Question 1

In a laissez-faire economy, what provides individuals the information needed to make decisions?

Accepted Answer

A)  insurance 
B)  prices 
C)  patents 
D)  government 
A)  insurance 
B)  prices 
C)  patents 
D)  government

Question 2

Production inefficiency occurs

Accepted Answer

A)  only when an economy produces underneath its production possibility frontier. 
B)  only when an economy produces at the wrong point on the production possibility frontier. 
C)  either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier. 
D)  only when the economy produces outside the production possibility frontier. 
A)  only when an economy produces underneath its production possibility frontier. 
B)  only when an economy produces at the wrong point on the production possibility frontier. 
C)  either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier. 
D)  only when the economy produces outside the production possibility frontier.

Question 3

Related to the Economics in Practice on p. 25: Based on the increase in the number of women in the labor force over the past 50 years, the opportunity cost of preparing a home-cooked meal

Accepted Answer

A)  decreased. 
B)  increased. 
C)  remained constant. 
D)  dropped to zero. 
A)  decreased. 
B)  increased. 
C)  remained constant. 
D)  dropped to zero.

Question 4

Goods and services of value to households are

Accepted Answer

A)  inputs in the production process. 
B)  outputs in the production process. 
C)  both inputs and outputs in the production process. 
D)  unrelated to the production process. 
A)  inputs in the production process. 
B)  outputs in the production process. 
C)  both inputs and outputs in the production process. 
D)  unrelated to the production process.

Question 5

Refer to the information provided in Figure 2.5 below to answer the questions that follow.   Figure 2.5
-Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is

Accepted Answer

A)  -2/3. 
B)  -1.5. 
C)  -3. 
D)  -30. 
A)  -2/3. 
B)  -1.5. 
C)  -3. 
D)  -30.

Question 6

For an economy to produce at a point beyond its current ppf, the economy must

Accepted Answer

A)  waste less. 
B)  be more efficient. 
C)  reduce inputs. 
D)  increase its resource base. 
A)  waste less. 
B)  be more efficient. 
C)  reduce inputs. 
D)  increase its resource base.

Question 7

Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow.   Figure 2.1
-Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows

Accepted Answer

A)  increasing opportunity costs. 
B)  constant opportunity costs. 
C)  decreasing opportunity costs. 
D)  random opportunity costs. 
A)  increasing opportunity costs. 
B)  constant opportunity costs. 
C)  decreasing opportunity costs. 
D)  random opportunity costs.

Question 8

The marginal rate of transformation represents the slope of the production possibility frontier.

Accepted Answer

A) True 
 B)False

Question 9

Related to the Economics in Practice on page 25: How did the introduction of the microwave oven in 1960 affect the market for frozen food?

Accepted Answer

A)  It encouraged people to leave the work force by making cooking easier and less time-consuming. 
B)  It reduced the opportunity cost of eating frozen food by decreasing the amount of time required to prepare frozen meals. 
C)  It increased the financial cost of alternative methods of food preparation, such as conventional ovens. 
D)  It made frozen foods more appealing by increasing the variety of meals that could be frozen and reheated. 
A)  It encouraged people to leave the work force by making cooking easier and less time-consuming. 
B)  It reduced the opportunity cost of eating frozen food by decreasing the amount of time required to prepare frozen meals. 
C)  It increased the financial cost of alternative methods of food preparation, such as conventional ovens. 
D)  It made frozen foods more appealing by increasing the variety of meals that could be frozen and reheated.

Question 10

In a ________, the amount of output that any one household gets depends on its income and wealth.

Accepted Answer

A)  Marxist economy 
B)  socialist economy 
C)  command system 
D)  free-market system 
A)  Marxist economy 
B)  socialist economy 
C)  command system 
D)  free-market system

Question 11

The gap between rich and poor countries

Accepted Answer

A)  has decreased over time because poor countries can more easily devote resources to capital production. 
B)  has increased over time because poor countries find it difficult to devote resources to capital production. 
C)  has remained constant over time because technological advances can be easily shared among nations. 
D)  has remained constant over time because the rate of capital production has remained constant in rich and poor nations. 
A)  has decreased over time because poor countries can more easily devote resources to capital production. 
B)  has increased over time because poor countries find it difficult to devote resources to capital production. 
C)  has remained constant over time because technological advances can be easily shared among nations. 
D)  has remained constant over time because the rate of capital production has remained constant in rich and poor nations.

Question 12

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow.   Figure 2.2
-Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no production inefficiencies if this economy is currently operating at a point

Accepted Answer

A)  inside the production possibility frontier. 
B)  along the production possibility frontier. 
C)  outside the production possibility frontier. 
D)  either inside or along the production possibility frontier. 
A)  inside the production possibility frontier. 
B)  along the production possibility frontier. 
C)  outside the production possibility frontier. 
D)  either inside or along the production possibility frontier.

Question 13

Some economists advocate government intervention in a market economy

Accepted Answer

A)  to produce collective goods and services. 
B)  when resource costs for a private producer do not reflect the full cost to society. 
C)  to stabilize the economy. 
D)  all of the above 
A)  to produce collective goods and services. 
B)  when resource costs for a private producer do not reflect the full cost to society. 
C)  to stabilize the economy. 
D)  all of the above

Question 14

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow.   Figure 2.2
-Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods

Accepted Answer

A)  without sacrificing any consumer goods. 
B)  by sacrificing some consumer goods. 
C)  only with technological improvements. 
D)  only with additional resources. 
A)  without sacrificing any consumer goods. 
B)  by sacrificing some consumer goods. 
C)  only with technological improvements. 
D)  only with additional resources.

Question 15

Which of the following is true of a market economy?

Accepted Answer

A)  In its pure form, it is also known as a command economy. 
B)  Decisions are regulated by a central agency. 
C)  The government answers the basic economic questions of what gets produced, how it gets produced, and who gets it. 
D)  It relies on millions of individual economic decisions to determine economic outcomes. 
A)  In its pure form, it is also known as a command economy. 
B)  Decisions are regulated by a central agency. 
C)  The government answers the basic economic questions of what gets produced, how it gets produced, and who gets it. 
D)  It relies on millions of individual economic decisions to determine economic outcomes.

Question 16

Private enterprise plays some role in production decisions for

Accepted Answer

A)  all countries in the world. 
B)  most countries in the world. 
C)  about half of the countries in the world. 
D)  few countries in the world. 
A)  all countries in the world. 
B)  most countries in the world. 
C)  about half of the countries in the world. 
D)  few countries in the world.

Question 17

Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to capital. All other things equal, which of the following statements is most likely true?

Accepted Answer

A)  Japan is a poorer country than Malaysia. 
B)  Japan will move up its production possibility curve faster than Malaysia. 
C)  Malaysia is producing inside its production possibility frontier, whereas Japan is producing at a point on its production possibility frontier. 
D)  Malaysia's production possibility frontier will shift up and out farther and faster than Japan's. 
A)  Japan is a poorer country than Malaysia. 
B)  Japan will move up its production possibility curve faster than Malaysia. 
C)  Malaysia is producing inside its production possibility frontier, whereas Japan is producing at a point on its production possibility frontier. 
D)  Malaysia's production possibility frontier will shift up and out farther and faster than Japan's.

Question 18

Production is the process by which

Accepted Answer

A)  products are used by consumers. 
B)  resources are transformed into useful forms. 
C)  products are converted into capital. 
D)  resources are allocated and distributed. 
A)  products are used by consumers. 
B)  resources are transformed into useful forms. 
C)  products are converted into capital. 
D)  resources are allocated and distributed.

Question 19

Someone has a comparative advantage in producing a good if she can produce that good

Accepted Answer

A)  in greater quantities. 
B)  at a lower opportunity cost. 
C)  using more capital and less labor. 
D)  using more labor and less capital. 
A)  in greater quantities. 
B)  at a lower opportunity cost. 
C)  using more capital and less labor. 
D)  using more labor and less capital.

Question 20

As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because

Accepted Answer

A)  as more of a good is produced, the inputs used to produce that good will increase in price. 
B)  consumers would be willing to pay higher prices for the good as more of the good is produced. 
C)  resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good. 
D)  as more of a good is produced, the quality of that good declines, and therefore the costs of production increase. 
A)  as more of a good is produced, the inputs used to produce that good will increase in price. 
B)  consumers would be willing to pay higher prices for the good as more of the good is produced. 
C)  resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good. 
D)  as more of a good is produced, the quality of that good declines, and therefore the costs of production increase.

In a laissez-faire economy, what provides individuals the information needed to make decisions?

Production inefficiency occurs

Related to the Economics in Practice on p. 25: Based on the increase in the number of women in the labor force over the past 50 years, the opportunity cost of preparing a home-cooked meal

Goods and services of value to households are

Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5 -Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is

For an economy to produce at a point beyond its current ppf, the economy must

Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1 -Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows

The marginal rate of transformation represents the slope of the production possibility frontier.

Related to the Economics in Practice on page 25: How did the introduction of the microwave oven in 1960 affect the market for frozen food?

In a ________, the amount of output that any one household gets depends on its income and wealth.

The gap between rich and poor countries

Some economists advocate government intervention in a market economy

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2 -Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods

Which of the following is true of a market economy?

Private enterprise plays some role in production decisions for

Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to capital. All other things equal, which of the following statements is most likely true?

Production is the process by which

Someone has a comparative advantage in producing a good if she can produce that good

As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

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Exam 2: The Economic Problem: Scarcity and Choice

In a laissez-faire economy, what provides individuals the information needed to make decisions?

Production inefficiency occurs

Related to the Economics in Practice on p. 25: Based on the increase in the number of women in the labor force over the past 50 years, the opportunity cost of preparing a home-cooked meal

Goods and services of value to households are

Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5 -Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is

For an economy to produce at a point beyond its current ppf, the economy must

Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1 -Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows

The marginal rate of transformation represents the slope of the production possibility frontier.

Related to the Economics in Practice on page 25: How did the introduction of the microwave oven in 1960 affect the market for frozen food?

In a ________, the amount of output that any one household gets depends on its income and wealth.

The gap between rich and poor countries

Some economists advocate government intervention in a market economy

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2 -Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods

Which of the following is true of a market economy?

Private enterprise plays some role in production decisions for

Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to capital. All other things equal, which of the following statements is most likely true?

Production is the process by which

Someone has a comparative advantage in producing a good if she can produce that good

As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters