Question 1

Scarcity

Accepted Answer

A)  exists in all human societies. 
B)  is a problem for less-developed nations only. 
C)  used to be a problem, but is not an issue for modern industrial nations. 
D)  afflicts greedy people only. 
A)  exists in all human societies. 
B)  is a problem for less-developed nations only. 
C)  used to be a problem, but is not an issue for modern industrial nations. 
D)  afflicts greedy people only.

Question 2

What causes the production possibility curve to be bowed out?

Accepted Answer

A bowed production possibility curve ind

Question 3

A student has a job that pays a wage rate of $10 per hour. The night before an economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost for her work is

Accepted Answer

A)  the $45.00 she earned. 
B)  the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours. 
C)  the three hours she did not study. 
D)  the entire four hours she set aside for studying. 
A)  the $45.00 she earned. 
B)  the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours. 
C)  the three hours she did not study. 
D)  the entire four hours she set aside for studying.

Question 4

On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap. The opportunity cost of attending the afternoon class is

Accepted Answer

A)  forgoing the nap. 
B)  missing seeing the movie with your friend. 
C)  giving up the time to study for the next morning's exam. 
D)  being unable to engage in all three of the above activities. 
A)  forgoing the nap. 
B)  missing seeing the movie with your friend. 
C)  giving up the time to study for the next morning's exam. 
D)  being unable to engage in all three of the above activities.

Question 5

In order for an economy to increase its production possibilities, the economy must

Accepted Answer

A)  be very efficient. 
B)  increase inputs. 
C)  increase its wants. 
D)  reduce output. 
A)  be very efficient. 
B)  increase inputs. 
C)  increase its wants. 
D)  reduce output.

Question 6

Why do people specialize?

Accepted Answer

A)  Specialization allows people to do a variety of job tasks. 
B)  Specialization usually increases productivity. 
C)  Specialization decreases people's dependence on each other. 
D)  Specialization occurs when people do not want to learn new tasks. 
A)  Specialization allows people to do a variety of job tasks. 
B)  Specialization usually increases productivity. 
C)  Specialization decreases people's dependence on each other. 
D)  Specialization occurs when people do not want to learn new tasks.

Question 7

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

Accepted Answer

A)  Irene has the absolute advantage in the production of tables. 
B)  Greg has the absolute advantage in the production of chairs. 
C)  Irene has the comparative advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs. 
A)  Irene has the absolute advantage in the production of tables. 
B)  Greg has the absolute advantage in the production of chairs. 
C)  Irene has the comparative advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs.

Question 8

In the above figure, the combination of personal computers and televisions shown by point w

Accepted Answer

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

Question 9

Absolute advantage is

Accepted Answer

A)  producing at a lower opportunity cost. 
B)  producing a good using the fewest inputs. 
C)  producing a good only when demand is high. 
D)  producing a good that requires imported components. 
A)  producing at a lower opportunity cost. 
B)  producing a good using the fewest inputs. 
C)  producing a good only when demand is high. 
D)  producing a good that requires imported components.

Question 10

Division of labor refers to

Accepted Answer

A)  dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B)  the separation of hourly workers from salaried workers. 
C)  assigning different workers to different tasks. 
D)  separating union workers from nonunion workers. 
A)  dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B)  the separation of hourly workers from salaried workers. 
C)  assigning different workers to different tasks. 
D)  separating union workers from nonunion workers.

Question 11

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Accepted Answer

A)  the farmer is not using resources efficiently. 
B)  the farmer is using more land for wheat than for beans. 
C)  the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D)  the farmer cannot be using the amount of land that was used to construct the curve. 
A)  the farmer is not using resources efficiently. 
B)  the farmer is using more land for wheat than for beans. 
C)  the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D)  the farmer cannot be using the amount of land that was used to construct the curve.

Question 12

Scarcity arises because

Accepted Answer

A)  resources are limited and are inadequate to meet all human wants. 
B)  shortages occur in some markets. 
C)  natural resources are abundant. 
D)  some people do not behave in a rational manner. 
A)  resources are limited and are inadequate to meet all human wants. 
B)  shortages occur in some markets. 
C)  natural resources are abundant. 
D)  some people do not behave in a rational manner.

Question 13

The discovery of new natural resources will cause

Accepted Answer

A)  the economy to move closer to the production possibilities curve. 
B)  the production possibilities curve to shift up and to the right. 
C)  an upward movement along the curve. 
D)  the curve to shift back and to the left. 
A)  the economy to move closer to the production possibilities curve. 
B)  the production possibilities curve to shift up and to the right. 
C)  an upward movement along the curve. 
D)  the curve to shift back and to the left.

Question 14

When productive activities are organized according to the principle of the division of labor

Accepted Answer

A)  scarcity is eliminated. 
B)  we do not devote enough resources for capital investment. 
C)  total output increases due to the advantages of specialization. 
D)  an inefficient outcome results. 
A)  scarcity is eliminated. 
B)  we do not devote enough resources for capital investment. 
C)  total output increases due to the advantages of specialization. 
D)  an inefficient outcome results.

Question 15

The trade-off between the present and future consumption is measured by

Accepted Answer

A)  the money cost of both the present and future consumption. 
B)  the foregone present consumption. 
C)  the difference between the money price of future goods and the money cost of producing them. 
D)  the difference between the money price of present goods and the money cost of producing them. 
A)  the money cost of both the present and future consumption. 
B)  the foregone present consumption. 
C)  the difference between the money price of future goods and the money cost of producing them. 
D)  the difference between the money price of present goods and the money cost of producing them.

Question 16

Division of labor

Accepted Answer

A)  increases the amount of capital in the economy. 
B)  leads to an increase in the amount of output in the economy. 
C)  makes economic goods possible. 
D)  is not possible for service goods. 
A)  increases the amount of capital in the economy. 
B)  leads to an increase in the amount of output in the economy. 
C)  makes economic goods possible. 
D)  is not possible for service goods.

Question 17

Why is efficiency desirable?

Accepted Answer

A)  It results in an equal distribution of income. 
B)  It results in the highest prices for the goods and services produced. 
C)  It makes best use of the available resources. 
D)  It is the most politically popular solution. 
A)  It results in an equal distribution of income. 
B)  It results in the highest prices for the goods and services produced. 
C)  It makes best use of the available resources. 
D)  It is the most politically popular solution.

Question 18

Economists are concerned with an individual's

Accepted Answer

A)  needs because needs are most important to an individual's well being. 
B)  needs because economists define needs to be the goods people need to survive. 
C)  wants because wants always lead to shortages in the economy. 
D)  wants because the existence of wants leads to scarcity. 
A)  needs because needs are most important to an individual's well being. 
B)  needs because economists define needs to be the goods people need to survive. 
C)  wants because wants always lead to shortages in the economy. 
D)  wants because the existence of wants leads to scarcity.

Question 19

-Refer to the above figure. Which of the following points indicates an efficient use of resources?

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 20

When determining the production possibilities curve

Accepted Answer

A)  the trade-off between the goods in the economy remains constant. 
B)  the amount of productive resources remains constant. 
C)  the prices of the goods are used. 
D)  the prices of resources are used. 
A)  the trade-off between the goods in the economy remains constant. 
B)  the amount of productive resources remains constant. 
C)  the prices of the goods are used. 
D)  the prices of resources are used.

Exam 2: Scarcity and the World of Trade-Offs

Scarcity

What causes the production possibility curve to be bowed out?

On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap. The opportunity cost of attending the afternoon class is

In order for an economy to increase its production possibilities, the economy must

Why do people specialize?

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

In the above figure, the combination of personal computers and televisions shown by point w

Absolute advantage is

Division of labor refers to

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Scarcity arises because

The discovery of new natural resources will cause

When productive activities are organized according to the principle of the division of labor

The trade-off between the present and future consumption is measured by

Division of labor

Why is efficiency desirable?

Economists are concerned with an individual's

-Refer to the above figure. Which of the following points indicates an efficient use of resources?

When determining the production possibilities curve

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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