Question 1

Scarcity affects

Accepted Answer

A)  only rich people. 
B)  only poor people. 
C)  only middle income people. 
D)  all people. 
A)  only rich people. 
B)  only poor people. 
C)  only middle income people. 
D)  all people.

Question 2

Economists define technology as

Accepted Answer

A)  machines such as computers. 
B)  entrepreneurship. 
C)  absolute advantage. 
D)  society's knowledge concerning the production of goods. 
A)  machines such as computers. 
B)  entrepreneurship. 
C)  absolute advantage. 
D)  society's knowledge concerning the production of goods.

Question 3

-When the economy moves from point D to E in the above table, the opportunity cost of a computer in terms of televisions is

Accepted Answer

A)  3. 
B)  4. 
C)  2. 
D)  5. 
A)  3. 
B)  4. 
C)  2. 
D)  5.

Question 4

-In the above figure, the combination of computers and televisions shown by point x

Accepted Answer

A)  is not attainable at the point in time for which the graph is drawn. 
B)  can be attained only if some of society's resources are unemployed. 
C)  suggests that the law of increasing relative costs does not hold. 
D)  results only because society allocates its resources inefficiently. 
A)  is not attainable at the point in time for which the graph is drawn. 
B)  can be attained only if some of society's resources are unemployed. 
C)  suggests that the law of increasing relative costs does not hold. 
D)  results only because society allocates its resources inefficiently.

Question 5

The opportunity cost of going to college full time away from home is

Accepted Answer

A)  the income you could have earned from a full-time job. 
B)  the funds you would have saved if you had not paid the tuition. 
C)  the time you could have spent with friends back home. 
D)  All of the above are correct. 
A)  the income you could have earned from a full-time job. 
B)  the funds you would have saved if you had not paid the tuition. 
C)  the time you could have spent with friends back home. 
D)  All of the above are correct.

Question 6

Briefly explain the concept of opportunity cost. What is the opportunity cost of attending college?

Accepted Answer

The opportunity cost of an action is the

Question 7

The production possibilities curve shows all possible combinations of

Accepted Answer

A)  two goods that are desired by society. 
B)  two goods that can be efficiently produced with a given set of resources. 
C)  two goods that can be purchased given the prices of the goods. 
D)  two goods that two countries can trade with each other. 
A)  two goods that are desired by society. 
B)  two goods that can be efficiently produced with a given set of resources. 
C)  two goods that can be purchased given the prices of the goods. 
D)  two goods that two countries can trade with each other.

Question 8

At a zero price, which of the following conditions is TRUE for an economic good?

Accepted Answer

A)  Its quantity supplied exceeds its quantity demanded. 
B)  Its quantity demanded exceeds its quantity supplied. 
C)  Its quantity demanded equals its quantity supplied. 
D)  Scarcity disappears. 
A)  Its quantity supplied exceeds its quantity demanded. 
B)  Its quantity demanded exceeds its quantity supplied. 
C)  Its quantity demanded equals its quantity supplied. 
D)  Scarcity disappears.

Question 9

Which of the following is an assumption used in deriving a production possibilities curve?

Accepted Answer

A)  Poverty always exists in society. 
B)  The wages in an industry increase constantly. 
C)  Prices will continue to increase. 
D)  The amount of resources is fixed. 
A)  Poverty always exists in society. 
B)  The wages in an industry increase constantly. 
C)  Prices will continue to increase. 
D)  The amount of resources is fixed.

Question 10

Human resources that perform the functions of organizing, managing, and assembling the other factors of production are called

Accepted Answer

A)  physical capital. 
B)  venture capital. 
C)  entrepreneurs. 
D)  productive capital. 
A)  physical capital. 
B)  venture capital. 
C)  entrepreneurs. 
D)  productive capital.

Question 11

Why does the trade-off between consumption goods and capital goods represent a trade-off between the present and the future?

Accepted Answer

This is because consumption goods are fo

Question 12

-In the above figure, what is the opportunity cost of one bushel of soybeans?

Accepted Answer

A)  1 bushel of corn 
B)  0.5 bushels of corn 
C)  2 bushels of corn 
D)  unable to determine 
A)  1 bushel of corn 
B)  0.5 bushels of corn 
C)  2 bushels of corn 
D)  unable to determine

Question 13

-In the above figure, the production of 75 ukuleles and 75 guitars is

Accepted Answer

A)  efficient production. 
B)  inefficient production. 
C)  impossible production. 
D)  full employment production. 
A)  efficient production. 
B)  inefficient production. 
C)  impossible production. 
D)  full employment production.

Question 14

Some resources are better suited to produce certain goods than other resources. This fact leads to

Accepted Answer

A)  a linear production possibilities curve. 
B)  inefficiency in the economy. 
C)  the law of increasing additional cost. 
D)  increases in technology. 
A)  a linear production possibilities curve. 
B)  inefficiency in the economy. 
C)  the law of increasing additional cost. 
D)  increases in technology.

Question 15

The basic problem in economics is

Accepted Answer

A)  unlimited needs. 
B)  scarcity. 
C)  demand. 
D)  limited resources. 
A)  unlimited needs. 
B)  scarcity. 
C)  demand. 
D)  limited resources.

Question 16

-Based on the above figure, if countries "A" and "B" faced the production possibilities curves above, both countries would benefit if

Accepted Answer

A)  they did not trade. 
B)  "A" produced industrial goods, and "B" produced agricultural goods. 
C)  "B" produced industrial goods, and "A" produced agricultural goods. 
D)  they both produced both industrial and agricultural goods. 
A)  they did not trade. 
B)  "A" produced industrial goods, and "B" produced agricultural goods. 
C)  "B" produced industrial goods, and "A" produced agricultural goods. 
D)  they both produced both industrial and agricultural goods.

Question 17

The production possibilities curve bows out because

Accepted Answer

A)  production is efficient. 
B)  of the law of increasing additional cost. 
C)  production is inefficient. 
D)  resources are not being fully utilized. 
A)  production is efficient. 
B)  of the law of increasing additional cost. 
C)  production is inefficient. 
D)  resources are not being fully utilized.

Question 18

How would you illustrate economic growth with the production possibilities curve? Explain.

Accepted Answer

Economic growth can be illustr

Question 19

Which of the following are considered factors of production? I. Land
II) Labor
III) Physical capital
IV) Entrepreneurship

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  I, II and III only 
D)  I, II, III and IV 
A)  I and II only 
B)  I and III only 
C)  I, II and III only 
D)  I, II, III and IV

Question 20

International trade between two nations increases the standard of living of both nations due to

Accepted Answer

A)  specialization and gains from absolute advantage. 
B)  specialization and gains from comparative advantage. 
C)  high tariffs. 
D)  political intervention. 
A)  specialization and gains from absolute advantage. 
B)  specialization and gains from comparative advantage. 
C)  high tariffs. 
D)  political intervention.

Exam 2: Scarcity and the World of Trade-Offs

Scarcity affects

Economists define technology as

-When the economy moves from point D to E in the above table, the opportunity cost of a computer in terms of televisions is

-In the above figure, the combination of computers and televisions shown by point x

The opportunity cost of going to college full time away from home is

Briefly explain the concept of opportunity cost. What is the opportunity cost of attending college?

The production possibilities curve shows all possible combinations of

At a zero price, which of the following conditions is TRUE for an economic good?

Which of the following is an assumption used in deriving a production possibilities curve?

Human resources that perform the functions of organizing, managing, and assembling the other factors of production are called

Why does the trade-off between consumption goods and capital goods represent a trade-off between the present and the future?

-In the above figure, what is the opportunity cost of one bushel of soybeans?

-In the above figure, the production of 75 ukuleles and 75 guitars is

Some resources are better suited to produce certain goods than other resources. This fact leads to

The basic problem in economics is

-Based on the above figure, if countries "A" and "B" faced the production possibilities curves above, both countries would benefit if

The production possibilities curve bows out because

How would you illustrate economic growth with the production possibilities curve? Explain.

Which of the following are considered factors of production? I. Land II) Labor III) Physical capital IV) Entrepreneurship

International trade between two nations increases the standard of living of both nations due to

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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