Question 1

-In the above figure, the combination of computers and televisions shown by point x

Accepted Answer

A)  is not attainable at the point in time for which the graph is drawn. 
B)  can be attained only if some of society's resources are unemployed. 
C)  suggests that the law of increasing relative costs does not hold. 
D)  results only because society allocates its resources inefficiently.

Question 2

To an economist, the term "needs"

Accepted Answer

A)  refers only to material desires but not nonmaterial desires. 
B)  is objectively undefinable. 
C)  identifies the purchases of basic goods and services. 
D)  refers to the purchase of goods by the poor.

Question 3

The production possibilities curve represents the maximum feasible production combinations resulting from

Accepted Answer

A)  the mix of current resources that utilizes all available inputs using current technology. 
B)  a fixed amount of demand by consumers. 
C)  the lack of trade-offs in production. 
D)  the lack of technology used in production.

Question 4

Which factor of production includes crude oil deposits?

Accepted Answer

A)  physical capital 
B)  human capital 
C)  land 
D)  entrepreneurship

Question 5

Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later he quits football to make movies for $3 million a year. His opportunity cost at graduation was ________ and eight years later was ________.

Accepted Answer

A)  $50,000; $2 million 
B)  $2 million; $2 million 
C)  $2 million; $3 million 
D)  $50,000; $50,000

Question 6

Jose and Maria work at a restaurant. Jose can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario, the opportunity cost of making one waffle for Maria is

Accepted Answer

A)  4 pancakes. 
B)  1/4 pancake. 
C)  2 1/2 pancakes. 
D)  2/5 pancake.

Question 7

In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as

Accepted Answer

A)  entrepreneurship. 
B)  human capital. 
C)  labor. 
D)  physical capital.

Question 8

In economics, international trade is based on the existence of

Accepted Answer

A)  absolute advantage between countries. 
B)  relative advantage between countries. 
C)  comparative advantage between countries. 
D)  output advantage between countries.

Question 9

If you can make $25,000 a year teaching, $20,000 a year writing computer programs, $30,000 a year driving a cab, and $40,000 a year as an actor or actress. You have a comparative advantage in

Accepted Answer

A)  teaching. 
B)  writing computer programs 
C)  being an actor or actress. 
D)  one of them but we need more information to know which.

Question 10

Explain how comparative advantage, specialization and division of labor are related.

Accepted Answer

The answer of Explain how comparative advantage, specialization and division...

Question 11

When a society takes increasing amounts of resources and applies them to the production of a specific good, resulting in increasing opportunity costs for each additional unit produced, which of the following applies?

Accepted Answer

A)  the law of demand 
B)  the law of supply 
C)  the law of scarcity 
D)  the law of increasing additional costs

Question 12

As an economy moves from point to point along its production possibilities curve, which one of the following variables changes?

Accepted Answer

A)  the total amount of resources employed 
B)  the level of technology 
C)  the level of efficiency of some factors of production 
D)  the amount of each good or service produced

Question 13

A straight-line production possibilities curve has

Accepted Answer

A)  an increasing opportunity cost between the two goods. 
B)  a decreasing opportunity cost between the two goods. 
C)  a constant opportunity cost between the two goods. 
D)  no opportunity cost between the two goods.

Question 14

Generally, specialization leads to

Accepted Answer

A)  constant opportunity costs. 
B)  greater productivity. 
C)  reductions in people's skill levels. 
D)  greater self-reliance.

Question 15

If a country increased the production of its capital goods, then

Accepted Answer

A)  the more consumption of goods we can have today. 
B)  the less consumption we can have today, but we will have more in the future. 
C)  the more unemployed resources there will be in the future. 
D)  the more unemployed resources there are today.

Question 16

Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100 bushels of corn today is

Accepted Answer

A)  100 bushels of corn next year. 
B)  25 bushels of corn next year. 
C)  10 bushels of corn next year. 
D)  2.5 bushels of corn next year.

Question 17

Naturally occurring diamonds are an example of

Accepted Answer

A)  land. 
B)  labor. 
C)  physical capital. 
D)  human capital.

Question 18

Scarcity implies that people must

Accepted Answer

A)  be irrational. 
B)  be selfish. 
C)  make choices. 
D)  not be selfish.

Question 19

Labor, human capital, and entrepreneurship are resources related to human beings. Distinguish among the three resources.

Accepted Answer

The answer of Labor, human capital, and entrepreneurship are resources...

Question 20

At a zero price, which of the following conditions is TRUE for an economic good?

Accepted Answer

A)  Its quantity supplied exceeds its quantity demanded. 
B)  Its quantity demanded exceeds its quantity supplied. 
C)  Its quantity demanded equals its quantity supplied. 
D)  Scarcity disappears.

Exam 2: Scarcity and the World of Trade-Offs