Question 1

Explain why even the most affluent people, businesses and counties never solve the problem of scarcity.

Accepted Answer

Scarcity is a problem that is never comp

Question 2

Suppose you have three choices-go to a movie, read a book, or sleep. You choose to go to a movie. The opportunity cost of the movie is

Accepted Answer

A)  the value of the book not read. 
B)  the value of sleeping which you enjoy the least. 
C)  the value of the concert that you didn't attend. 
D)  the value of the activity that you would have selected if you hadn't gone to the movie. 
A)  the value of the book not read. 
B)  the value of sleeping which you enjoy the least. 
C)  the value of the concert that you didn't attend. 
D)  the value of the activity that you would have selected if you hadn't gone to the movie.

Question 3

The production possibilities curve (PPC) illustrates economic growth by a(n)

Accepted Answer

A)  bowed-out shape of the PPC. 
B)  outward shift of the PPC. 
C)  inward shift of the PPC. 
D)  movement along the PPC. 
A)  bowed-out shape of the PPC. 
B)  outward shift of the PPC. 
C)  inward shift of the PPC. 
D)  movement along the PPC.

Question 4

Efficiency can correctly be defined as

Accepted Answer

A)  producing outside the production possibilities boundary. 
B)  maximizing opportunity cost. 
C)  producing the most output with given technology and resources. 
D)  providing for the immediate needs of the greatest proportion of the population. 
A)  producing outside the production possibilities boundary. 
B)  maximizing opportunity cost. 
C)  producing the most output with given technology and resources. 
D)  providing for the immediate needs of the greatest proportion of the population.

Question 5

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know that

Accepted Answer

A)  the farmer is not using his resources efficiently. 
B)  the farmer is using his land to produce a crop other than soybeans or corn. 
C)  the farmer must be using more land than was used in constructing the production possibilities curve. 
D)  the farmer is using his resources efficiently. 
A)  the farmer is not using his resources efficiently. 
B)  the farmer is using his land to produce a crop other than soybeans or corn. 
C)  the farmer must be using more land than was used in constructing the production possibilities curve. 
D)  the farmer is using his resources efficiently.

Question 6

If a country's production possibilities curve gets more bowed out over time, it is an indication that

Accepted Answer

A)  technological change has taken place. 
B)  society is learning to use its resources more efficiently. 
C)  the quantity of labor and capital have increased. 
D)  resources have become more highly specialized. 
A)  technological change has taken place. 
B)  society is learning to use its resources more efficiently. 
C)  the quantity of labor and capital have increased. 
D)  resources have become more highly specialized.

Question 7

Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?

Accepted Answer

A)  an outcome in which wages are roughly equal around the world 
B)  an outcome in which the standard of living is roughly equal around the world 
C)  an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement 
D)  an outcome in which resources are devoted to their most efficient use 
A)  an outcome in which wages are roughly equal around the world 
B)  an outcome in which the standard of living is roughly equal around the world 
C)  an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement 
D)  an outcome in which resources are devoted to their most efficient use

Question 8

-In the above figure, the opportunity cost of moving from point D to point C is

Accepted Answer

A)  20 guitars. 
B)  50 ukuleles. 
C)  55 guitars. 
D)  25 ukuleles. 
A)  20 guitars. 
B)  50 ukuleles. 
C)  55 guitars. 
D)  25 ukuleles.

Question 9

Scarcity exists because

Accepted Answer

A)  there is a temporary disruption in the market supply. 
B)  there is a shortage of goods caused by a natural disaster. 
C)  there are not enough resources available to produce all the goods that people want. 
D)  there is a shortage of labor throughout the world. 
A)  there is a temporary disruption in the market supply. 
B)  there is a shortage of goods caused by a natural disaster. 
C)  there are not enough resources available to produce all the goods that people want. 
D)  there is a shortage of labor throughout the world.

Question 10

When an economy sacrifices production of consumption goods to produce more capital goods, we would expect that the production possibilities curve will

Accepted Answer

A)  shift outward. 
B)  shift inward. 
C)  become a straight line. 
D)  shift about in random fashion. 
A)  shift outward. 
B)  shift inward. 
C)  become a straight line. 
D)  shift about in random fashion.

Question 11

Wants

Accepted Answer

A)  is another term for needs. 
B)  refer to services while needs refer to goods. 
C)  is the term used by economists instead of needs because needs are not objectively definable. 
D)  are used by economists and refer to the same thing as needs when used by psychologists. 
A)  is another term for needs. 
B)  refer to services while needs refer to goods. 
C)  is the term used by economists instead of needs because needs are not objectively definable. 
D)  are used by economists and refer to the same thing as needs when used by psychologists.

Question 12

Scarcity implies that

Accepted Answer

A)  people should limit their wants, since shortages exist. 
B)  firms should be more efficient when producing goods. 
C)  people must make choices. 
D)  nonrenewable resources should never be used. 
A)  people should limit their wants, since shortages exist. 
B)  firms should be more efficient when producing goods. 
C)  people must make choices. 
D)  nonrenewable resources should never be used.

Question 13

A country that must reduce current consumption to increase future consumption possibilities

Accepted Answer

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

Question 14

Assume that Economy A and Economy B have the same resources, but that individuals 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 higher output than Economy B. 
B)  Economy A will have a lower output than Economy B. 
C)  Economy A and Economy B will have identical outputs. 
D)  individuals in Economy A will have lower incomes than individuals in Economy B. 
A)  Economy A will have a higher output than Economy B. 
B)  Economy A will have a lower output than Economy B. 
C)  Economy A and Economy B will have identical outputs. 
D)  individuals in Economy A will have lower incomes than individuals in Economy B.

Question 15

Which of the following is a TRUE statement?

Accepted Answer

A)  All goods are economic goods. 
B)  All economic goods are goods, but not all goods are economic goods. 
C)  Economic goods and goods mean the same thing. 
D)  Economic goods do not include services while goods do include services. 
A)  All goods are economic goods. 
B)  All economic goods are goods, but not all goods are economic goods. 
C)  Economic goods and goods mean the same thing. 
D)  Economic goods do not include services while goods do include services.

Question 16

It is correct to state that a society which is on its production possibilities curve is

Accepted Answer

A)  underutilizing is resources. 
B)  technologically inefficient. 
C)  consuming too much output. 
D)  fully utilizing its productive resources. 
A)  underutilizing is resources. 
B)  technologically inefficient. 
C)  consuming too much output. 
D)  fully utilizing its productive resources.

Question 17

Services can be thought of as

Accepted Answer

A)  unvalued goods. 
B)  unwanted goods. 
C)  free goods. 
D)  intangible goods. 
A)  unvalued goods. 
B)  unwanted goods. 
C)  free goods. 
D)  intangible goods.

Question 18

A production point that lies outside the Production Possibilities Curve (PPC)

Accepted Answer

A)  denotes inefficiency. 
B)  indicates unemployment. 
C)  is currently not attainable. 
D)  can never be reached, even in future periods. 
A)  denotes inefficiency. 
B)  indicates unemployment. 
C)  is currently not attainable. 
D)  can never be reached, even in future periods.

Question 19

Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher opportunity cost? Explain.

Accepted Answer

The opportunity cost is the income lost

Question 20

Jose and Maria work at a restaurant. Jose can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario, the opportunity cost of making one pancake for Jose is

Accepted Answer

A)  1/4 waffle. 
B)  2/5 waffle. 
C)  2.5 waffles. 
D)  4 waffles. 
A)  1/4 waffle. 
B)  2/5 waffle. 
C)  2.5 waffles. 
D)  4 waffles.

Exam 2: Scarcity and the World of Trade-Offs

Explain why even the most affluent people, businesses and counties never solve the problem of scarcity.

Suppose you have three choices-go to a movie, read a book, or sleep. You choose to go to a movie. The opportunity cost of the movie is

The production possibilities curve (PPC) illustrates economic growth by a(n)

Efficiency can correctly be defined as

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know that

If a country's production possibilities curve gets more bowed out over time, it is an indication that

Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?

-In the above figure, the opportunity cost of moving from point D to point C is

Scarcity exists because

When an economy sacrifices production of consumption goods to produce more capital goods, we would expect that the production possibilities curve will

Wants

Scarcity implies that

A country that must reduce current consumption to increase future consumption possibilities

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

Which of the following is a TRUE statement?

It is correct to state that a society which is on its production possibilities curve is

Services can be thought of as

A production point that lies outside the Production Possibilities Curve (PPC)

Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher opportunity cost? Explain.

Jose and Maria work at a restaurant. Jose can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario, the opportunity cost of making one pancake for Jose is

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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