Question 1

When productive activities are organized according to the principle of the division of labor,

Accepted Answer

A)  scarcity is eliminated. 
B)  we do not devote enough resources for capital investment. 
C)  total output increases due to the advantages of specialization. 
D)  an inefficient outcome results. 
A)  scarcity is eliminated. 
B)  we do not devote enough resources for capital investment. 
C)  total output increases due to the advantages of specialization. 
D)  an inefficient outcome results.

Question 2

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Accepted Answer

A)  the farmer is not using resources efficiently. 
B)  the farmer is using more land for wheat than for beans. 
C)  the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D)  the farmer cannot be using the amount of land that was used to construct the curve. 
A)  the farmer is not using resources efficiently. 
B)  the farmer is using more land for wheat than for beans. 
C)  the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D)  the farmer cannot be using the amount of land that was used to construct the curve.

Question 3

How can the concepts of opportunity costs, scarcity and choice by illustrated by the production possibilities curve?

Accepted Answer

The concept of opportunity cost is illus

Question 4

Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?

Accepted Answer

A)  Tiger Woods has an absolute advantage in changing oil. 
B)  Tiger Woods has a comparative advantage in changing oil. 
C)  There is no opportunity cost for the garage mechanic to change oil. 
D)  The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic. 
A)  Tiger Woods has an absolute advantage in changing oil. 
B)  Tiger Woods has a comparative advantage in changing oil. 
C)  There is no opportunity cost for the garage mechanic to change oil. 
D)  The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic.

Question 5

Technology is best defined as

Accepted Answer

A)  society's pool of applied knowledge concerning the production of goods and services. 
B)  the maximum output that can be obtained from a stock of physical capital. 
C)  output inside the production possibilities curve. 
D)  the utilization of more resources for the same amount of production. 
A)  society's pool of applied knowledge concerning the production of goods and services. 
B)  the maximum output that can be obtained from a stock of physical capital. 
C)  output inside the production possibilities curve. 
D)  the utilization of more resources for the same amount of production.

Question 6

The law of increasing additional costs is due to

Accepted Answer

A)  taxes. 
B)  scarcity. 
C)  the fact that it is more difficult to use resources efficiently the more society produces. 
D)  the fact that resources are not perfectly adaptable for alternative uses. 
A)  taxes. 
B)  scarcity. 
C)  the fact that it is more difficult to use resources efficiently the more society produces. 
D)  the fact that resources are not perfectly adaptable for alternative uses.

Question 7

Which of the following statements is FALSE?

Accepted Answer

A)  Economic goods are available in desired quantities at a zero price. 
B)  A good is anything that gives satisfaction or happiness to individuals. 
C)  Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation. 
D)  Wants are unlimited and include all material and nonmaterial desires. 
A)  Economic goods are available in desired quantities at a zero price. 
B)  A good is anything that gives satisfaction or happiness to individuals. 
C)  Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation. 
D)  Wants are unlimited and include all material and nonmaterial desires.

Question 8

If a country is currently producing inside its production possibilities curve,

Accepted Answer

A)  it can increase the production of both goods by putting unemployed resources to work. 
B)  it can increase the production of one of the goods only if it reduces the production of the other good. 
C)  it is experiencing efficient production of one good but not the other. 
D)  None of the above are correct. 
A)  it can increase the production of both goods by putting unemployed resources to work. 
B)  it can increase the production of one of the goods only if it reduces the production of the other good. 
C)  it is experiencing efficient production of one good but not the other. 
D)  None of the above are correct.

Question 9

Capital goods

Accepted Answer

A)  are a special type of consumption goods. 
B)  are consumed because they enhance the enjoyment consumers obtain from other goods and services. 
C)  are goods used to make consumer goods and services. 
D)  lead to inward shifts of a production possibilities curve. 
A)  are a special type of consumption goods. 
B)  are consumed because they enhance the enjoyment consumers obtain from other goods and services. 
C)  are goods used to make consumer goods and services. 
D)  lead to inward shifts of a production possibilities curve.

Question 10

Opportunity cost exists because

Accepted Answer

A)  of scarcity. 
B)  prices must adjust to eliminate shortages. 
C)  production could not occur without the opportunity cost of using resources. 
D)  the value of economic goods is positive while the value of goods is zero. 
A)  of scarcity. 
B)  prices must adjust to eliminate shortages. 
C)  production could not occur without the opportunity cost of using resources. 
D)  the value of economic goods is positive while the value of goods is zero.

Question 11

Which is the best example of specialization?

Accepted Answer

A)  A high school math teacher who teaches only calculus. 
B)  A firm that produces both luggage and cooking oil. 
C)  A person whose job includes accounting, personnel and maintenance tasks. 
D)  A high school math teacher who teaches algebra and calculus. 
A)  A high school math teacher who teaches only calculus. 
B)  A firm that produces both luggage and cooking oil. 
C)  A person whose job includes accounting, personnel and maintenance tasks. 
D)  A high school math teacher who teaches algebra and calculus.

Question 12

-Given the production possibilities schedule in the above table, a combination of 9 televisions and 4 personal computers

Accepted Answer

A)  is attainable but involves an inefficient use of society's resources. 
B)  would be attainable only if a new technology of producing televisions or computers were introduced. 
C)  is not attainable because it is not listed in the schedule. 
D)  is not attainable because society does not have enough resources to produce this combination. 
A)  is attainable but involves an inefficient use of society's resources. 
B)  would be attainable only if a new technology of producing televisions or computers were introduced. 
C)  is not attainable because it is not listed in the schedule. 
D)  is not attainable because society does not have enough resources to produce this combination.

Question 13

Absolute advantage is

Accepted Answer

A)  producing at a lower opportunity cost. 
B)  producing a good using the fewest inputs. 
C)  producing a good only when demand is high. 
D)  producing a good that requires imported components. 
A)  producing at a lower opportunity cost. 
B)  producing a good using the fewest inputs. 
C)  producing a good only when demand is high. 
D)  producing a good that requires imported components.

Question 14

A point inside a production possibilities curve indicates

Accepted Answer

A)  resources are not being used efficiently. 
B)  resources are being used very efficiently. 
C)  opportunity costs are constant. 
D)  an output combination that is unobtainable with the current resource and technology levels 
A)  resources are not being used efficiently. 
B)  resources are being used very efficiently. 
C)  opportunity costs are constant. 
D)  an output combination that is unobtainable with the current resource and technology levels

Question 15

It is not uncommon for people to say something like, "If we can put someone on the moon we should be able to . . . ," followed by the person's favorite project. What response can an economist make to this person?

Accepted Answer

Society must make choices, and when it c

Question 16

The production possibilities curve demonstrate which of the following concepts?

Accepted Answer

A)  scarcity 
B)  choice 
C)  trade-offs 
D)  all of the above 
A)  scarcity 
B)  choice 
C)  trade-offs 
D)  all of the above

Question 17

There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and for good D at a price of zero. Which situation reflects scarcity rather than shortage?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 18

What is the "division of labor"? How is the division of labor related to production?

Accepted Answer

The division of labor refers to the segr

Question 19

Opportunity cost exists because of

Accepted Answer

A)  poverty. 
B)  scarcity. 
C)  greed. 
D)  self-interest. 
A)  poverty. 
B)  scarcity. 
C)  greed. 
D)  self-interest.

Question 20

Assuming Vice President Smith has to sacrifice more than his assistant in order to engage in full-time typing, we would say that his assistant has a(n) ________ advantage in typing versus Mr. Smith.

Accepted Answer

A)  absolute 
B)  comparative 
C)  pecuniary 
D)  overwhelming 
A)  absolute 
B)  comparative 
C)  pecuniary 
D)  overwhelming

Exam 2: Scarcity and the World of Trade-Offs

When productive activities are organized according to the principle of the division of labor,

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

How can the concepts of opportunity costs, scarcity and choice by illustrated by the production possibilities curve?

Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?

Technology is best defined as

The law of increasing additional costs is due to

Which of the following statements is FALSE?

If a country is currently producing inside its production possibilities curve,

Capital goods

Opportunity cost exists because

Which is the best example of specialization?

-Given the production possibilities schedule in the above table, a combination of 9 televisions and 4 personal computers

Absolute advantage is

A point inside a production possibilities curve indicates

It is not uncommon for people to say something like, "If we can put someone on the moon we should be able to . . . ," followed by the person's favorite project. What response can an economist make to this person?

The production possibilities curve demonstrate which of the following concepts?

There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and for good D at a price of zero. Which situation reflects scarcity rather than shortage?

What is the "division of labor"? How is the division of labor related to production?

Opportunity cost exists because of

Assuming Vice President Smith has to sacrifice more than his assistant in order to engage in full-time typing, we would say that his assistant has a(n) ________ advantage in typing versus Mr. Smith.

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