Question 1

Economic goods are

Accepted Answer

A)  abundant goods, about which we must constantly make decisions about their best use. 
B)  all imaginable items from which individuals derive satisfaction or happiness. 
C)  goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a zero price. 
D)  goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any price. 
A)  abundant goods, about which we must constantly make decisions about their best use. 
B)  all imaginable items from which individuals derive satisfaction or happiness. 
C)  goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a zero price. 
D)  goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any price.

Question 2

Which of the following statements about scarcity is TRUE?

Accepted Answer

A)  Scarcity is no longer a problem for industrialized countries. 
B)  Scarcity exists in all societies. 
C)  Scarcity is a problem only for greedy people. 
D)  Scarcity is a problem only in countries that do not use markets to organize economic activity. 
A)  Scarcity is no longer a problem for industrialized countries. 
B)  Scarcity exists in all societies. 
C)  Scarcity is a problem only for greedy people. 
D)  Scarcity is a problem only in countries that do not use markets to organize economic activity.

Question 3

Which of the following statements about economic scarcity is FALSE?

Accepted Answer

A)  Scarcity occurs among the poor and the rich. 
B)  Scarcity only occurs if there are shortages and people wait in line to buy things. 
C)  Scarcity results from not having enough resources to produce all the things we want. 
D)  Scarcity results in the necessity to make choices. 
A)  Scarcity occurs among the poor and the rich. 
B)  Scarcity only occurs if there are shortages and people wait in line to buy things. 
C)  Scarcity results from not having enough resources to produce all the things we want. 
D)  Scarcity results in the necessity to make choices.

Question 4

The division of labor refers to

Accepted Answer

A)  workers being assigned specific tasks. 
B)  workers performing multiple tasks. 
C)  separating men and women in the workforce. 
D)  creating jobs that all people can perform at the same level. 
A)  workers being assigned specific tasks. 
B)  workers performing multiple tasks. 
C)  separating men and women in the workforce. 
D)  creating jobs that all people can perform at the same level.

Question 5

Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher opportunity cost? Explain.

Accepted Answer

The opportunity cost is the income lost

Question 6

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

Accepted Answer

A)  is an efficient use of society's resources because it is below the production possibilities curve. 
B)  is more desirable than point x because producing at point w does not put a strain on society's resources. 
C)  is attainable but involves the inefficient use of some of society's resources. 
D)  is beyond the capacity of society to produce. 
A)  is an efficient use of society's resources because it is below the production possibilities curve. 
B)  is more desirable than point x because producing at point w does not put a strain on society's resources. 
C)  is attainable but involves the inefficient use of some of society's resources. 
D)  is beyond the capacity of society to produce.

Question 7

Which of the following is assumed when constructing a production possibilities curve?

Accepted Answer

A)  a fixed amount of resources 
B)  the efficient use of resources 
C)  resources of a given quality 
D)  All of the above are correct. 
A)  a fixed amount of resources 
B)  the efficient use of resources 
C)  resources of a given quality 
D)  All of the above are correct.

Question 8

The production possibilities curve represents

Accepted Answer

A)  the total amount of stocks and bonds that exist in the economy. 
B)  the trade-off between human capital and physical capital that exists. 
C)  all possible combinations of total output that can be produced. 
D)  society's needs. 
A)  the total amount of stocks and bonds that exist in the economy. 
B)  the trade-off between human capital and physical capital that exists. 
C)  all possible combinations of total output that can be produced. 
D)  society's needs.

Question 9

John and Mary work eight hours at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Accepted Answer

A)  Mary has the absolute advantage in decorating wedding cakes. 
B)  John has the absolute advantage in decorating wedding cakes. 
C)  Mary has the comparative advantage in decorating wedding cakes. 
D)  John has the comparative advantage in decorating ice-cream cakes. 
A)  Mary has the absolute advantage in decorating wedding cakes. 
B)  John has the absolute advantage in decorating wedding cakes. 
C)  Mary has the comparative advantage in decorating wedding cakes. 
D)  John has the comparative advantage in decorating ice-cream cakes.

Question 10

Why is a point below the production possibilities curve less efficient than a point on that curve?

Accepted Answer

A point on the production possibilities

Question 11

A straight-line production possibilities curve takes this shape because

Accepted Answer

A)  the opportunity cost of producing a good is constant. 
B)  the opportunity cost of producing more of a good is decreasing. 
C)  resources are better suited for producing one output than another. 
D)  resources are fixed. 
A)  the opportunity cost of producing a good is constant. 
B)  the opportunity cost of producing more of a good is decreasing. 
C)  resources are better suited for producing one output than another. 
D)  resources are fixed.

Question 12

Which of the following sets of terms describes the problem of scarcity in economics?

Accepted Answer

A)  Goods, land, and needs 
B)  Labor, needs, and opportunity costs 
C)  Choices, opportunity costs, and trade-offs 
D)  Production, consumption, and wants 
A)  Goods, land, and needs 
B)  Labor, needs, and opportunity costs 
C)  Choices, opportunity costs, and trade-offs 
D)  Production, consumption, and wants

Question 13

A point inside a society's production possibilities curve represents

Accepted Answer

A)  an unattainable combination of outputs. 
B)  an output combination that satisfies the needs of the population. 
C)  an underutilization of productive resources. 
D)  a technically superior output combination. 
A)  an unattainable combination of outputs. 
B)  an output combination that satisfies the needs of the population. 
C)  an underutilization of productive resources. 
D)  a technically superior output combination.

Question 14

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

Accepted Answer

A)  production possibilities curve. 
B)  substitution options curve. 
C)  demand curve. 
D)  opportunity cost curve. 
A)  production possibilities curve. 
B)  substitution options curve. 
C)  demand curve. 
D)  opportunity cost curve.

Question 15

The ability to produce a good at a lower opportunity cost that others is known as

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  specialization. 
D)  marginal cost production. 
A)  comparative advantage. 
B)  absolute advantage. 
C)  specialization. 
D)  marginal cost production.

Question 16

The principle of comparative advantage implies that

Accepted Answer

A)  only wealthy countries ultimately can benefit from international trade. 
B)  every country can benefit from international trade. 
C)  we should limit the extent to which people specialize. 
D)  most people are harmed by trade. 
A)  only wealthy countries ultimately can benefit from international trade. 
B)  every country can benefit from international trade. 
C)  we should limit the extent to which people specialize. 
D)  most people are harmed by trade.

Question 17

The opportunity cost of going to college for a student receiving a scholarship

Accepted Answer

A)  is the income that she would have earned if she did not go to college. 
B)  is the risk of dropping out. 
C)  is the food and living expenses that she has to purchase while in college. 
D)  is zero because she does not have to pay tuition. 
A)  is the income that she would have earned if she did not go to college. 
B)  is the risk of dropping out. 
C)  is the food and living expenses that she has to purchase while in college. 
D)  is zero because she does not have to pay tuition.

Question 18

Scarcity

Accepted Answer

A)  does not exist in the United States. 
B)  applies only to developing countries. 
C)  is caused by production problems. 
D)  is not a shortage. 
A)  does not exist in the United States. 
B)  applies only to developing countries. 
C)  is caused by production problems. 
D)  is not a shortage.

Question 19

If a country increased the production of its capital goods, then

Accepted Answer

A)  the more consumption of goods we can have today. 
B)  the less consumption we can have today, but we will have more in the future. 
C)  the more unemployed resources there will be in the future. 
D)  the more unemployed resources there are today. 
A)  the more consumption of goods we can have today. 
B)  the less consumption we can have today, but we will have more in the future. 
C)  the more unemployed resources there will be in the future. 
D)  the more unemployed resources there are today.

Question 20

Which of the following is a true statement?

Accepted Answer

A)  Cost is always measured in the nation's currency. 
B)  Opportunity cost is an objective measure since the cost of an activity is the same for everyone. 
C)  The less alternatives there are the greater the cost. 
D)  Opportunity cost is always a foregone opportunity. 
A)  Cost is always measured in the nation's currency. 
B)  Opportunity cost is an objective measure since the cost of an activity is the same for everyone. 
C)  The less alternatives there are the greater the cost. 
D)  Opportunity cost is always a foregone opportunity.

Exam 2: Scarcity and the World of Trade-Offs

Economic goods are

Which of the following statements about scarcity is TRUE?

Which of the following statements about economic scarcity is FALSE?

The division of labor refers to

Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher opportunity cost? Explain.

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

Which of the following is assumed when constructing a production possibilities curve?

The production possibilities curve represents

John and Mary work eight hours at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Why is a point below the production possibilities curve less efficient than a point on that curve?

A straight-line production possibilities curve takes this shape because

Which of the following sets of terms describes the problem of scarcity in economics?

A point inside a society's production possibilities curve represents

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

The ability to produce a good at a lower opportunity cost that others is known as

The principle of comparative advantage implies that

The opportunity cost of going to college for a student receiving a scholarship

Scarcity

If a country increased the production of its capital goods, then

Which of the following is a true statement?

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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