Question 1

The law of increasing opportunity costs implies that:

Accepted Answer

A) ​a production possibilities curve will be bowed inward toward the origin. 
B) ​a production possibilities curve will be bowed outward away from the origin. 
C) ​a production possibilities curve will be a straight line. 
D) ​a production possibilities curve will be upward sloping. 
A) ​a production possibilities curve will be bowed inward toward the origin. 
B) ​a production possibilities curve will be bowed outward away from the origin. 
C) ​a production possibilities curve will be a straight line. 
D) ​a production possibilities curve will be upward sloping. B

Question 2

Which one of the following will not cause the production possibilities curve to shift outward?

Accepted Answer

A) ​increased education 
B) ​the construction of a new factory 
C) ​more tractors becoming available to farmers 
D) ​All of the above cause the production possibilities curve to shift outward. 
A) ​increased education 
B) ​the construction of a new factory 
C) ​more tractors becoming available to farmers 
D) ​All of the above cause the production possibilities curve to shift outward. D

Question 3

Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.

Accepted Answer

A) True 
 B)False  False

Question 4

In a simple circular flow model,

Accepted Answer

A) ​households are suppliers of resources. 
B) ​households are demanders of final products. 
C) ​firms are demanders of resources. 
D) ​all of the above are true. 
A) ​households are suppliers of resources. 
B) ​households are demanders of final products. 
C) ​firms are demanders of resources. 
D) ​all of the above are true.

Question 5

​Exhibit 3-2  
-Refer to Exhibit 3-2. In the circular flow diagram, goods and services:

Accepted Answer

A) ​flow in a clockwise direction. 
B) ​flow in a counterclockwise direction. 
C) ​are sold by businesses in the factor market. 
D) ​none of the above 
A) ​flow in a clockwise direction. 
B) ​flow in a counterclockwise direction. 
C) ​are sold by businesses in the factor market. 
D) ​none of the above

Question 6

Which of the following is the most accurate statement about a production possibilities curve?

Accepted Answer

A) ​An economy can produce at any point inside or outside its production possibilities curve. 
B) ​An economy can produce only on its production possibilities curve. 
C) ​An economy can produce at any point on or inside its production possibilities curve, but not outside the curve. 
D) ​An economy can produce at any point inside its production possibilities curve, but not on or outside the curve. 
A) ​An economy can produce at any point inside or outside its production possibilities curve. 
B) ​An economy can produce only on its production possibilities curve. 
C) ​An economy can produce at any point on or inside its production possibilities curve, but not outside the curve. 
D) ​An economy can produce at any point inside its production possibilities curve, but not on or outside the curve.

Question 7

​Exhibit 3-12  
-Refer to Exhibit 3-12. Which of the following could make Point Q attainable in the production possibilities diagram?

Accepted Answer

A) ​policies encouraging full employment of resources 
B) ​technological innovations in the production of apples only 
C) ​an increase in the land available for agriculture use 
D) ​a transfer of available resources from apple to wheat production 
A) ​policies encouraging full employment of resources 
B) ​technological innovations in the production of apples only 
C) ​an increase in the land available for agriculture use 
D) ​a transfer of available resources from apple to wheat production

Question 8

Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.

Accepted Answer

A) True 
 B)False

Question 9

​Exhibit 3-4  
-Refer to Exhibit 3-4. Moving from Point ____ to Point ____ will result in an increase in the quantity of both capital and consumption goods produced this period.

Accepted Answer

A) ​B; A 
B) ​F; A 
C) ​D; F 
D) ​F; D 
A) ​B; A 
B) ​F; A 
C) ​D; F 
D) ​F; D

Question 10

​Exhibit 3-13  
-Refer to Exhibit 3-13. A movement from Point D to Point A:

Accepted Answer

A) ​increases efficiency by conserving resources. 
B) ​requires the sacrifice of cupcakes in order to acquire more cakes. 
C) ​requires the sacrifice of cakes in order to acquire more cupcakes. 
D) ​decreases production of both cakes and cupcakes and would be inefficient. 
A) ​increases efficiency by conserving resources. 
B) ​requires the sacrifice of cupcakes in order to acquire more cakes. 
C) ​requires the sacrifice of cakes in order to acquire more cupcakes. 
D) ​decreases production of both cakes and cupcakes and would be inefficient.

Question 11

​Exhibit 3-4  
-Refer to Exhibit 3-4. The movement from Point D to Point E:

Accepted Answer

A) ​results in an increase in the production of capital goods but a decrease in the production of consumption goods this period. 
B) ​does not change the level of output produced since both points are on the production possibilities curve. 
C) ​results in an increase in the production of both capital and consumption goods this period. 
D) ​results in an increase in the production of consumption goods but a decrease in the production of capital goods this period. 
A) ​results in an increase in the production of capital goods but a decrease in the production of consumption goods this period. 
B) ​does not change the level of output produced since both points are on the production possibilities curve. 
C) ​results in an increase in the production of both capital and consumption goods this period. 
D) ​results in an increase in the production of consumption goods but a decrease in the production of capital goods this period.

Question 12

High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

Accepted Answer

A) True 
 B)False

Question 13

​Exhibit 3-15  
-Refer to Exhibit 3-15. Moving from Point A to Point B, what is the opportunity cost of producing a mountain bike?

Accepted Answer

The answer of ​Exhibit 3-15  
-Refer to Exhibit 3-15....

Question 14

​Exhibit 3-3  
-Refer to Exhibit 3-3. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

Accepted Answer

A) ​A to B. 
B) ​B to E. 
C) ​C to F. 
D) ​G to F. 
A) ​A to B. 
B) ​B to E. 
C) ​C to F. 
D) ​G to F.

Question 15

Which of the following will not shift the production possibilities curve outward?

Accepted Answer

A) ​an improvement in technology, which increases the efficiency of inputs 
B) ​the discovery of significant oil reserves in Alaska 
C) ​a decrease in capacity utilization of existing factories 
D) ​additions to the stock of physical capital 
A) ​an improvement in technology, which increases the efficiency of inputs 
B) ​the discovery of significant oil reserves in Alaska 
C) ​a decrease in capacity utilization of existing factories 
D) ​additions to the stock of physical capital

Question 16

The use of large amounts of labor relative to capital in an economy indicates:

Accepted Answer

A) ​labor-intensive production. 
B) ​capital-intensive production. 
C) ​that wage rates will be relatively high. 
D) ​that hand-made goods are of better quality than machine-made goods. 
A) ​labor-intensive production. 
B) ​capital-intensive production. 
C) ​that wage rates will be relatively high. 
D) ​that hand-made goods are of better quality than machine-made goods.

Question 17

Which of the following is false?

Accepted Answer

A) ​A production possibilities curve represents the potential total output combinations of any two goods for an economy. 
B) ​On a production possibilities curve, we assume that the economy has a given quantity and quality of resources and technology available to use for production. 
C) ​If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently.Such an economy's actual output is less than potential output. 
D) ​By putting unemployed resources to work or by putting already employed resources to better uses, we could shift out the production possibilities curve. 
A) ​A production possibilities curve represents the potential total output combinations of any two goods for an economy. 
B) ​On a production possibilities curve, we assume that the economy has a given quantity and quality of resources and technology available to use for production. 
C) ​If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently.Such an economy's actual output is less than potential output. 
D) ​By putting unemployed resources to work or by putting already employed resources to better uses, we could shift out the production possibilities curve.

Question 18

When economists speak of markets, they primarily mean:

Accepted Answer

A) ​places where production of goods and services take place. 
B) ​those locations where stocks and bonds of corporations take place. 
C) ​mechanisms that coordinate actions of buyers and sellers. 
D) ​the trillions of dollars that change hands in the foreign exchange markets. 
A) ​places where production of goods and services take place. 
B) ​those locations where stocks and bonds of corporations take place. 
C) ​mechanisms that coordinate actions of buyers and sellers. 
D) ​the trillions of dollars that change hands in the foreign exchange markets.

Question 19

A devastating earthquake destroys ten percent of the population in California. As a result:

Accepted Answer

A) ​California's production possibility curve shifts outward. 
B) ​California moves up and to the left along its production possibilities curve. 
C) ​California moves down and to the right along its production possibilities curve. 
D) ​California's production possibility curve shifts inward. 
A) ​California's production possibility curve shifts outward. 
B) ​California moves up and to the left along its production possibilities curve. 
C) ​California moves down and to the right along its production possibilities curve. 
D) ​California's production possibility curve shifts inward.

Question 20

A production possibilities curve will be concave as opposed to straight line if

Accepted Answer

A) ​the law of increasing opportunity costs applies. 
B) ​some resources cannot be easily adapted to different tasks. 
C) ​the opportunity cost of the production of a good increases as more of it is produced. 
D) ​all of the above 
A) ​the law of increasing opportunity costs applies. 
B) ​some resources cannot be easily adapted to different tasks. 
C) ​the opportunity cost of the production of a good increases as more of it is produced. 
D) ​all of the above

Exam 3: Scarcity, Trade-Offs, and Production Possibilities

The law of increasing opportunity costs implies that:

Which one of the following will not cause the production possibilities curve to shift outward?

Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.

In a simple circular flow model,

​Exhibit 3-2 -Refer to Exhibit 3-2. In the circular flow diagram, goods and services:

Which of the following is the most accurate statement about a production possibilities curve?

​Exhibit 3-12 -Refer to Exhibit 3-12. Which of the following could make Point Q attainable in the production possibilities diagram?

Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.

​Exhibit 3-4 -Refer to Exhibit 3-4. Moving from Point ____ to Point ____ will result in an increase in the quantity of both capital and consumption goods produced this period.

​Exhibit 3-13 -Refer to Exhibit 3-13. A movement from Point D to Point A:

​Exhibit 3-4 -Refer to Exhibit 3-4. The movement from Point D to Point E:

High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

​Exhibit 3-15 -Refer to Exhibit 3-15. Moving from Point A to Point B, what is the opportunity cost of producing a mountain bike?

​Exhibit 3-3 -Refer to Exhibit 3-3. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

Which of the following will not shift the production possibilities curve outward?

The use of large amounts of labor relative to capital in an economy indicates:

Which of the following is false?

When economists speak of markets, they primarily mean:

A devastating earthquake destroys ten percent of the population in California. As a result:

A production possibilities curve will be concave as opposed to straight line if

The Role and Method of Economics

Eight Powerful Ideas

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 3-2 -Refer to Exhibit 3-2. In the circular flow diagram, goods and services:

Exhibit 3-12 -Refer to Exhibit 3-12. Which of the following could make Point Q attainable in the production possibilities diagram?

Exhibit 3-4 -Refer to Exhibit 3-4. Moving from Point to Point will result in an increase in the quantity of both capital and consumption goods produced this period.

Exhibit 3-13 -Refer to Exhibit 3-13. A movement from Point D to Point A:

Exhibit 3-4 -Refer to Exhibit 3-4. The movement from Point D to Point E:

Exhibit 3-15 -Refer to Exhibit 3-15. Moving from Point A to Point B, what is the opportunity cost of producing a mountain bike?

Exhibit 3-3 -Refer to Exhibit 3-3. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: