Question 1

The law of increasing relative cost states that

Accepted Answer

A) producing additional units of one good results in increasing amounts of lost output of the other. 
B) producing additional units of one good results in proportionately smaller reductions in output of the other. 
C) the economy will be producing on its production possibilities curve. 
D) the production possibilities curve will be a straight line. 
A) producing additional units of one good results in increasing amounts of lost output of the other. 
B) producing additional units of one good results in proportionately smaller reductions in output of the other. 
C) the economy will be producing on its production possibilities curve. 
D) the production possibilities curve will be a straight line. A

Question 2

Figure 2-2  
-The combination of personal computers and televisions shown in Figure 2-2 by point W

Accepted Answer

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

Question 3

The concept "terms of trade" refers to

Accepted Answer

A) the system of rules and regulations established to govern trade. 
B) the quantity of one good that must be traded in order to obtain a unit of another. 
C) the provisions of a contract between import-export firms in two countries. 
D) the time period during which trade is to take place. 
A) the system of rules and regulations established to govern trade. 
B) the quantity of one good that must be traded in order to obtain a unit of another. 
C) the provisions of a contract between import-export firms in two countries. 
D) the time period during which trade is to take place. B

Question 4

Discuss the problems of developing nations in terms of capital investment versus consumption goods.Specifically,what could be done for poorer nations to get out of poverty?

Accepted Answer

To raise future incomes,the decision mus

Question 5

If an economy is operating at a point located inside the production possibilities curve,then

Accepted Answer

A) society's resources are being inefficiently utilized. 
B) the curve will move to the left. 
C) the curve will move to the right. 
D) society's resources are being used to produce too many consumer goods. 
A) society's resources are being inefficiently utilized. 
B) the curve will move to the left. 
C) the curve will move to the right. 
D) society's resources are being used to produce too many consumer goods.

Question 6

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

Accepted Answer

A) a system of property rights. 
B) an economic system. 
C) a social system. 
D) an educational system. 
A) a system of property rights. 
B) an economic system. 
C) a social system. 
D) an educational system.

Question 7

A production possibilities curve that is bowed outward occurs when

Accepted Answer

A) successive additions of one good require greater and greater reductions in the other. 
B) resources are not scarce. 
C) opportunity costs are constant. 
D) the society is operating on the production possibilities curve. 
A) successive additions of one good require greater and greater reductions in the other. 
B) resources are not scarce. 
C) opportunity costs are constant. 
D) the society is operating on the production possibilities curve.

Question 8

In both capitalist and mixed economies,the incomes and wealth levels of households

Accepted Answer

A) always will be less fairly distributed than in command economies. 
B) are independent of the ownership of resources. 
C) are determined by government decision-makers. 
D) depend on the degree to which households own marketable resources and on the prices of those resources. 
A) always will be less fairly distributed than in command economies. 
B) are independent of the ownership of resources. 
C) are determined by government decision-makers. 
D) depend on the degree to which households own marketable resources and on the prices of those resources.

Question 9

A movement along the production possibilities curve would suggest that

Accepted Answer

A) society has chosen to produce a different set of outputs. 
B) productivity has declined because workers are demanding more leisure. 
C) the labour force has grown. 
D) productivity has increased. 
A) society has chosen to produce a different set of outputs. 
B) productivity has declined because workers are demanding more leisure. 
C) the labour force has grown. 
D) productivity has increased.

Question 10

If all resources are perfectly adaptable for alternative uses,the production possibilities curve will

Accepted Answer

A) be a straight line. 
B) be bowed in. 
C) be bowed out. 
D) not exist. 
A) be a straight line. 
B) be bowed in. 
C) be bowed out. 
D) not exist.

Question 11

Explain why,if specialization and trade always makes it possible to increase a country's consumption,in effect generating extra output from the existing stock of scarce resources,anyone would favour placing restrictions on trade through such means as tariffs or quotas.

Accepted Answer

Specializing in the production of a good

Question 12

Figure 2-3
Tonnes
of
Soybeans  
-The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is

Accepted Answer

A) 1/2 tonne of soybeans.. 
B) 1 tonne of soybeans. 
C) 1 1/2 tonnes of soybeans. 
D) 2 tonnes of soybeans. 
A) 1/2 tonne of soybeans.. 
B) 1 tonne of soybeans. 
C) 1 1/2 tonnes of soybeans. 
D) 2 tonnes of soybeans.

Question 13

Give examples of reasons why some people might prefer a pure capitalist economy and others a mixed economy.

Accepted Answer

One reason an person might prefer a mixe

Question 14

A mixed economy is one in which decisions about how resources are used

Accepted Answer

A) are made entirely by the private sector. 
B) are made entirely by the public sector. 
C) are made partly by the private sector and partly by the public sector. 
D) are made entirely by firms and consumers. 
A) are made entirely by the private sector. 
B) are made entirely by the public sector. 
C) are made partly by the private sector and partly by the public sector. 
D) are made entirely by firms and consumers.

Question 15

Figure 2-4  
-The shape of the production possibilities curve in Figure 2-4 indicates that

Accepted Answer

A) production of both corn and cloth is characterized by constant costs. 
B) production of corn is characterized by constant costs and the production of cloth by increasing costs. 
C) production of both corn and cloth is characterized by increasing costs. 
D) production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs. 
A) production of both corn and cloth is characterized by constant costs. 
B) production of corn is characterized by constant costs and the production of cloth by increasing costs. 
C) production of both corn and cloth is characterized by increasing costs. 
D) production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs.

Question 16

Describe the three basic types of economic systems.

Accepted Answer

A pure command economy is an economic sy

Question 17

Figure 2-2  
-Given the production possibilities schedule in Table 2-1,a combination of nine televisions and four personal computers

Accepted Answer

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

Question 18

Figure 2-3
Tonnes
of
Soybeans  
-In Figure 2-3,how many units of corn are produced at point "a"?

Accepted Answer

A) 2,500 
B) 3,000 
C) 2,000 
D) Can't tell without more information. 
A) 2,500 
B) 3,000 
C) 2,000 
D) Can't tell without more information.

Question 19

Economy A and Economy B have the same resources,but workers in Economy A have specialized whereas individuals in Economy B have not.Given this information,you can determine that

Accepted Answer

A) Economy A will have a lower output than Economy B. 
B) Economy A will have a higher output than Economy B. 
C) Individuals in Economy A will have lower incomes than individuals in Economy B. 
D) Economy A and Economy B will have identical outputs. 
A) Economy A will have a lower output than Economy B. 
B) Economy A will have a higher output than Economy B. 
C) Individuals in Economy A will have lower incomes than individuals in Economy B. 
D) Economy A and Economy B will have identical outputs.

Question 20

A country that must reduce current consumption if it wished to increase future consumption possibilities

Accepted Answer

A) must be producing along its production possibilities curve. 
B) must be producing outside the production possibilities curve. 
C) must be allocating resources inefficiently. 
D) must not have private ownership of property. 
A) must be producing along its production possibilities curve. 
B) must be producing outside the production possibilities curve. 
C) must be allocating resources inefficiently. 
D) must not have private ownership of property.

The law of increasing relative cost states that

Figure 2-2 -The combination of personal computers and televisions shown in Figure 2-2 by point W

The concept "terms of trade" refers to

Discuss the problems of developing nations in terms of capital investment versus consumption goods.Specifically,what could be done for poorer nations to get out of poverty?

If an economy is operating at a point located inside the production possibilities curve,then

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

A production possibilities curve that is bowed outward occurs when

In both capitalist and mixed economies,the incomes and wealth levels of households

A movement along the production possibilities curve would suggest that

If all resources are perfectly adaptable for alternative uses,the production possibilities curve will

Explain why,if specialization and trade always makes it possible to increase a country's consumption,in effect generating extra output from the existing stock of scarce resources,anyone would favour placing restrictions on trade through such means as tariffs or quotas.

Figure 2-3 Tonnes of Soybeans -The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is

Give examples of reasons why some people might prefer a pure capitalist economy and others a mixed economy.

A mixed economy is one in which decisions about how resources are used

Figure 2-4 -The shape of the production possibilities curve in Figure 2-4 indicates that

Describe the three basic types of economic systems.

Figure 2-2 -Given the production possibilities schedule in Table 2-1,a combination of nine televisions and four personal computers

Figure 2-3 Tonnes of Soybeans -In Figure 2-3,how many units of corn are produced at point "a"?

Economy A and Economy B have the same resources,but workers in Economy A have specialized whereas individuals in Economy B have not.Given this information,you can determine that

A country that must reduce current consumption if it wished to increase future consumption possibilities

The Nature of Economics

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 2: Production Possibilities and Economic Systems

The law of increasing relative cost states that

Figure 2-2 -The combination of personal computers and televisions shown in Figure 2-2 by point W

The concept "terms of trade" refers to

Discuss the problems of developing nations in terms of capital investment versus consumption goods.Specifically,what could be done for poorer nations to get out of poverty?

If an economy is operating at a point located inside the production possibilities curve,then

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

A production possibilities curve that is bowed outward occurs when

In both capitalist and mixed economies,the incomes and wealth levels of households

A movement along the production possibilities curve would suggest that

If all resources are perfectly adaptable for alternative uses,the production possibilities curve will

Explain why,if specialization and trade always makes it possible to increase a country's consumption,in effect generating extra output from the existing stock of scarce resources,anyone would favour placing restrictions on trade through such means as tariffs or quotas.

Figure 2-3 Tonnes of Soybeans -The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is

Give examples of reasons why some people might prefer a pure capitalist economy and others a mixed economy.

A mixed economy is one in which decisions about how resources are used

Figure 2-4 -The shape of the production possibilities curve in Figure 2-4 indicates that

Describe the three basic types of economic systems.

Figure 2-2 -Given the production possibilities schedule in Table 2-1,a combination of nine televisions and four personal computers

Figure 2-3 Tonnes of Soybeans -In Figure 2-3,how many units of corn are produced at point "a"?

Economy A and Economy B have the same resources,but workers in Economy A have specialized whereas individuals in Economy B have not.Given this information,you can determine that

A country that must reduce current consumption if it wished to increase future consumption possibilities

The Nature of Economics

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters