Question 1

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

Accepted Answer

A)  a decrease in the production of capital goods 
B)  an increase in the production of consumer goods 
C)  an increase in the number of retired workers 
D)  none of the above 
A)  a decrease in the production of capital goods 
B)  an increase in the production of consumer goods 
C)  an increase in the number of retired workers 
D)  none of the above

Question 2

In a market economy,prices help determine the distribution of goods and services but not the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following scenarios would cause an outward shift in the production possibilities curve?

Accepted Answer

A)  temporary shutdown of mines due to frequent accidents 
B)  discovery of large mineral deposits 
C)  tougher environmental legislation 
D)  shortage of skilled labor 
A)  temporary shutdown of mines due to frequent accidents 
B)  discovery of large mineral deposits 
C)  tougher environmental legislation 
D)  shortage of skilled labor

Question 4

The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

Accepted Answer

A) True 
 B)False

Question 5

What are the factors that can cause a shift in the production possibilities curve?

Accepted Answer

Advancement in technology,impr

Question 6

On a production possibilities diagram,points inside the frontier are:

Accepted Answer

A)  unattainable given existing technology and resources. 
B)  inefficient. 
C)  efficient. 
D)  efficient but not necessarily desirable. 
A)  unattainable given existing technology and resources. 
B)  inefficient. 
C)  efficient. 
D)  efficient but not necessarily desirable.

Question 7

Alex must prepare for exams in both biology and economics this week.Assume that the production possibilities curve showing the tradeoff between exam scores in biology and economics is concave toward the origin.As Alex moves along the curve spending more of his time studying for economics,the opportunity cost of an hour of preparation for economics:

Accepted Answer

A)  increases. 
B)  remains constant. 
C)  decreases. 
D)  first increases then decreases. 
A)  increases. 
B)  remains constant. 
C)  decreases. 
D)  first increases then decreases.

Question 8

The production possibilities curve illustrates:

Accepted Answer

A)  the minimum quantity of two resources necessary to produce a given level of output. 
B)  that when resources are currently being used inefficiently, it is possible to increase production of one good only by sacrificing some of another good. 
C)  that when resources are currently being used efficiently, it is possible to increase production of one good only by sacrificing some of another good. 
D)  the minimum quantities of output that can be produced using available resources. 
A)  the minimum quantity of two resources necessary to produce a given level of output. 
B)  that when resources are currently being used inefficiently, it is possible to increase production of one good only by sacrificing some of another good. 
C)  that when resources are currently being used efficiently, it is possible to increase production of one good only by sacrificing some of another good. 
D)  the minimum quantities of output that can be produced using available resources.

Question 9

The bowed production possibilities curve represents:

Accepted Answer

A)  constant opportunity costs. 
B)  decreasing opportunity costs. 
C)  increasing opportunity costs. 
D)  none of the above 
A)  constant opportunity costs. 
B)  decreasing opportunity costs. 
C)  increasing opportunity costs. 
D)  none of the above

Question 10

Exhibit 3-9   Refer to Exhibit 3-9.In order to move from Point D to Point C,the economy will have to give up:

Accepted Answer

A)  200 bushels of wheat. 
B)  nothing. 
C)  200 bushels of soybeans. 
D)  100 bushels of wheat. 
A)  200 bushels of wheat. 
B)  nothing. 
C)  200 bushels of soybeans. 
D)  100 bushels of wheat.

Question 11

Along a straight-line production possibilities curve:

Accepted Answer

A)  the opportunity cost of production of a good is zero. 
B)  the opportunity cost of production of a good falls as its output increases. 
C)  the opportunity cost of production of a good rises as its output increases. 
D)  the opportunity cost of production of a good is constant. 
A)  the opportunity cost of production of a good is zero. 
B)  the opportunity cost of production of a good falls as its output increases. 
C)  the opportunity cost of production of a good rises as its output increases. 
D)  the opportunity cost of production of a good is constant.

Question 12

Exhibit 3-14   Refer to Exhibit 3-14.Assuming that the production possibilities curve extends out farther as indicated above due to technological change,which of the following observations is correct?

Accepted Answer

A)  There is a technological advance in food production but not in housing production. 
B)  There is a technological advance in housing production but not in food production. 
C)  There is a technological advance in both housing and food production. 
D)  none of the above 
A)  There is a technological advance in food production but not in housing production. 
B)  There is a technological advance in housing production but not in food production. 
C)  There is a technological advance in both housing and food production. 
D)  none of the above

Question 13

Which of the following would mostly likely shift the production possibilities curve in an outward direction?

Accepted Answer

A)  a decrease in the current rate of unemployment 
B)  a movement along the curve sacrificing capital goods for consumption goods 
C)  an increase in the price of goods and services 
D)  advances in medicine that reduce the incidence of disease and lengthen productive life spans 
A)  a decrease in the current rate of unemployment 
B)  a movement along the curve sacrificing capital goods for consumption goods 
C)  an increase in the price of goods and services 
D)  advances in medicine that reduce the incidence of disease and lengthen productive life spans

Question 14

What determines the position and shape of a society's production possibilities curve?

Accepted Answer

A)  the physical resources of that society 
B)  the level of technology of the society 
C)  the number of factories available to the society 
D)  all of the above 
A)  the physical resources of that society 
B)  the level of technology of the society 
C)  the number of factories available to the society 
D)  all of the above

Question 15

Which of the following will shift the production possibilities curve outward?

Accepted Answer

A)  a hurricane that destroys buildings throughout Florida 
B)  an increase in the capacity utilization of existing factories 
C)  an increase in the unemployment rate 
D)  a decrease in the market price of both goods 
A)  a hurricane that destroys buildings throughout Florida 
B)  an increase in the capacity utilization of existing factories 
C)  an increase in the unemployment rate 
D)  a decrease in the market price of both goods

Question 16

A production possibilities curve is negatively sloped because:

Accepted Answer

A)  the price of a good falls as you move down along the curve. 
B)  resources are wasted as you move along the curve. 
C)  it is not possible to adjust production decisions at all once an economy operates on the curve. 
D)  once on the frontier, it is only possible to increase production of one good by reducing production of the other. 
A)  the price of a good falls as you move down along the curve. 
B)  resources are wasted as you move along the curve. 
C)  it is not possible to adjust production decisions at all once an economy operates on the curve. 
D)  once on the frontier, it is only possible to increase production of one good by reducing production of the other.

Question 17

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

Accepted Answer

A)  40 cupcakes. 
B)  10 cupcakes. 
C)  4 cupcakes. 
D)  1/4 of a cupcake. 
A)  40 cupcakes. 
B)  10 cupcakes. 
C)  4 cupcakes. 
D)  1/4 of a cupcake.

Question 18

Consumer sovereignty means that consumers vote with their dollars in a market economy,which helps determine what is produced.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 3-8   Refer to Exhibit 3-8.At Point B 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 20

Exhibit 3-4   Refer to Exhibit 3-4.The movement from Point D to Point E:

Accepted Answer

A)  results in an increase in the production of capital goods but a decrease in the production of consumption goods this period. 
B)  does not change the level of output produced since both points are on the production possibilities curve. 
C)  results in an increase in the production of both capital and consumption goods this period. 
D)  results in an increase in the production of consumption goods but a decrease in the production of capital goods this period. 
A)  results in an increase in the production of capital goods but a decrease in the production of consumption goods this period. 
B)  does not change the level of output produced since both points are on the production possibilities curve. 
C)  results in an increase in the production of both capital and consumption goods this period. 
D)  results in an increase in the production of consumption goods but a decrease in the production of capital goods this period.

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

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

In a market economy,prices help determine the distribution of goods and services but not the allocation of resources.

Which of the following scenarios would cause an outward shift in the production possibilities curve?

The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

What are the factors that can cause a shift in the production possibilities curve?

On a production possibilities diagram,points inside the frontier are:

The production possibilities curve illustrates:

The bowed production possibilities curve represents:

Exhibit 3-9 Refer to Exhibit 3-9.In order to move from Point D to Point C,the economy will have to give up:

Along a straight-line production possibilities curve:

Exhibit 3-14 Refer to Exhibit 3-14.Assuming that the production possibilities curve extends out farther as indicated above due to technological change,which of the following observations is correct?

Which of the following would mostly likely shift the production possibilities curve in an outward direction?

What determines the position and shape of a society's production possibilities curve?

Which of the following will shift the production possibilities curve outward?

A production possibilities curve is negatively sloped because:

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

Consumer sovereignty means that consumers vote with their dollars in a market economy,which helps determine what is produced.

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

Exhibit 3-4 Refer to Exhibit 3-4.The movement from Point D to Point E:

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

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