Question 1

As the term "opportunity cost" is defined in the text,the opportunity cost of going to college includes

Accepted Answer

A)   both tuition and the value of the student's time.
B)   tuition but not the value of the student's time,which is a cash cost.
C)   the value of the student's time but not tuition,which is a monetary cost.
D)   neither tuition nor the value of the student's time,since obtaining a college degree makes one's income higher in the future.
E)   neither tuition nor the value of the student's time,at least at subsidized state universities. A

Question 2

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)   an economy's capacity to produce increases in proportion to its population.
B)   if all resources of an economy are in use,more of one good can be produced only if less of another is produced.
C)   an economy will automatically seek that output at which all of its resources are employed.
D)   no opportunity cost exists in production. B

Question 3

Figure 3-4 
-Suppose the U.S.government has an annual budget of about $3.03 trillion.Does the U.S.government face the problem of scarcity?

Accepted Answer

A)   No,a government with $3.03 trillion faces no real constraints.
B)   No,scarcity does not apply to governments.
C)   Yes,resources are limited even for the U.S.government.
D)   Yes,although the U.S.government can easily obtain more resources.
E)   Uncertain-economic theory has no answer to this question. C

Question 4

As more of a good is produced,its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Accepted Answer

A) True 
 B)False

Question 5

If a farmer's opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans,then her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.

Accepted Answer

A) True 
 B)False

Question 6

The term "satisficing" indicates an optimal choice.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following quotations best captures the idea of opportunity cost?

Accepted Answer

A)   "Opportunity knocks but once."
B)   "Every choice involves a sacrifice."
C)   "Let's not ask for the moon; we have the stars."
D)   "Fools rush in where wise men fear to tread."
E)   "All that glitters is not gold."

Question 8

If a society uses the market system,it must rely solely on markets to solve all of its problems.

Accepted Answer

A) True 
 B)False

Question 9

In a market system,the major coordination tasks are carried out

Accepted Answer

A)   with the approval of central planners.
B)   as part of the regular appropriation process of Congress.
C)   irregularly by the major corporations.
D)   automatically by the market mechanism.

Question 10

Workers in Adam Smith's famous pin factory example,who were proficient in pin production,then faced the problem of

Accepted Answer

A)   too many different tasks.
B)   becoming bored with their jobs.
C)   having to exchange pins for other goods and services.
D)   not having enough pins to purchase other goods and services.

Question 11

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

Accepted Answer

A) True 
 B)False

Question 12

A society which is inside its production possibilities frontier is efficient.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

Accepted Answer

A)   volume of physical resources
B)   level of labor skills
C)   level of technology
D)   amount of factories on hand
E)   All of the above are correct.

Question 14

A well-functioning market will have high monetary costs applied to high opportunity costs.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following does not determine the position and shape of a society's PPF?

Accepted Answer

A)   physical resources
B)   price level
C)   skills and technology
D)   past construction of factories and research

Question 16

Opportunity cost is the value of the next best alternative that is given up.

Accepted Answer

A) True 
 B)False

Question 17

Few bother to think about what makes Florida oranges show up daily in South Dakota supermarkets,but the people of South Dakota are likely to think a great deal about this.Why does someone take the time and energy to assure that oranges which are grown in Florida move more than 1,000 miles before they appear on grocery shelves?

Accepted Answer

The answer of Few bother to think about what makes...

Question 18

A typical economy produces thousands of different goods.Is it accurate to say that society faces a production possibilities frontier?

Accepted Answer

A)   No,because two dimensions cannot capture the complexity of a full economy.
B)   No,although a graph with several thousand dimensions would be appropriate.
C)   Yes,although society does not face opportunity cost and the model does not apply.
D)   Yes,because scarcity always imposes opportunity costs.
E)   Uncertain-economic theory has no answer to this question.

Question 19

A normal production possibilities frontier has a

Accepted Answer

A)   positive slope,and is steeper near the horizontal axis than near the vertical axis.
B)   negative slope,and is steeper near the horizontal axis than near the vertical axis.
C)   positive slope,and is steeper near the vertical axis than near the horizontal axis.
D)   negative slope,and is steeper near the vertical axis than near the horizontal axis.
E)   zero slope,and it does not touch the horizontal axis.

Question 20

Goods that are actually produced by firms are not really limited in supply,because the firms can always produce more of them.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem Scarcity and Choice

As the term "opportunity cost" is defined in the text,the opportunity cost of going to college includes

The production possibilities curve illustrates the basic principle that

Figure 3-4 -Suppose the U.S.government has an annual budget of about $3.03 trillion.Does the U.S.government face the problem of scarcity?

As more of a good is produced,its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

If a farmer's opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans,then her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.

The term "satisficing" indicates an optimal choice.

Which of the following quotations best captures the idea of opportunity cost?

If a society uses the market system,it must rely solely on markets to solve all of its problems.

In a market system,the major coordination tasks are carried out

Workers in Adam Smith's famous pin factory example,who were proficient in pin production,then faced the problem of

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

A society which is inside its production possibilities frontier is efficient.

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

A well-functioning market will have high monetary costs applied to high opportunity costs.

Which of the following does not determine the position and shape of a society's PPF?

Opportunity cost is the value of the next best alternative that is given up.

A typical economy produces thousands of different goods.Is it accurate to say that society faces a production possibilities frontier?

A normal production possibilities frontier has a

Goods that are actually produced by firms are not really limited in supply,because the firms can always produce more of them.