Question 1

If Joey goes surfing for four hours instead of earning $10 per hour for those four hours, his opportunity cost is

Accepted Answer

A)  the good time spent surfing. 
B)  the cost of gasoline used to get to the beach. 
C)  the travel time to the beach. 
D)  $40. 
A)  the good time spent surfing. 
B)  the cost of gasoline used to get to the beach. 
C)  the travel time to the beach. 
D)  $40.

Question 2

Comparative advantage is the ability to

Accepted Answer

A)  perform an activity at a lower opportunity cost. 
B)  determine who your best trading partners are. 
C)  determine the best use of capital goods. 
D)  convince others of the best choices to make in their own self-interest. 
A)  perform an activity at a lower opportunity cost. 
B)  determine who your best trading partners are. 
C)  determine the best use of capital goods. 
D)  convince others of the best choices to make in their own self-interest.

Question 3

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused

Accepted Answer

A)  scarcity because there are less oranges now than people want. 
B)  scarcity because people have to switch to other types of citrus fruits. 
C)  a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. 
D)  a shortage because the orange growers will have less income. 
A)  scarcity because there are less oranges now than people want. 
B)  scarcity because people have to switch to other types of citrus fruits. 
C)  a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. 
D)  a shortage because the orange growers will have less income.

Question 4

The tasks performed by the chef at your favorite restaurant could be categorized as

Accepted Answer

A)  a good. 
B)  an economic good. 
C)  a service or intangible good. 
D)  All of the above are correct. 
A)  a good. 
B)  an economic good. 
C)  a service or intangible good. 
D)  All of the above are correct.

Question 5

-Given the production possibilities schedule in the above table, a combination of 23 televisions and 6 personal computers

Accepted Answer

A)  is attainable but involves the unemployment of some of society's resources. 
B)  clearly illustrates the trade-off between televisions and computers. 
C)  cannot be produced by society, given its current level of resources and production technology. 
D)  can be produced only if society is willing to have some of its resources used inefficiently. 
A)  is attainable but involves the unemployment of some of society's resources. 
B)  clearly illustrates the trade-off between televisions and computers. 
C)  cannot be produced by society, given its current level of resources and production technology. 
D)  can be produced only if society is willing to have some of its resources used inefficiently.

Question 6

A person goes to college to become an engineer. This is an example of an

Accepted Answer

A)  investment in physical capital. 
B)  investment in human capital. 
C)  increase in entrepreneurship. 
D)  increase in labor. 
A)  investment in physical capital. 
B)  investment in human capital. 
C)  increase in entrepreneurship. 
D)  increase in labor.

Question 7

An irrigation system is installed on a farm in North Dakota. This is an example of which factor of production?

Accepted Answer

A)  Labor 
B)  Land 
C)  Human capital 
D)  Physical capital 
A)  Labor 
B)  Land 
C)  Human capital 
D)  Physical capital

Question 8

The value of the best alternative sacrificed to obtain something you want is referred to as

Accepted Answer

A)  explicit cost. 
B)  opportunity cost. 
C)  marginal cost. 
D)  sunk cost. 
A)  explicit cost. 
B)  opportunity cost. 
C)  marginal cost. 
D)  sunk cost.

Question 9

Suppose that nuclear power plants are banned. What are examples of the opportunity costs of this decision?

Accepted Answer

Electricity must be produced by some met

Question 10

-In the above figure, the production of 25 guitars and 25 ukuleles is

Accepted Answer

A)  efficient production. 
B)  inefficient production. 
C)  impossible production. 
D)  not possible since production always occurs along the PPC. 
A)  efficient production. 
B)  inefficient production. 
C)  impossible production. 
D)  not possible since production always occurs along the PPC.

Question 11

Suppose that Canadian farmers can grow wheat more cheaply than can U.S. farmers. In the interest of efficiency, what is the desirable outcome?

Accepted Answer

A)  Allow the Canadian farmers to sell their wheat for a lower price. 
B)  Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S. farmers. 
C)  Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. 
D)  Have U.S. citizens boycott Canadian wheat. 
A)  Allow the Canadian farmers to sell their wheat for a lower price. 
B)  Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S. farmers. 
C)  Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. 
D)  Have U.S. citizens boycott Canadian wheat.

Question 12

-Refer to the above figure. Given our current level of technology and resources, the unobtainable point(s) of production would be

Accepted Answer

A)  points a and c. 
B)  point a. 
C)  point b. 
D)  point c. 
A)  points a and c. 
B)  point a. 
C)  point b. 
D)  point c.

Question 13

Which of the following is a true statement?

Accepted Answer

A)  All goods are economic goods. 
B)  All economic goods are goods, but not all goods are economic goods. 
C)  Economic goods and goods mean the same thing. 
D)  Economic goods do not include services while goods do include services. 
A)  All goods are economic goods. 
B)  All economic goods are goods, but not all goods are economic goods. 
C)  Economic goods and goods mean the same thing. 
D)  Economic goods do not include services while goods do include services.

Question 14

Opportunity cost is illustrated on the production possibilities curve by a

Accepted Answer

A)  bowed-out shape of the curve. 
B)  shift to the right of the curve. 
C)  shift to the left of the curve. 
D)  movement along the curve. 
A)  bowed-out shape of the curve. 
B)  shift to the right of the curve. 
C)  shift to the left of the curve. 
D)  movement along the curve.

Question 15

Economic growth is shown by

Accepted Answer

A)  a point near the top of the production possibilities curve. 
B)  a point outside the production possibilities curve. 
C)  an inward shift of the production possibilities curve. 
D)  an outward shift of the production possibilities curve. 
A)  a point near the top of the production possibilities curve. 
B)  a point outside the production possibilities curve. 
C)  an inward shift of the production possibilities curve. 
D)  an outward shift of the production possibilities curve.

Question 16

-In the above figure, the opportunity cost of moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles is

Accepted Answer

A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars. 
A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars.

Question 17

A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT

Accepted Answer

A)  an increase in the unemployment rate. 
B)  an increase in the quality of the labor force. 
C)  an improvement in production technology. 
D)  a discovery of a new source of renewable energy. 
A)  an increase in the unemployment rate. 
B)  an increase in the quality of the labor force. 
C)  an improvement in production technology. 
D)  a discovery of a new source of renewable energy.

Question 18

At a point on a production possibilities curve, opportunity cost of more capital goods today is

Accepted Answer

A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future. 
A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future.

Question 19

Economists are concerned with an individual's

Accepted Answer

A)  needs because needs represent the most important goods to an individual. 
B)  needs because economists define needs to be the goods people need to survive. 
C)  wants because, unlike needs, wants lead to shortages in the economy. 
D)  wants because the existence of wants leads to scarcity. 
A)  needs because needs represent the most important goods to an individual. 
B)  needs because economists define needs to be the goods people need to survive. 
C)  wants because, unlike needs, wants lead to shortages in the economy. 
D)  wants because the existence of wants leads to scarcity.

Question 20

A production possibilities curve will shift inward

Accepted Answer

A)  when the unemployment rate increases. 
B)  when production is inefficient. 
C)  when resources are expanding. 
D)  when a war destroys the capital goods of a country. 
A)  when the unemployment rate increases. 
B)  when production is inefficient. 
C)  when resources are expanding. 
D)  when a war destroys the capital goods of a country.

Exam 2: Scarcity and the World of Trade-Offs

If Joey goes surfing for four hours instead of earning $10 per hour for those four hours, his opportunity cost is

Comparative advantage is the ability to

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused

The tasks performed by the chef at your favorite restaurant could be categorized as

-Given the production possibilities schedule in the above table, a combination of 23 televisions and 6 personal computers

A person goes to college to become an engineer. This is an example of an

An irrigation system is installed on a farm in North Dakota. This is an example of which factor of production?

The value of the best alternative sacrificed to obtain something you want is referred to as

Suppose that nuclear power plants are banned. What are examples of the opportunity costs of this decision?

-In the above figure, the production of 25 guitars and 25 ukuleles is

Suppose that Canadian farmers can grow wheat more cheaply than can U.S. farmers. In the interest of efficiency, what is the desirable outcome?

-Refer to the above figure. Given our current level of technology and resources, the unobtainable point(s) of production would be

Which of the following is a true statement?

Opportunity cost is illustrated on the production possibilities curve by a

Economic growth is shown by

-In the above figure, the opportunity cost of moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles is

A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT

At a point on a production possibilities curve, opportunity cost of more capital goods today is

Economists are concerned with an individual's

A production possibilities curve will shift inward

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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