Question 1

"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has

Accepted Answer

A)  an absolute advantage in cooking, cleaning, and car repair. 
B)  a comparative advantage in cooking, cleaning, and car repair. 
C)  more intelligence than me. 
D)  more income than me. 
A)  an absolute advantage in cooking, cleaning, and car repair. 
B)  a comparative advantage in cooking, cleaning, and car repair. 
C)  more intelligence than me. 
D)  more income than me.

Question 2

Refer to the above figure. The shape of the production possibility curve indicates that production of

Accepted Answer

A)  wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs. 
B)  wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs. 
C)  both goods are characterized by increasing costs. 
D)  both goods are characterized by decreasing costs. 
A)  wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs. 
B)  wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs. 
C)  both goods are characterized by increasing costs. 
D)  both goods are characterized by decreasing costs.

Question 3

A technological improvement can cause the production possibilities curve to shift outward because

Accepted Answer

A)  it increases costs and contributes to lower production rates. 
B)  maximum feasible outputs of both goods increase. 
C)  production will fall, but jobs will be saved. 
D)  it causes increases in unemployment. 
A)  it increases costs and contributes to lower production rates. 
B)  maximum feasible outputs of both goods increase. 
C)  production will fall, but jobs will be saved. 
D)  it causes increases in unemployment.

Question 4

Some resources are better suited to produce certain goods than other resources. This fact leads to

Accepted Answer

A)  a linear production possibilities curve. 
B)  inefficiency in the economy. 
C)  the law of increasing additional cost. 
D)  increases in technology. 
A)  a linear production possibilities curve. 
B)  inefficiency in the economy. 
C)  the law of increasing additional cost. 
D)  increases in technology.

Question 5

Using the above table, moving from alternative C to alternative B, what is the opportunity cost of one loaf of bread?

Accepted Answer

A)  1 pizza pie 
B)  30 pizza pies 
C)  2 pizza pies 
D)  0.5 pizza pie 
A)  1 pizza pie 
B)  30 pizza pies 
C)  2 pizza pies 
D)  0.5 pizza pie

Question 6

-Refer to the above figure. Assume that only two goods can be produced in the economy. Which of the following statements is TRUE?

Accepted Answer

A)  Points a, b, and c are all obtainable points of production. 
B)  Points a and b are obtainable points of production. 
C)  Points b and c are obtainable and efficient points of production. 
D)  Only point b is an obtainable and efficient point of production. 
A)  Points a, b, and c are all obtainable points of production. 
B)  Points a and b are obtainable points of production. 
C)  Points b and c are obtainable and efficient points of production. 
D)  Only point b is an obtainable and efficient point of production.

Question 7

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 8

Education increases the stock of which factor of production?

Accepted Answer

A)  physical capital 
B)  human capital 
C)  land 
D)  entrepreneurship 
A)  physical capital 
B)  human capital 
C)  land 
D)  entrepreneurship

Question 9

Human beings

Accepted Answer

A)  have unlimited wants. 
B)  think they have unlimited wants, but really have limited needs. 
C)  have limited wants, but unlimited needs. 
D)  know what their needs are, but do not know what their wants are. 
A)  have unlimited wants. 
B)  think they have unlimited wants, but really have limited needs. 
C)  have limited wants, but unlimited needs. 
D)  know what their needs are, but do not know what their wants are.

Question 10

Comparative advantage is the ability to

Accepted Answer

A)  perform an activity at a lower opportunity cost. 
B)  determine who your best trading partners are. 
C)  determine the best use of capital goods. 
D)  convince others of the best choices to make in their own self-interest. 
A)  perform an activity at a lower opportunity cost. 
B)  determine who your best trading partners are. 
C)  determine the best use of capital goods. 
D)  convince others of the best choices to make in their own self-interest.

Question 11

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 12

Refer to the above figure. How do you describe what is happening as the economy moves from point C to point B?

Accepted Answer

A)  Previously unemployed resources are now being devoted to the production of wool. 
B)  Previously unemployed resources are now being devoted to the production of bread. 
C)  The economy has increased its wool production by 30 bales at an opportunity cost of 250 loaves of bread. 
D)  The economy has acquired new resources for making bread. 
A)  Previously unemployed resources are now being devoted to the production of wool. 
B)  Previously unemployed resources are now being devoted to the production of bread. 
C)  The economy has increased its wool production by 30 bales at an opportunity cost of 250 loaves of bread. 
D)  The economy has acquired new resources for making bread.

Question 13

The law of increasing opportunity cost implies that

Accepted Answer

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

Question 14

Economic growth can be pictured in a production possibilities curve diagram by

Accepted Answer

A)  shifting the production possibilities curve in. 
B)  shifting the production possibilities curve out. 
C)  making the production possibilities curve straighter. 
D)  moving from a point inside the production possibilities curve to a point on the curve. 
A)  shifting the production possibilities curve in. 
B)  shifting the production possibilities curve out. 
C)  making the production possibilities curve straighter. 
D)  moving from a point inside the production possibilities curve to a point on the curve.

Question 15

A production possibilities curve will shift inward

Accepted Answer

A)  when the unemployment rate increases. 
B)  when production is inefficient. 
C)  when resources are expanding. 
D)  when a war destroys the capital goods of a country. 
A)  when the unemployment rate increases. 
B)  when production is inefficient. 
C)  when resources are expanding. 
D)  when a war destroys the capital goods of a country.

Question 16

Scarcity is caused by

Accepted Answer

A)  unlimited wants running up against limited economic resources. 
B)  a company's slow production speed. 
C)  an individual's budget that is insufficient to cover the expenses of certain goods or services. 
D)  shortages. 
A)  unlimited wants running up against limited economic resources. 
B)  a company's slow production speed. 
C)  an individual's budget that is insufficient to cover the expenses of certain goods or services. 
D)  shortages.

Question 17

A country operates inside its production possibilities curve; this may be caused by

Accepted Answer

A)  unemployed resources. 
B)  total efficiency in industry. 
C)  a new resource being discovered. 
D)  a lack of modern products being produced. 
A)  unemployed resources. 
B)  total efficiency in industry. 
C)  a new resource being discovered. 
D)  a lack of modern products being produced.

Question 18

Human resources that perform the functions of organizing, managing, and assembling the other factors of production are called

Accepted Answer

A)  physical capital. 
B)  venture capital. 
C)  entrepreneurs. 
D)  productive capital. 
A)  physical capital. 
B)  venture capital. 
C)  entrepreneurs. 
D)  productive capital.

Question 19

Production is efficient when

Accepted Answer

A)  it generates a point beyond the production possibility curve. 
B)  the economy cannot produce more of one good without giving up the production of another good. 
C)  technological change occurs. 
D)  the maximum amounts of the most important good are produced. 
A)  it generates a point beyond the production possibility curve. 
B)  the economy cannot produce more of one good without giving up the production of another good. 
C)  technological change occurs. 
D)  the maximum amounts of the most important good are produced.

Question 20

Why do most people specialize in their work?

Accepted Answer

Most people specialize because

Exam 2: Scarcity and the World of Trade-Offs

"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has

Refer to the above figure. The shape of the production possibility curve indicates that production of

A technological improvement can cause the production possibilities curve to shift outward because

Some resources are better suited to produce certain goods than other resources. This fact leads to

Using the above table, moving from alternative C to alternative B, what is the opportunity cost of one loaf of bread?

-Refer to the above figure. Assume that only two goods can be produced in the economy. Which of the following statements is TRUE?

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

Education increases the stock of which factor of production?

Human beings

Comparative advantage is the ability to

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

Refer to the above figure. How do you describe what is happening as the economy moves from point C to point B?

The law of increasing opportunity cost implies that

Economic growth can be pictured in a production possibilities curve diagram by

A production possibilities curve will shift inward

Scarcity is caused by

A country operates inside its production possibilities curve; this may be caused by

Human resources that perform the functions of organizing, managing, and assembling the other factors of production are called

Production is efficient when

Why do most people specialize in their work?

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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