Question 1

The concavity (bowed-out shape)of the production possibilities curve is the result of:

Accepted Answer

A)  the law of demand. 
B)  the law of supply. 
C)  the law of increasing opportunity cost. 
D)  complementarily in consumption. 
A)  the law of demand. 
B)  the law of supply. 
C)  the law of increasing opportunity cost. 
D)  complementarily in consumption.

Question 2

Which of the following will not shift the production possibilities curve outward?

Accepted Answer

A)  an improvement in technology, which increases the efficiency of inputs 
B)  the discovery of significant oil reserves in Alaska 
C)  a decrease in capacity utilization of existing factories 
D)  additions to the stock of physical capital 
A)  an improvement in technology, which increases the efficiency of inputs 
B)  the discovery of significant oil reserves in Alaska 
C)  a decrease in capacity utilization of existing factories 
D)  additions to the stock of physical capital

Question 3

Illustrate a production possibilities curve for automobiles and breakfast cereal that is bowed outward.Show what is likely to happen to the production possibilities curve as a result of a devastating war on a country's home soil.

Accepted Answer

@#IMG-DLM& The production possibilities

Question 4

The circular flow model indicates that income flows from households to firms through product markets and back from firms to households through factor markets.Is the total amount spent by all households equal to the total income that flows back to all households? Why or why not? Is the amount spent by each individual household equal to the amount that flows back to that specific household? Why or why not?

Accepted Answer

In our circular flow model,the total amo

Question 5

The law of increasing opportunity costs implies that a society's production possibilities curve will be a straight line.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 3-4   Refer to Exhibit 3-4.Moving from Point ____ to Point ____ will result in an increase in the production of capital goods,but a decrease in the production of consumption goods this period.

Accepted Answer

A)  B; A 
B)  D; G 
C)  A; B 
D)  E; D 
A)  B; A 
B)  D; G 
C)  A; B 
D)  E; D

Question 7

Exhibit 3-3   Refer to Exhibit 3-3.At Point A:

Accepted Answer

A)  only wine is produced. 
B)  only bread is produced. 
C)  both wine and bread are produced. 
D)  the economy is operating inefficiently. 
A)  only wine is produced. 
B)  only bread is produced. 
C)  both wine and bread are produced. 
D)  the economy is operating inefficiently.

Question 8

Exhibit 3-11   Refer to Exhibit 3-11.Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift from AA to BB?

Accepted Answer

A)  a reduction in the size of the available labor force 
B)  choosing to produce more fish and less breadfruit 
C)  choosing to produce more breadfruit and fewer fish 
D)  additions to the stock of capital 
A)  a reduction in the size of the available labor force 
B)  choosing to produce more fish and less breadfruit 
C)  choosing to produce more breadfruit and fewer fish 
D)  additions to the stock of capital

Question 9

If an economy is operating inside its production possibilities curve for tanks and bread:

Accepted Answer

A)  scarcity does not exist. 
B)  all resources are being used efficiently. 
C)  production of bread can only increase by sacrificing the production of tanks. 
D)  production of bread and tanks can both increase. 
A)  scarcity does not exist. 
B)  all resources are being used efficiently. 
C)  production of bread can only increase by sacrificing the production of tanks. 
D)  production of bread and tanks can both increase.

Question 10

High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 3-13   Refer to Exhibit 3-13.The opportunity cost of producing an additional cake:

Accepted Answer

A)  increases as the economy moves in a southeast direction along the production possibilities curve. 
B)  decreases as the economy moves in a southeast direction along the production possibilities curve. 
C)  remains constant as the economy moves in a southeast direction along the production possibilities curve. 
D)  equals zero. 
A)  increases as the economy moves in a southeast direction along the production possibilities curve. 
B)  decreases as the economy moves in a southeast direction along the production possibilities curve. 
C)  remains constant as the economy moves in a southeast direction along the production possibilities curve. 
D)  equals zero.

Question 12

Any movement along an existing production possibilities curve will

Accepted Answer

A)  increase the production of one good while decreasing the production of the other. 
B)  increase the production of both goods. 
C)  increase efficiency. 
D)  increase employment. 
A)  increase the production of one good while decreasing the production of the other. 
B)  increase the production of both goods. 
C)  increase efficiency. 
D)  increase employment.

Question 13

In a command economy,decisions about how to allocate resources are made:

Accepted Answer

A)  based upon tradition. 
B)  by a central planning board. 
C)  by individuals and firms interacting in markets coordinated by a price system. 
D)  by a lottery system. 
A)  based upon tradition. 
B)  by a central planning board. 
C)  by individuals and firms interacting in markets coordinated by a price system. 
D)  by a lottery system.

Question 14

Which of the following is not an example of a consumption good?

Accepted Answer

A)  video games. 
B)  a television 
C)  a tractor 
D)  a trip to Hawaii 
A)  video games. 
B)  a television 
C)  a tractor 
D)  a trip to Hawaii

Question 15

Exhibit 3-5   Refer to Exhibit 3-5.If the economy depicted in the diagram above chooses to shift more of its resources into clothing,it will have to give up:

Accepted Answer

A)  smaller and smaller amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
B)  nothing, since food and clothing are not substitutes. 
C)  relatively equal amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
D)  larger and larger amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
A)  smaller and smaller amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
B)  nothing, since food and clothing are not substitutes. 
C)  relatively equal amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
D)  larger and larger amounts of food per unit of added clothing, as the quantity of clothing produced increases.

Question 16

Which of the following is NOT illustrated by a production possibility curve?

Accepted Answer

A)  scarcity 
B)  opportunity cost 
C)  necessity for choice 
D)  price 
A)  scarcity 
B)  opportunity cost 
C)  necessity for choice 
D)  price

Question 17

Exhibit 3-8   Refer to Exhibit 3-8.At Point A in the production possibilities graph shown,the economy:

Accepted Answer

A)  is not using its resources efficiently. 
B)  is using its resources efficiently while producing clothing but no food. 
C)  is using its resources efficiently while producing food but no clothing. 
D)  is using its resources efficiently to produce both food and clothing. 
A)  is not using its resources efficiently. 
B)  is using its resources efficiently while producing clothing but no food. 
C)  is using its resources efficiently while producing food but no clothing. 
D)  is using its resources efficiently to produce both food and clothing.

Question 18

Which of the following would be most likely to shift a country's production possibilities curve outward?

Accepted Answer

A)  An improvement in the general level of literacy and education. 
B)  A sudden, substantial expansion of consumer wants. 
C)  A reduction in the country's labor force or population. 
D)  Shifting resources from investment to consumption goods production. 
A)  An improvement in the general level of literacy and education. 
B)  A sudden, substantial expansion of consumer wants. 
C)  A reduction in the country's labor force or population. 
D)  Shifting resources from investment to consumption goods production.

Question 19

If the production possibilities curve is a straight line:

Accepted Answer

A)  opportunity costs increase as output of either commodity is expanded. 
B)  resources are not equally substitutable between the production of the goods. 
C)  opportunity costs are negative. 
D)  as an increasing quantity of resources are shifted from one manufacturing process (good Y) to another (good X), there is no increase in opportunity cost. 
A)  opportunity costs increase as output of either commodity is expanded. 
B)  resources are not equally substitutable between the production of the goods. 
C)  opportunity costs are negative. 
D)  as an increasing quantity of resources are shifted from one manufacturing process (good Y) to another (good X), there is no increase in opportunity cost.

Question 20

Which of the following is false?

Accepted Answer

A)  A production possibilities curve represents the potential total output combinations of any two goods for an economy. 
B)  On a production possibilities curve, we assume that the economy has a given quantity and quality of resources and technology available to use for production. 
C)  If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently. Such an economy's actual output is less than potential output. 
D)  By putting unemployed resources to work or by putting already employed resources to better uses, we could shift out the production possibilities curve. 
A)  A production possibilities curve represents the potential total output combinations of any two goods for an economy. 
B)  On a production possibilities curve, we assume that the economy has a given quantity and quality of resources and technology available to use for production. 
C)  If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently. Such an economy's actual output is less than potential output. 
D)  By putting unemployed resources to work or by putting already employed resources to better uses, we could shift out the production possibilities curve.

Exam 3: Scarcity, Trade-Offs, and Production Possibilities

The concavity (bowed-out shape)of the production possibilities curve is the result of:

Which of the following will not shift the production possibilities curve outward?

Illustrate a production possibilities curve for automobiles and breakfast cereal that is bowed outward.Show what is likely to happen to the production possibilities curve as a result of a devastating war on a country's home soil.

The law of increasing opportunity costs implies that a society's production possibilities curve will be a straight line.

Exhibit 3-4 Refer to Exhibit 3-4.Moving from Point ____ to Point ____ will result in an increase in the production of capital goods,but a decrease in the production of consumption goods this period.

Exhibit 3-3 Refer to Exhibit 3-3.At Point A:

Exhibit 3-11 Refer to Exhibit 3-11.Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift from AA to BB?

If an economy is operating inside its production possibilities curve for tanks and bread:

High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

Exhibit 3-13 Refer to Exhibit 3-13.The opportunity cost of producing an additional cake:

Any movement along an existing production possibilities curve will

In a command economy,decisions about how to allocate resources are made:

Which of the following is not an example of a consumption good?

Exhibit 3-5 Refer to Exhibit 3-5.If the economy depicted in the diagram above chooses to shift more of its resources into clothing,it will have to give up:

Which of the following is NOT illustrated by a production possibility curve?

Exhibit 3-8 Refer to Exhibit 3-8.At Point A in the production possibilities graph shown,the economy:

Which of the following would be most likely to shift a country's production possibilities curve outward?

If the production possibilities curve is a straight line:

Which of the following is false?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

Exhibit 3-4 Refer to Exhibit 3-4.Moving from Point to Point will result in an increase in the production of capital goods,but a decrease in the production of consumption goods this period.