Question 1

A market economy depends on market mechanisms to:

Accepted Answer

A) ​determine the most efficient way of using resources. 
B) ​determine how large the government's budget deficit should be. 
C) ​decide how much government regulation there should be. 
D) ​provide everyone with a minimum level of income. 
A) ​determine the most efficient way of using resources. 
B) ​determine how large the government's budget deficit should be. 
C) ​decide how much government regulation there should be. 
D) ​provide everyone with a minimum level of income.

Question 2

​Exhibit 3-3  
-Refer to Exhibit 3-3. The most inefficient point depicted is:

Accepted Answer

A) ​Point A. 
B) ​Point C. 
C) ​Point D. 
D) ​Point G. 
A) ​Point A. 
B) ​Point C. 
C) ​Point D. 
D) ​Point G.

Question 3

​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) ​D; G 
C) ​A; B 
D) ​E; D 
A) ​B; A 
B) ​D; G 
C) ​A; B 
D) ​E; D

Question 4

If an economy is operating inside its production possibilities curve for tanks and bread:

Accepted Answer

A) ​scarcity does not exist. 
B) ​all resources are being used efficiently. 
C) ​production of bread can only increase by sacrificing the production of tanks. 
D) ​production of bread and tanks can both increase. 
A) ​scarcity does not exist. 
B) ​all resources are being used efficiently. 
C) ​production of bread can only increase by sacrificing the production of tanks. 
D) ​production of bread and tanks can both increase.

Question 5

​Exhibit 3-7  
-Refer to Exhibit 3-7. If the economy moves from Point C to Point A in the diagram:

Accepted Answer

A) ​more prison cells are created. 
B) ​more classrooms are created. 
C) ​it sacrifices an increasing quantity of classrooms per prison cell produced the further the movement toward Point A. 
D) ​there is no net change in the number of prison cells and classrooms, as all points on the frontier are equally efficient. 
A) ​more prison cells are created. 
B) ​more classrooms are created. 
C) ​it sacrifices an increasing quantity of classrooms per prison cell produced the further the movement toward Point A. 
D) ​there is no net change in the number of prison cells and classrooms, as all points on the frontier are equally efficient.

Question 6

Other things being constant, an economy must give up some consumer goods and services today to produce more capital goods in order to grow.

Accepted Answer

A) True 
 B)False

Question 7

In a market operating along the production possibilities curve, which of the following is inevitable if the production of one of the goods is increased?

Accepted Answer

A) ​inefficiency 
B) ​labor shortage 
C) ​unemployed resources 
D) ​less of other goods must be produced 
A) ​inefficiency 
B) ​labor shortage 
C) ​unemployed resources 
D) ​less of other goods must be produced

Question 8

​Exhibit 3-9  
-Refer to Exhibit 3-9. In order to move from Point B to Point C, the economy will have to:

Accepted Answer

A) ​give up 200 bushels of soybeans. 
B) ​give up 200 bushels of wheat. 
C) ​give up 300 bushels of wheat. 
D) ​give up 100 bushels of soybeans. 
A) ​give up 200 bushels of soybeans. 
B) ​give up 200 bushels of wheat. 
C) ​give up 300 bushels of wheat. 
D) ​give up 100 bushels of soybeans.

Question 9

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

Accepted Answer

A) ​increases the level of unemployment. 
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) ​is not possible given the available resources and technology. 
A) ​increases the level of unemployment. 
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) ​is not possible given the available resources and technology.

Question 10

A system of economic organization in which the ownership and control of productive capital assets rests with the state and resources are allocated through central planning and political decision making is called:

Accepted Answer

A) ​a market economy. 
B) ​a command economy. 
C) ​a corporate economy. 
D) ​capitalism. 
A) ​a market economy. 
B) ​a command economy. 
C) ​a corporate economy. 
D) ​capitalism.

Question 11

A production possibilities curve that is linear (a straight line):

Accepted Answer

A) ​illustrates a tradeoff in which opportunity cost of a good increases with the level of its production. 
B) ​illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production. 
C) ​illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production. 
D) ​demonstrates the fallacy of composition. 
A) ​illustrates a tradeoff in which opportunity cost of a good increases with the level of its production. 
B) ​illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production. 
C) ​illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production. 
D) ​demonstrates the fallacy of composition.

Question 12

The position of a country's production possibilities curve in the future will be affected by:

Accepted Answer

A) ​the rate of technological progress. 
B) ​discoveries of supplies of natural resources. 
C) ​the growth rate of productivity in the country. 
D) ​all of the above. 
A) ​the rate of technological progress. 
B) ​discoveries of supplies of natural resources. 
C) ​the growth rate of productivity in the country. 
D) ​all of the above.

Question 13

Which of the following is most limited in scope under a pure market economy?

Accepted Answer

A) ​Freedom of choice. 
B) ​Consumer sovereignty. 
C) ​Entrepreneurship. 
D) ​Government. 
A) ​Freedom of choice. 
B) ​Consumer sovereignty. 
C) ​Entrepreneurship. 
D) ​Government.

Question 14

A technological advance that increases the productivity of all inputs is best illustrated as:

Accepted Answer

A) ​a movement along the production possibilities curve. 
B) ​a flattening of the production possibilities curve. 
C) ​an inward shift of the production possibilities curve. 
D) ​an outward shift of the production possibilities curve. 
A) ​a movement along the production possibilities curve. 
B) ​a flattening of the production possibilities curve. 
C) ​an inward shift of the production possibilities curve. 
D) ​an outward shift of the production possibilities curve.

Question 15

The concept of opportunity cost is illustrated by:

Accepted Answer

A) ​a movement from the interior of the production possibilities curve to the frontier. 
B) ​a movement from the production possibilities curve to its interior. 
C) ​a movement from a point on the production possibilities curve to the northeast. 
D) ​a movement along the production possibilities curve, as production of one good falls in order to increase production of another. 
A) ​a movement from the interior of the production possibilities curve to the frontier. 
B) ​a movement from the production possibilities curve to its interior. 
C) ​a movement from a point on the production possibilities curve to the northeast. 
D) ​a movement along the production possibilities curve, as production of one good falls in order to increase production of another.

Question 16

Along a straight-line production possibilities curve:

Accepted Answer

A) ​the opportunity cost of production of a good is zero. 
B) ​the opportunity cost of production of a good falls as its output increases. 
C) ​the opportunity cost of production of a good rises as its output increases. 
D) ​the opportunity cost of production of a good is constant. 
A) ​the opportunity cost of production of a good is zero. 
B) ​the opportunity cost of production of a good falls as its output increases. 
C) ​the opportunity cost of production of a good rises as its output increases. 
D) ​the opportunity cost of production of a good is constant.

Question 17

Explain how each of the following could discourage economic growth:
a.The government closes all of the schools so that more people will be available for work.
b.The country fears military invasion and spends half of its income on military goods.​

Accepted Answer

Economic growth depends on a country's w

Question 18

Workers in the 1800s building railroads by hand was an example of a(n) ____ intensive form of production.

Accepted Answer

A) ​capital 
B) ​labor 
C) ​entrepreneurial 
D) ​working 
A) ​capital 
B) ​labor 
C) ​entrepreneurial 
D) ​working

Question 19

In a market economy, resources are allocated:

Accepted Answer

A) ​by central planners using a price system. 
B) ​by decentralized planners at the local level. 
C) ​by individual decision makers responding to market prices. 
D) ​by government bureaucracies because of the absence of a price system. 
A) ​by central planners using a price system. 
B) ​by decentralized planners at the local level. 
C) ​by individual decision makers responding to market prices. 
D) ​by government bureaucracies because of the absence of a price system.

Question 20

​Exhibit 3-7  
-Refer to Exhibit 3-7. The diagram represents a tradeoff in an economy between prison cells and classrooms. Which position represents the choice to allocate the greatest amount of resources to producing prison cells?

Accepted Answer

A) ​A 
B) ​B 
C) ​C 
D) ​None of the above are correct.Points on the frontier show the efficient combinations of resources that produce equal quantities of both outputs. 
A) ​A 
B) ​B 
C) ​C 
D) ​None of the above are correct.Points on the frontier show the efficient combinations of resources that produce equal quantities of both outputs.

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

A market economy depends on market mechanisms to:

​Exhibit 3-3 -Refer to Exhibit 3-3. The most inefficient point depicted is:

​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.

If an economy is operating inside its production possibilities curve for tanks and bread:

​Exhibit 3-7 -Refer to Exhibit 3-7. If the economy moves from Point C to Point A in the diagram:

Other things being constant, an economy must give up some consumer goods and services today to produce more capital goods in order to grow.

In a market operating along the production possibilities curve, which of the following is inevitable if the production of one of the goods is increased?

​Exhibit 3-9 -Refer to Exhibit 3-9. In order to move from Point B to Point C, the economy will have to:

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

A system of economic organization in which the ownership and control of productive capital assets rests with the state and resources are allocated through central planning and political decision making is called:

A production possibilities curve that is linear (a straight line):

The position of a country's production possibilities curve in the future will be affected by:

Which of the following is most limited in scope under a pure market economy?

A technological advance that increases the productivity of all inputs is best illustrated as:

The concept of opportunity cost is illustrated by:

Along a straight-line production possibilities curve:

Explain how each of the following could discourage economic growth: a.The government closes all of the schools so that more people will be available for work. b.The country fears military invasion and spends half of its income on military goods.​

Workers in the 1800s building railroads by hand was an example of a(n) ____ intensive form of production.

In a market economy, resources are allocated:

​Exhibit 3-7 -Refer to Exhibit 3-7. The diagram represents a tradeoff in an economy between prison cells and classrooms. Which position represents the choice to allocate the greatest amount of resources to producing prison cells?

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 3-3 -Refer to Exhibit 3-3. The most inefficient point depicted is:

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 3-7 -Refer to Exhibit 3-7. If the economy moves from Point C to Point A in the diagram:

Exhibit 3-9 -Refer to Exhibit 3-9. In order to move from Point B to Point C, the economy will have to:

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

Explain how each of the following could discourage economic growth: a.The government closes all of the schools so that more people will be available for work. b.The country fears military invasion and spends half of its income on military goods.

Exhibit 3-7 -Refer to Exhibit 3-7. The diagram represents a tradeoff in an economy between prison cells and classrooms. Which position represents the choice to allocate the greatest amount of resources to producing prison cells?