Question 1

If a country is currently producing inside its production possibilities curve

Accepted Answer

A)  it can increase the production of both goods by putting unemployed resources to work. 
B)  it can increase the production of one of the goods only if it reduces the production of the other good. 
C)  it is experiencing efficient production of one good but not the other. 
D)  None of the above are correct. 
A)  it can increase the production of both goods by putting unemployed resources to work. 
B)  it can increase the production of one of the goods only if it reduces the production of the other good. 
C)  it is experiencing efficient production of one good but not the other. 
D)  None of the above are correct.

Question 2

One of the benefits of specialization is

Accepted Answer

A)  greater output. 
B)  people enjoy doing one repetitive task over and over. 
C)  specialists cost less to hire. 
D)  training costs are higher. 
A)  greater output. 
B)  people enjoy doing one repetitive task over and over. 
C)  specialists cost less to hire. 
D)  training costs are higher.

Question 3

The production possibilities curve shifts outward when

Accepted Answer

A)  the law of increasing additional cost takes hold. 
B)  the economy is producing efficiently. 
C)  we produce more consumption goods over productive investment in equipment. 
D)  there is an increase in resources or technology. 
A)  the law of increasing additional cost takes hold. 
B)  the economy is producing efficiently. 
C)  we produce more consumption goods over productive investment in equipment. 
D)  there is an increase in resources or technology.

Question 4

The fact that our wants are unlimited but our resources are limited implies that

Accepted Answer

A)  we should limit our wants. 
B)  entrepreneurship has failed as an economic system. 
C)  we have to make choices. 
D)  the only way to make someone better off is to make someone else worse off. 
A)  we should limit our wants. 
B)  entrepreneurship has failed as an economic system. 
C)  we have to make choices. 
D)  the only way to make someone better off is to make someone else worse off.

Question 5

In economic terminology, when a resource is used to produce output it is referred to as

Accepted Answer

A)  an intangible. 
B)  a factor of production. 
C)  a service. 
D)  a fifth element. 
A)  an intangible. 
B)  a factor of production. 
C)  a service. 
D)  a fifth element.

Question 6

Technology is

Accepted Answer

A)  society's pool of knowledge of how to produce goods and services. 
B)  a resource like land or physical capital. 
C)  computers and lasers. 
D)  not obtainable by engaging in activities that increase human capital. 
A)  society's pool of knowledge of how to produce goods and services. 
B)  a resource like land or physical capital. 
C)  computers and lasers. 
D)  not obtainable by engaging in activities that increase human capital.

Question 7

Inefficient use of resources is shown on the production possibilities curve

Accepted Answer

A)  by an inward shifting of the curve. 
B)  by a point inside the curve. 
C)  by a point near the top of the curve. 
D)  by a point outside the curve. 
A)  by an inward shifting of the curve. 
B)  by a point inside the curve. 
C)  by a point near the top of the curve. 
D)  by a point outside the curve.

Question 8

Which of the following is TRUE about comparative advantage?

Accepted Answer

A)  Comparative advantage explains trade among nations, but not within nations. 
B)  Comparative advantage explains trade within nations, but not among nations. 
C)  Comparative advantage explains trade within nations and among nations. 
D)  Comparative advantage has nothing to do with trade among nations; it only is concerned with specialization within a firm. 
A)  Comparative advantage explains trade among nations, but not within nations. 
B)  Comparative advantage explains trade within nations, but not among nations. 
C)  Comparative advantage explains trade within nations and among nations. 
D)  Comparative advantage has nothing to do with trade among nations; it only is concerned with specialization within a firm.

Question 9

The term "labor" for an economist includes

Accepted Answer

A)  all skilled workers, but not the unskilled workers. 
B)  all productive contributions of humankind. 
C)  only the value of the work done by scientists. 
D)  all employees who have high school diplomas. 
A)  all skilled workers, but not the unskilled workers. 
B)  all productive contributions of humankind. 
C)  only the value of the work done by scientists. 
D)  all employees who have high school diplomas.

Question 10

You like to sleep until 11:00 am during the semester. What is the opportunity cost of attending an 8:00 am class?

Accepted Answer

A)  nothing, since you can go back to bed later 
B)  sleep 
C)  obtaining the notes from the 8:00 am class 
D)  the credit hours earned from the 8:00 am class 
A)  nothing, since you can go back to bed later 
B)  sleep 
C)  obtaining the notes from the 8:00 am class 
D)  the credit hours earned from the 8:00 am class

Question 11

If the quantity desired of something exceeds the amount available at zero price, that item is called

Accepted Answer

A)  capital. 
B)  an economic good. 
C)  an intangible good. 
D)  a bad. 
A)  capital. 
B)  an economic good. 
C)  an intangible good. 
D)  a bad.

Question 12

Explain the difference between human needs and wants.

Accepted Answer

Needs are objectively undefinable. Needs

Question 13

Scarcity exists because

Accepted Answer

A)  the majority of people in the world are poor. 
B)  people are too greedy and refuse to share what they have with others. 
C)  human wants exceed what can be produced with the limited resources available. 
D)  not enough new technology is being used to eliminate scarcity. 
A)  the majority of people in the world are poor. 
B)  people are too greedy and refuse to share what they have with others. 
C)  human wants exceed what can be produced with the limited resources available. 
D)  not enough new technology is being used to eliminate scarcity.

Question 14

Whenever productive resources are used to make capital goods

Accepted Answer

A)  society is not producing efficiently. 
B)  society is giving up current consumption. 
C)  the production possibilities curve becomes flatter. 
D)  absolute advantage occurs. 
A)  society is not producing efficiently. 
B)  society is giving up current consumption. 
C)  the production possibilities curve becomes flatter. 
D)  absolute advantage occurs.

Question 15

Economic growth is shown by

Accepted Answer

A)  a point near the top of the production possibilities curve. 
B)  a point outside the production possibilities curve. 
C)  an inward shift of the production possibilities curve. 
D)  an outward shift of the production possibilities curve. 
A)  a point near the top of the production possibilities curve. 
B)  a point outside the production possibilities curve. 
C)  an inward shift of the production possibilities curve. 
D)  an outward shift of the production possibilities curve.

Question 16

Refer to the above figure. Which of the following statements is TRUE?

Accepted Answer

A)  Panel A does not represent an economy that is producing efficiently while Panel B does. 
B)  Panel A represents an economy that has a lower level of technology than Panel B. 
C)  Opportunity costs do not apply to Panel A but apply to Panel B. 
D)  In Panel A, equal amounts of Y must be given up to obtain equal increments of X while in Panel B increasingly greater amounts of Y must be given up to obtain equal increments of X. 
A)  Panel A does not represent an economy that is producing efficiently while Panel B does. 
B)  Panel A represents an economy that has a lower level of technology than Panel B. 
C)  Opportunity costs do not apply to Panel A but apply to Panel B. 
D)  In Panel A, equal amounts of Y must be given up to obtain equal increments of X while in Panel B increasingly greater amounts of Y must be given up to obtain equal increments of X.

Question 17

Which of the following statements indicates the idea of trade-offs?

Accepted Answer

A)  "There is no such thing as a free lunch." 
B)  "The devil made me do it." 
C)  "You've got me under your spell." 
D)  "Always give it the best that you can." 
A)  "There is no such thing as a free lunch." 
B)  "The devil made me do it." 
C)  "You've got me under your spell." 
D)  "Always give it the best that you can."

Question 18

Which of the following is a TRUE statement?

Accepted Answer

A)  Opportunity cost is always measured in the nation's currency. 
B)  Opportunity cost is an objective measure since the cost of an activity is the same for everyone. 
C)  The fewer alternatives there are the greater the opportunity cost. 
D)  Opportunity cost is always a foregone opportunity. 
A)  Opportunity cost is always measured in the nation's currency. 
B)  Opportunity cost is an objective measure since the cost of an activity is the same for everyone. 
C)  The fewer alternatives there are the greater the opportunity cost. 
D)  Opportunity cost is always a foregone opportunity.

Question 19

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

Accepted Answer

A)  physical capital. 
B)  entrepreneurship. 
C)  a service. 
D)  land. 
A)  physical capital. 
B)  entrepreneurship. 
C)  a service. 
D)  land.

Question 20

In economics, the term physical capital

Accepted Answer

A)  refers to funds used by businesses to acquire goods and services. 
B)  refers to all manufactured resources used for production. 
C)  refers to the process of raising funds through the stock market. 
D)  refers to the stock of merchandise already produced. 
A)  refers to funds used by businesses to acquire goods and services. 
B)  refers to all manufactured resources used for production. 
C)  refers to the process of raising funds through the stock market. 
D)  refers to the stock of merchandise already produced.

Exam 2: Scarcity and the World of Trade-Offs

If a country is currently producing inside its production possibilities curve

One of the benefits of specialization is

The production possibilities curve shifts outward when

The fact that our wants are unlimited but our resources are limited implies that

In economic terminology, when a resource is used to produce output it is referred to as

Technology is

Inefficient use of resources is shown on the production possibilities curve

Which of the following is TRUE about comparative advantage?

The term "labor" for an economist includes

You like to sleep until 11:00 am during the semester. What is the opportunity cost of attending an 8:00 am class?

If the quantity desired of something exceeds the amount available at zero price, that item is called

Explain the difference between human needs and wants.

Scarcity exists because

Whenever productive resources are used to make capital goods

Economic growth is shown by

Refer to the above figure. Which of the following statements is TRUE?

Which of the following statements indicates the idea of trade-offs?

Which of the following is a TRUE statement?

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

In economics, the term physical capital

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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