Question 1

An economy's production possibility curve will be a straight line if:

Accepted Answer

A) ​resources are not equally substitutable among productive tasks. 
B) ​the economy experiences significant unemployment. 
C) ​the opportunity cost of production of a good decreases as more of it is produced. 
D) ​the opportunity cost of production of a good is constant as more of it is produced. 
A) ​resources are not equally substitutable among productive tasks. 
B) ​the economy experiences significant unemployment. 
C) ​the opportunity cost of production of a good decreases as more of it is produced. 
D) ​the opportunity cost of production of a good is constant as more of it is produced.

Question 2

A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as:

Accepted Answer

A) ​an inward shift of the production possibilities curve. 
B) ​an outward shift of the production possibilities curve. 
C) ​a movement down and to the right along the production possibilities curve. 
D) ​a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve. 
A) ​an inward shift of the production possibilities curve. 
B) ​an outward shift of the production possibilities curve. 
C) ​a movement down and to the right along the production possibilities curve. 
D) ​a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.

Question 3

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

Accepted Answer

A) ​requires the sacrifice of one cake in order to obtain four cupcakes. 
B) ​requires the sacrifice of four cupcakes in order to obtain one cake. 
C) ​reallocates inputs without affecting overall levels of production. 
D) ​increases unemployment. 
A) ​requires the sacrifice of one cake in order to obtain four cupcakes. 
B) ​requires the sacrifice of four cupcakes in order to obtain one cake. 
C) ​reallocates inputs without affecting overall levels of production. 
D) ​increases unemployment.

Question 4

Which of the following concepts are illustrated by the production possibilities curve?

Accepted Answer

A) ​scarcity 
B) ​choice 
C) ​trade-offs 
D) ​all of the above 
A) ​scarcity 
B) ​choice 
C) ​trade-offs 
D) ​all of the above

Question 5

A decrease in the unemployment rate will shift an economy's production possibilities curve outward.

Accepted Answer

A) True 
 B)False

Question 6

​Exhibit 3-1  
-Refer to Exhibit 3-1. In the graph of the circular flow model, area B represents

Accepted Answer

A) ​product markets. 
B) ​firms. 
C) ​factor markets. 
D) ​households. 
A) ​product markets. 
B) ​firms. 
C) ​factor markets. 
D) ​households.

Question 7

From a point inside the production possibility frontier,

Accepted Answer

A) ​more of one good can be produced only by sacrificing some output of another good. 
B) ​it is possible to increase production of both goods. 
C) ​it is impossible to increase production of either good with current resources and technology. 
D) ​increased output of both goods can only occur if the production possibility curve shifts outward. 
A) ​more of one good can be produced only by sacrificing some output of another good. 
B) ​it is possible to increase production of both goods. 
C) ​it is impossible to increase production of either good with current resources and technology. 
D) ​increased output of both goods can only occur if the production possibility curve shifts outward.

Question 8

The economic system of which of the following countries can be treated as an example of a command economy?

Accepted Answer

A) ​United States 
B) ​Canada 
C) ​United Kingdom 
D) ​Cuba 
A) ​United States 
B) ​Canada 
C) ​United Kingdom 
D) ​Cuba

Question 9

Economic growth can be illustrated by:

Accepted Answer

A) ​a movement along the production possibilities curve. 
B) ​a movement from a point on the production possibilities curve to a point inside 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 movement from a point on the production possibilities curve to a point inside the production possibilities curve. 
C) ​an inward shift of the production possibilities curve. 
D) ​an outward shift of the production possibilities curve.

Question 10

​Exhibit 3-3  
-Refer to Exhibit 3-3. At Point A:

Accepted Answer

A) ​only wine is produced. 
B) ​only bread is produced. 
C) ​both wine and bread are produced. 
D) ​the economy is operating inefficiently. 
A) ​only wine is produced. 
B) ​only bread is produced. 
C) ​both wine and bread are produced. 
D) ​the economy is operating inefficiently.

Question 11

Draw a picture of a production possibilities curve. Identify each axis as measuring either guns or butter. Select and label Point A, which is beyond the economy's ability to produce; Point B, which represents an inefficient level of production; Point C, an efficient combination of output in which more guns are produced than units of butter; and Point D, an efficient production point in which more units of butter are produced than guns. Be sure to label each clearly.​

Accepted Answer

Diagrams will vary.

Question 12

Approximately two decades after a "baby boom," one could expect:

Accepted Answer

A) ​production to change from an interior point to a point along the production possibilities curve. 
B) ​a movement along the production possibilities curve from one point to another. 
C) ​an outward shift of the production possibilities curve along both axes. 
D) ​an inward shift of the production possibilities curve. 
A) ​production to change from an interior point to a point along the production possibilities curve. 
B) ​a movement along the production possibilities curve from one point to another. 
C) ​an outward shift of the production possibilities curve along both axes. 
D) ​an inward shift of the production possibilities curve.

Question 13

In a market economy, government officials make most production decisions in a centralized manner.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following will shift a production possibilities curve outward?​

Accepted Answer

A) ​an increase in the unemployment rate 
B) ​a decrease in the unemployment rate from 18% to 15% 
C) ​an improvement in technology 
D) ​a decrease in available labor and capital 
A) ​an increase in the unemployment rate 
B) ​a decrease in the unemployment rate from 18% to 15% 
C) ​an improvement in technology 
D) ​a decrease in available labor and capital

Question 15

​Exhibit 3-14  
-Refer to Exhibit 3-14. Assuming that the production possibilities curve extends out farther as indicated above due to technological change, which of the following observations is correct?

Accepted Answer

A) ​There is a technological advance in food production but not in housing production. 
B) ​There is a technological advance in housing production but not in food production. 
C) ​There is a technological advance in both housing and food production. 
D) ​none of the above 
A) ​There is a technological advance in food production but not in housing production. 
B) ​There is a technological advance in housing production but not in food production. 
C) ​There is a technological advance in both housing and food production. 
D) ​none of the above

Question 16

​Exhibit 3-5  
-Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

Accepted Answer

A) ​smaller and smaller amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
B) ​nothing, since food and clothing are not substitutes. 
C) ​relatively equal amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
D) ​larger and larger amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
A) ​smaller and smaller amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
B) ​nothing, since food and clothing are not substitutes. 
C) ​relatively equal amounts of food per unit of added clothing, as the quantity of clothing produced increases. 
D) ​larger and larger amounts of food per unit of added clothing, as the quantity of clothing produced increases.

Question 17

​Exhibit 3-8  
-Refer to Exhibit 3-8. At Point B in the production possibilities graph shown, the economy:

Accepted Answer

A) ​is not using its resources efficiently. 
B) ​is using its resources efficiently while producing clothing but not food. 
C) ​is using its resources efficiently while producing food but not clothing. 
D) ​is using its resources efficiently to produce both food and clothing. 
A) ​is not using its resources efficiently. 
B) ​is using its resources efficiently while producing clothing but not food. 
C) ​is using its resources efficiently while producing food but not clothing. 
D) ​is using its resources efficiently to produce both food and clothing.

Question 18

Three economic questions must be determined in all societies. What are they?

Accepted Answer

A) ​How much will be produced? When will it be produced? How much will it cost? 
B) ​What will the price of each good be? Who will produce each good? Who will consume each good? 
C) ​What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? 
D) ​What goods will be produced? How will goods be produced? Who will get the goods produced? 
A) ​How much will be produced? When will it be produced? How much will it cost? 
B) ​What will the price of each good be? Who will produce each good? Who will consume each good? 
C) ​What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? 
D) ​What goods will be produced? How will goods be produced? Who will get the goods produced?

Question 19

Assume the economy moves from a situation with full employment to one in which the unemployment rate is higher. This can be portrayed as:

Accepted Answer

A) ​an inward shift of the production possibilities curve. 
B) ​an outward shift of the production possibilities curve. 
C) ​a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve. 
D) ​a movement from a point on the production possibilities curve to a point inside the production possibilities curve. 
A) ​an inward shift of the production possibilities curve. 
B) ​an outward shift of the production possibilities curve. 
C) ​a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve. 
D) ​a movement from a point on the production possibilities curve to a point inside the production possibilities curve.

Question 20

Countries with high labor costs tend to:

Accepted Answer

A) ​rely on only one method for the production of goods. 
B) ​use more labor rather than capital in the production process. 
C) ​use more capital rather than labor in the production process. 
D) ​be relatively poor countries. 
A) ​rely on only one method for the production of goods. 
B) ​use more labor rather than capital in the production process. 
C) ​use more capital rather than labor in the production process. 
D) ​be relatively poor countries.

An economy's production possibility curve will be a straight line if:

A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as:

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

Which of the following concepts are illustrated by the production possibilities curve?

A decrease in the unemployment rate will shift an economy's production possibilities curve outward.

Exhibit 3-1 -Refer to Exhibit 3-1. In the graph of the circular flow model, area B represents

From a point inside the production possibility frontier,

The economic system of which of the following countries can be treated as an example of a command economy?

Economic growth can be illustrated by:

Exhibit 3-3 -Refer to Exhibit 3-3. At Point A:

Approximately two decades after a "baby boom," one could expect:

In a market economy, government officials make most production decisions in a centralized manner.

Which of the following will shift a production possibilities curve outward?

Exhibit 3-14 -Refer to Exhibit 3-14. Assuming that the production possibilities curve extends out farther as indicated above due to technological change, which of the following observations is correct?

Exhibit 3-5 -Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

Exhibit 3-8 -Refer to Exhibit 3-8. At Point B in the production possibilities graph shown, the economy:

Three economic questions must be determined in all societies. What are they?

Assume the economy moves from a situation with full employment to one in which the unemployment rate is higher. This can be portrayed as:

Countries with high labor costs tend to:

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

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

An economy's production possibility curve will be a straight line if:

A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as:

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

Which of the following concepts are illustrated by the production possibilities curve?

A decrease in the unemployment rate will shift an economy's production possibilities curve outward.

​Exhibit 3-1 -Refer to Exhibit 3-1. In the graph of the circular flow model, area B represents

From a point inside the production possibility frontier,

The economic system of which of the following countries can be treated as an example of a command economy?

Economic growth can be illustrated by:

​Exhibit 3-3 -Refer to Exhibit 3-3. At Point A:

Approximately two decades after a "baby boom," one could expect:

In a market economy, government officials make most production decisions in a centralized manner.

Which of the following will shift a production possibilities curve outward?​

​Exhibit 3-14 -Refer to Exhibit 3-14. Assuming that the production possibilities curve extends out farther as indicated above due to technological change, which of the following observations is correct?

​Exhibit 3-5 -Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

​Exhibit 3-8 -Refer to Exhibit 3-8. At Point B in the production possibilities graph shown, the economy:

Three economic questions must be determined in all societies. What are they?

Assume the economy moves from a situation with full employment to one in which the unemployment rate is higher. This can be portrayed as:

Countries with high labor costs tend to:

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

Exhibit 3-1 -Refer to Exhibit 3-1. In the graph of the circular flow model, area B represents

Exhibit 3-3 -Refer to Exhibit 3-3. At Point A:

Which of the following will shift a production possibilities curve outward?

Exhibit 3-14 -Refer to Exhibit 3-14. Assuming that the production possibilities curve extends out farther as indicated above due to technological change, which of the following observations is correct?

Exhibit 3-5 -Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

Exhibit 3-8 -Refer to Exhibit 3-8. At Point B in the production possibilities graph shown, the economy: