physical capital 
B)  human capital 
C)  land 
D)  entrepreneurship

Question 14

Briefly explain why people make choices.

Accepted Answer

People make choices because of

Question 15

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is

Accepted Answer

A)  the combined value of studying economics and taking a nap. 
B)  the value of studying economics, the next best use of time. 
C)  the value of chatting with her friends. 
D)  zero since she does not pay her friends to talk to her. 
A)  the combined value of studying economics and taking a nap. 
B)  the value of studying economics, the next best use of time. 
C)  the value of chatting with her friends. 
D)  zero since she does not pay her friends to talk to her.

Question 16

Whenever the economy is producing the maximum amount of goods given the level of technology and the amount of resources

Accepted Answer

A)  the number of resources used should be decreased since society must protect its scarce resources. 
B)  the concept of opportunity costs does not exist. 
C)  more goods will be available than customers want to buy. 
D)  the economy is producing efficiently. 
A)  the number of resources used should be decreased since society must protect its scarce resources. 
B)  the concept of opportunity costs does not exist. 
C)  more goods will be available than customers want to buy. 
D)  the economy is producing efficiently.

Question 17

All of society's applied knowledge on how to produce goods and services is

Accepted Answer

A)  held by university professors. 
B)  called technology. 
C)  opportunity cost. 
D)  efficiency. 
A)  held by university professors. 
B)  called technology. 
C)  opportunity cost. 
D)  efficiency.

Question 18

Wants

Accepted Answer

A)  is another term for needs. 
B)  refer to services while needs refer to goods. 
C)  is the term used by economists instead of needs because needs are not objectively definable. 
D)  are used by economists and refer to the same thing as needs when used by psychologists. 
A)  is another term for needs. 
B)  refer to services while needs refer to goods. 
C)  is the term used by economists instead of needs because needs are not objectively definable. 
D)  are used by economists and refer to the same thing as needs when used by psychologists.

Question 19

Division of labor refers to

Accepted Answer

A)  dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B)  the separation of hourly workers from salaried workers. 
C)  assigning different workers to different tasks. 
D)  separating union workers from nonunion workers. 
A)  dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B)  the separation of hourly workers from salaried workers. 
C)  assigning different workers to different tasks. 
D)  separating union workers from nonunion workers.

Question 20

What causes the production possibility curve to be bowed out?

Accepted Answer

A bowed production possibility curve ind

Exam 2: Scarcity and the World of Trade-Offs

What does a production possibilities curve show?

Look at the following production possibilities table for smartphones and tablets. The table shows the maximum combination of smartphones and tablets of corn that can be produced, when all resources are fully employed. Production Possibilities Good A B C D E Based on the above information,

If a person can make $70,000 as an accountant, $60,000 as a chef, $20,000 as a mechanic, and nothing as an opera singer, he or she has a comparative advantage in

The existence of scarcity means that

Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?

If the quantity desired of something exceeds the amount available at zero price, that item is called

One of the assumptions underlying the production possibilities curve is that

Scarcity is

All mutually beneficial trades have taken place. This implies that

Distinguish between scarcity and shortages.

-Refer to the above figure. If the farmer has 50 acres of land, the farmer is producing at point a, and an acre of land yields 400 bushels of beans or 800 bushels of wheat, how much land is devoted to the production of wheat?

If a CEO can type faster than her secretary, then

Which factor of production includes water?

Briefly explain why people make choices.

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is

Whenever the economy is producing the maximum amount of goods given the level of technology and the amount of resources

All of society's applied knowledge on how to produce goods and services is

Wants

Division of labor refers to

What causes the production possibility curve to be bowed out?

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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