Question 1

What is the difference between comparative advantage and absolute advantage?

Accepted Answer

Absolute advantage refers to the ability

Question 2

The more society consumes today,

Accepted Answer

A)  the more it consumes next year. 
B)  the harder it will be to consume less in the future because people will find it hard to adjust to less. 
C)  the less society can consume in the future. 
D)  the easier it will be to consume less in the future. 
A)  the more it consumes next year. 
B)  the harder it will be to consume less in the future because people will find it hard to adjust to less. 
C)  the less society can consume in the future. 
D)  the easier it will be to consume less in the future.

Question 3

Why is it that all of our wants cannot be satisfied?

Accepted Answer

A)  Because of shortages. 
B)  Because we cannot seem to decide what we really want. 
C)  Because other people try to change your mind about what you want. 
D)  Because limited resources mean all the goods we want cannot be obtained. 
A)  Because of shortages. 
B)  Because we cannot seem to decide what we really want. 
C)  Because other people try to change your mind about what you want. 
D)  Because limited resources mean all the goods we want cannot be obtained.

Question 4

Why is efficiency desirable?

Accepted Answer

A)  It results in an equal distribution of income. 
B)  It results in zero unemployment. 
C)  It makes best use of the finite resources we have. 
D)  It is the most politically popular solution. 
A)  It results in an equal distribution of income. 
B)  It results in zero unemployment. 
C)  It makes best use of the finite resources we have. 
D)  It is the most politically popular solution.

Question 5

Which of the following would cause an economy to produce at a point inside its production possibilities curve?

Accepted Answer

A)  The efficient allocation of all factors of production 
B)  Population growth 
C)  Unemployment and an inefficient use of available resources 
D)  Capital accumulation 
A)  The efficient allocation of all factors of production 
B)  Population growth 
C)  Unemployment and an inefficient use of available resources 
D)  Capital accumulation

Question 6

For a country that produces two goods: Environmental clean-up goods and space program goods. What economic information is contained in its production possibility curve?

Accepted Answer

@#IMG-DLM& The above figure illustrates the produc

Question 7

-Refer to the above figure. How do you describe what is happening as the economy moves from point A to point B?

Accepted Answer

A)  The economy has acquired new resources that are well suited for producing wool. 
B)  Land that was once used to grow wheat is now being used to graze sheep. 
C)  The economy is producing more bread by choosing to produce less wool. 
D)  The technology for growing wheat has improved. 
A)  The economy has acquired new resources that are well suited for producing wool. 
B)  Land that was once used to grow wheat is now being used to graze sheep. 
C)  The economy is producing more bread by choosing to produce less wool. 
D)  The technology for growing wheat has improved.

Question 8

Which of the following will most likely happen when better technology is used in production?

Accepted Answer

A)  an upward movement along the production possibilities curve 
B)  an outward shift of the production possibilities curve 
C)  an inward shift of the production possibilities curve 
D)  a downward movement along the production possibilities curve 
A)  an upward movement along the production possibilities curve 
B)  an outward shift of the production possibilities curve 
C)  an inward shift of the production possibilities curve 
D)  a downward movement along the production possibilities curve

Question 9

A factory can be thought of as

Accepted Answer

A)  a land and labor combination. 
B)  a trade-off with land. 
C)  physical capital. 
D)  a type of entrepreneurship. 
A)  a land and labor combination. 
B)  a trade-off with land. 
C)  physical capital. 
D)  a type of entrepreneurship.

Question 10

The difference between scarcity and a shortage is that

Accepted Answer

A)  scarcity is caused by poverty and shortages are caused by natural disasters. 
B)  shortages are a type of scarcity caused by natural disasters while scarcity is caused by human errors. 
C)  scarcity always is a part of human life while shortages usually are temporary. 
D)  shortages are always part of human life while scarcity is usually temporary. 
A)  scarcity is caused by poverty and shortages are caused by natural disasters. 
B)  shortages are a type of scarcity caused by natural disasters while scarcity is caused by human errors. 
C)  scarcity always is a part of human life while shortages usually are temporary. 
D)  shortages are always part of human life while scarcity is usually temporary.

Question 11

-Refer to the above figure. Production at Point E

Accepted Answer

A)  would indicate that this economy is producing beyond its capabilities. 
B)  would indicate production at a level below that which is attainable. 
C)  is not attainable with given resources and technology. 
D)  would demonstrate a total lack of technical expertise. 
A)  would indicate that this economy is producing beyond its capabilities. 
B)  would indicate production at a level below that which is attainable. 
C)  is not attainable with given resources and technology. 
D)  would demonstrate a total lack of technical expertise.

Question 12

The production possibilities curve can shift inward when

Accepted Answer

A)  production increases. 
B)  employment increases. 
C)  the stock of productive capital rises. 
D)  a country experiences a natural disaster. 
A)  production increases. 
B)  employment increases. 
C)  the stock of productive capital rises. 
D)  a country experiences a natural disaster.

Question 13

Which of the following statements is NOT an assumption underlying the production possibilities curve?

Accepted Answer

A)  Resources are fully and efficiently employed. 
B)  Technology is fixed. 
C)  Production occurs over some specified time period. 
D)  The amount of resources available for production can be changed quickly. 
A)  Resources are fully and efficiently employed. 
B)  Technology is fixed. 
C)  Production occurs over some specified time period. 
D)  The amount of resources available for production can be changed quickly.

Question 14

A point outside a production possibilities curve indicates

Accepted Answer

A)  that resources are not being used efficiently. 
B)  an output combination that society cannot attain given its current level of resources and technology. 
C)  that resources are being used very efficiently. 
D)  that both goods are characterized by increasing costs. 
A)  that resources are not being used efficiently. 
B)  an output combination that society cannot attain given its current level of resources and technology. 
C)  that resources are being used very efficiently. 
D)  that both goods are characterized by increasing costs.

Question 15

Naturally occurring diamonds are an example of

Accepted Answer

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

Question 16

Comparative advantage implies that you

Accepted Answer

A)  can produce more units of a good or service than another. 
B)  can produce a good or service at a lower opportunity cost. 
C)  can produce goods with more capital resources. 
D)  can produce goods with more human resources. 
A)  can produce more units of a good or service than another. 
B)  can produce a good or service at a lower opportunity cost. 
C)  can produce goods with more capital resources. 
D)  can produce goods with more human resources.

Question 17

Scarcity

Accepted Answer

A)  exists in all human societies. 
B)  is a problem for less-developed nations only. 
C)  used to be a problem, but is not an issue for modern industrial nations. 
D)  afflicts greedy people only. 
A)  exists in all human societies. 
B)  is a problem for less-developed nations only. 
C)  used to be a problem, but is not an issue for modern industrial nations. 
D)  afflicts greedy people only.

Question 18

In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as

Accepted Answer

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

Question 19

When Adam Smith's ten pin workers specialized, they were able to increase output of pins in a day from 200 to 48,000. One reason for the increase in pin output was due to

Accepted Answer

A)  the time saved when workers do not need to shift from one task to another. 
B)  the boredom the workers suffered when they stopped making a whole pin and only concentrated on one task such as painting the heads white. 
C)  new machinery. 
D)  the bonus they received when they produced more pins. 
A)  the time saved when workers do not need to shift from one task to another. 
B)  the boredom the workers suffered when they stopped making a whole pin and only concentrated on one task such as painting the heads white. 
C)  new machinery. 
D)  the bonus they received when they produced more pins.

Question 20

-Which of the following statements about a movement along the production possibilities curve in the above figure is FALSE?

Accepted Answer

A)  An additional computer can be produced only if fewer televisions are produced. 
B)  The trade-off between computers and televisions is not constant. 
C)  Society cannot have more of both goods at the same time. 
D)  There are no opportunity costs involved in choosing one point on the curve over all other points. 
A)  An additional computer can be produced only if fewer televisions are produced. 
B)  The trade-off between computers and televisions is not constant. 
C)  Society cannot have more of both goods at the same time. 
D)  There are no opportunity costs involved in choosing one point on the curve over all other points.

Exam 2: Scarcity and the World of Trade-Offs

What is the difference between comparative advantage and absolute advantage?

The more society consumes today,

Why is it that all of our wants cannot be satisfied?

Why is efficiency desirable?

Which of the following would cause an economy to produce at a point inside its production possibilities curve?

For a country that produces two goods: Environmental clean-up goods and space program goods. What economic information is contained in its production possibility curve?

-Refer to the above figure. How do you describe what is happening as the economy moves from point A to point B?

Which of the following will most likely happen when better technology is used in production?

A factory can be thought of as

The difference between scarcity and a shortage is that

-Refer to the above figure. Production at Point E

The production possibilities curve can shift inward when

Which of the following statements is NOT an assumption underlying the production possibilities curve?

A point outside a production possibilities curve indicates

Naturally occurring diamonds are an example of

Comparative advantage implies that you

Scarcity

In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as

When Adam Smith's ten pin workers specialized, they were able to increase output of pins in a day from 200 to 48,000. One reason for the increase in pin output was due to

-Which of the following statements about a movement along the production possibilities curve in the above figure is FALSE?

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

Filters