Question 1

Investment is an economic term for the act of increasing the stock of money available for business loans.

Accepted Answer

A) True 
 B)False

Question 2

If an economy keeps increasing its capital stock,then over time its production possibilities curve will:

Accepted Answer

A)  not move. 
B)  shift to the left. 
C)  shift to the right. 
D)  disappear because scarcity ceases to exist. 
E)  demonstrate massive job loss for workers.

Question 3

Exhibit 2-15 Production possibilities curve
 
-In Exhibit 2-15,the production possibilities curve demonstrates:

Accepted Answer

A)  changing prices. 
B)  economic growth. 
C)  decreases in resources. 
D)  the law of increasing opportunity costs. 
E)  changing technology.

Question 4

Of factors which affect any economy's production potential,the best two listed below are:

Accepted Answer

A)  resources and technology. 
B)  prices and outputs. 
C)  wages and prices. 
D)  taxes and prices. 
E)  resources and prices.

Question 5

According to marginal analysis,you should spend more time studying economics if the extra benefit from an additional hour of study:

Accepted Answer

A)  is positive. 
B)  outweighs the extra cost. 
C)  exceeds the benefits of the previous hour of study. 
D)  will raise your exam score.

Question 6

In economics terminology,the process of accumulating money is investment.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 2-19 Production possibilities curves
 
-In Exhibit 2-19,the production possibilities curves for a country are shown for the years Year X and Year Y.Which of the following could have caused a shift for Year X to Year Y in production possibilities curves?

Accepted Answer

A)  An increase in unemployment. 
B)  A decline in technology. 
C)  An increase in the stock of capital goods. 
D)  A natural disaster. 
E)  More efficient production.

Question 8

Exhibit 2-4 Production possibilities curve data
 
-According to the data given in Exhibit 2-4,the production of 140 units of consumer goods and 10 units of capital goods:

Accepted Answer

A)  is possible but would be inefficient. 
B)  may be a result of unemployment. 
C)  may be a result of unused natural resources. 
D)  all of the above. 
E)  none of the above.

Question 9

The various combinations of goods and services that can be produced,when an economy uses its available resources and technology efficiently,is called:

Accepted Answer

A)  scarcity. 
B)  opportunity cost. 
C)  unlimited production. 
D)  capital accumulation. 
E)  production possibilities.

Question 10

Opportunity cost is the:

Accepted Answer

A)  cost incurred when one fails to take advantage of an opportunity. 
B)  price paid for goods and services. 
C)  cost of the best option forgone as a result of choosing an alternative option. 
D)  undesirable aspects of an option.

Question 11

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis.On this diagram,the opportunity cost of good X,in terms of good Y,is represented by the:

Accepted Answer

A)  distance to the curve from the horizontal axis. 
B)  distance to the curve from the vertical axis. 
C)  distance from the origin to the curve. 
D)  change in Y for each change in X along the curve.

Question 12

Exhibit 2-18 Production possibilities curves
 
-In Exhibit 2-18,the production possibilities curves for a country are shown for the years Year X and Year Y.Suppose this country was located at point A in Year X and point B in Year Y.This economy:

Accepted Answer

A)  is worse off in Year Y than in Year X. 
B)  has stagnated production in this two year period. 
C)  is more efficient in Year Y than in Year X. 
D)  has shown growth between these two years. 
E)  has higher unemployment in Year Y than in Year X.

Question 13

Which of the following cause(s)economic growth?

Accepted Answer

A) c and d. 
B) d and e. 
C) The production of more scarce goods 
D) A technological improvement 
E) The production of more capital goods

Question 14

The production possibilities curve for the nation of Economania shifts to the right.This could have been caused by:

Accepted Answer

A)  a decrease in Economania's capital stock. 
B)  a decrease in the Economania's labor supply. 
C)  high unemployment in Economania the previous time period. 
D)  Economania producing all consumer goods in the previous period. 
E)  technological innovation in the production of Economania goods.

Question 15

Which of the following is true of the production possibilities curve?

Accepted Answer

A)  It assumes a fixed level of technology. 
B)  It assumes resources are fixed. 
C)  It assumes resources are fully employed. 
D)  All of the above are correct.

Question 16

As production of a good increases,opportunity costs rise because:

Accepted Answer

A)  there will be more inefficiency. 
B)  people always prefer having more goods. 
C)  of inflationary pressures. 
D)  workers are not equally suited to all tasks.

Question 17

On a production possibilities curve diagram,greater entrepreneurship:

Accepted Answer

A)  causes the curve to shift outward. 
B)  keeps the economy on the curve. 
C)  prevents movement along the curve. 
D)  keeps the economy at the corners of the curve.

Question 18

A point inside a production possibilities curve reflects:

Accepted Answer

A)  the law of increasing costs. 
B)  technological innovation. 
C)  less than full use of resources and technology. 
D)  economic efficiency. 
E)  a way to increase future economic growth.

Question 19

The basic approach in marginal analysis is to compare a policy's total benefits with its total costs.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 2-13 Production possibilities curve
 
-In Exhibit 2-13,in terms of efficiency:

Accepted Answer

A)  point A is preferred to point B. 
B)  point A is preferred to point E. 
C)  point A is preferred to point D. 
D)  point B is preferred to point A. 
E)  point B is preferred to point C.

Exam 2: Production Possibilities,Opportunity Cost,and Economic Growth

Investment is an economic term for the act of increasing the stock of money available for business loans.

If an economy keeps increasing its capital stock,then over time its production possibilities curve will:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15,the production possibilities curve demonstrates:

Of factors which affect any economy's production potential,the best two listed below are:

According to marginal analysis,you should spend more time studying economics if the extra benefit from an additional hour of study:

In economics terminology,the process of accumulating money is investment.

Exhibit 2-19 Production possibilities curves -In Exhibit 2-19,the production possibilities curves for a country are shown for the years Year X and Year Y.Which of the following could have caused a shift for Year X to Year Y in production possibilities curves?

Exhibit 2-4 Production possibilities curve data -According to the data given in Exhibit 2-4,the production of 140 units of consumer goods and 10 units of capital goods:

The various combinations of goods and services that can be produced,when an economy uses its available resources and technology efficiently,is called:

Opportunity cost is the:

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis.On this diagram,the opportunity cost of good X,in terms of good Y,is represented by the:

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18,the production possibilities curves for a country are shown for the years Year X and Year Y.Suppose this country was located at point A in Year X and point B in Year Y.This economy:

Which of the following cause(s) economic growth?

The production possibilities curve for the nation of Economania shifts to the right.This could have been caused by:

Which of the following is true of the production possibilities curve?

As production of a good increases,opportunity costs rise because:

On a production possibilities curve diagram,greater entrepreneurship:

A point inside a production possibilities curve reflects:

The basic approach in marginal analysis is to compare a policy's total benefits with its total costs.

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13,in terms of efficiency: