Question 1

A movement along the production possibilities curve would imply that

Accepted Answer

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

Question 2

Scarcity and shortages differ in that

Accepted Answer

A)  scarcity is caused by natural disasters and shortages are caused by mistakes people make. 
B)  scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. 
C)  scarcity is a type of shortage but shortage is a broader concept. 
D)  shortages apply to resource markets while scarcity applies to product markets. 
A)  scarcity is caused by natural disasters and shortages are caused by mistakes people make. 
B)  scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. 
C)  scarcity is a type of shortage but shortage is a broader concept. 
D)  shortages apply to resource markets while scarcity applies to product markets.

Question 3

The division of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

Accepted Answer

A)  advantage-taking. 
B)  comparative value. 
C)  specialization. 
D)  outsourcing. 
A)  advantage-taking. 
B)  comparative value. 
C)  specialization. 
D)  outsourcing.

Question 4

A point outside a production possibilities curve indicates

Accepted Answer

A)  that resources are not being used efficiently. 
B)  an output combination that society cannot attain given its current level of resources and technology. 
C)  that resources are being used very efficiently. 
D)  that both goods are characterized by increasing costs. 
A)  that resources are not being used efficiently. 
B)  an output combination that society cannot attain given its current level of resources and technology. 
C)  that resources are being used very efficiently. 
D)  that both goods are characterized by increasing costs.

Question 5

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 expenses for food and clothing that she purchases 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 expenses for food and clothing that she purchases while in college. 
D)  is zero because she does not have to pay tuition.

Question 6

Which of the following would NOT allow society to move to point "h" in the above figure?

Accepted Answer

A)  an improvement in technology 
B)  more efficient use of current resources 
C)  an increase in quantity of labor 
D)  an increase in quantity of capital 
A)  an improvement in technology 
B)  more efficient use of current resources 
C)  an increase in quantity of labor 
D)  an increase in quantity of capital

Question 7

-In the above figure, which of the following points indicates the efficient use of resources?

Accepted Answer

A)  a 
B)  f 
C)  g 
D)  h 
A)  a 
B)  f 
C)  g 
D)  h

Question 8

Which of the following is an assumption used in deriving a production possibilities curve?

Accepted Answer

A)  Poverty always exists in society. 
B)  The wages in an industry increase constantly. 
C)  Prices will continue to increase. 
D)  The amount of resources is fixed. 
A)  Poverty always exists in society. 
B)  The wages in an industry increase constantly. 
C)  Prices will continue to increase. 
D)  The amount of resources is fixed.

Question 9

Which of the following is NOT an economic resource?

Accepted Answer

A)  company stock share 
B)  low-skilled labor 
C)  coal 
D)  an economist 
A)  company stock share 
B)  low-skilled labor 
C)  coal 
D)  an economist

Question 10

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the expense of another is called

Accepted Answer

A)  a scarcity curve. 
B)  a production possibilities curve. 
C)  a growth curve. 
D)  a supply curve. 
A)  a scarcity curve. 
B)  a production possibilities curve. 
C)  a growth curve. 
D)  a supply curve.

Question 11

In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 25 guitars and 75 ukuleles is

Accepted Answer

A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars. 
A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars.

Question 12

Why do most people choose to specialize in a narrow set of skills for their work, rather than to learn a little bit about several varied fields of endeavor?

Accepted Answer

A)  They feel that doing so will minimize their chances of being unemployed. 
B)  They don't correctly perceive the costs of being so specialized. 
C)  It allows them to earn more income by being more productive. 
D)  They are unaware of how much better off they would be if they diversified their skills. 
A)  They feel that doing so will minimize their chances of being unemployed. 
B)  They don't correctly perceive the costs of being so specialized. 
C)  It allows them to earn more income by being more productive. 
D)  They are unaware of how much better off they would be if they diversified their skills.

Question 13

Using productive resources to make capital goods requires that we

Accepted Answer

A)  get everyone to agree on the best use of those resources. 
B)  get government approval of our plan to make capital goods. 
C)  forgo some level of current consumption. 
D)  prove that the existence of the capital goods will not cause any environmental damage. 
A)  get everyone to agree on the best use of those resources. 
B)  get government approval of our plan to make capital goods. 
C)  forgo some level of current consumption. 
D)  prove that the existence of the capital goods will not cause any environmental damage.

Question 14

If the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid rate of economic growth, then the economy should produce at a point

Accepted Answer

A)  near the middle of the curve dividing resources equally between the production of consumer and capital goods. 
B)  at a point near the vertical axis concentrating on the production of consumer goods. 
C)  at a point near the horizontal axis concentrating on the production of capital goods. 
D)  at a point inside the curve allowing the economy to adjust rapidly to changes in economic activity. 
A)  near the middle of the curve dividing resources equally between the production of consumer and capital goods. 
B)  at a point near the vertical axis concentrating on the production of consumer goods. 
C)  at a point near the horizontal axis concentrating on the production of capital goods. 
D)  at a point inside the curve allowing the economy to adjust rapidly to changes in economic activity.

Question 15

How are scarcity, choice, and opportunity cost related?

Accepted Answer

Since resources are scarce, we cannot ha

Question 16

If all resources were perfectly adaptable for alternative uses, the production possibilities curve would

Accepted Answer

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

Question 17

Refer to the above figure. Which of the following points indicates an unobtainable point of production?

Accepted Answer

A)  a 
B)  d 
C)  e 
D)  More information is needed to answer the question. 
A)  a 
B)  d 
C)  e 
D)  More information is needed to answer the question.

Question 18

When deriving the production possibilities curve, it is assumed that

Accepted Answer

A)  the amount of each good that is to be produced is fixed. 
B)  the prices of resources are fixed along the curve. 
C)  most resources can be used to produce only one good. 
D)  resources are efficiently used. 
A)  the amount of each good that is to be produced is fixed. 
B)  the prices of resources are fixed along the curve. 
C)  most resources can be used to produce only one good. 
D)  resources are efficiently used.

Question 19

One opportunity cost associated with going to college is

Accepted Answer

A)  purchasing text books. 
B)  paying tuition. 
C)  giving up employment possibilities while in college. 
D)  paying for room, board, and other living expenses. 
A)  purchasing text books. 
B)  paying tuition. 
C)  giving up employment possibilities while in college. 
D)  paying for room, board, and other living expenses.

Question 20

The conversion of resources into consumer goods or services is called

Accepted Answer

A)  human capital. 
B)  production. 
C)  opportunity cost. 
D)  consumption. 
A)  human capital. 
B)  production. 
C)  opportunity cost. 
D)  consumption.

Exam 2: Scarcity and the World of Trade-Offs

A movement along the production possibilities curve would imply that

Scarcity and shortages differ in that

The division of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

A point outside a production possibilities curve indicates

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

Which of the following would NOT allow society to move to point "h" in the above figure?

-In the above figure, which of the following points indicates the efficient use of resources?

Which of the following is an assumption used in deriving a production possibilities curve?

Which of the following is NOT an economic resource?

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the expense of another is called

In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 25 guitars and 75 ukuleles is

Why do most people choose to specialize in a narrow set of skills for their work, rather than to learn a little bit about several varied fields of endeavor?

Using productive resources to make capital goods requires that we

How are scarcity, choice, and opportunity cost related?

If all resources were perfectly adaptable for alternative uses, the production possibilities curve would

Refer to the above figure. Which of the following points indicates an unobtainable point of production?

When deriving the production possibilities curve, it is assumed that

One opportunity cost associated with going to college is

The conversion of resources into consumer goods or services is called

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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