Question 1

Use the following figure to answer questions: Figure 1.3  
-Using Figure 1.3 and PP1,at point A,

Accepted Answer

A) There is inefficient use of available resources. 
B) The available technology keeps production inside PP1. 
C) All available resources are being used efficiently. 
D) An increase in the production of mops would definitely require a decrease in the production of brooms. 
A) There is inefficient use of available resources. 
B) The available technology keeps production inside PP1. 
C) All available resources are being used efficiently. 
D) An increase in the production of mops would definitely require a decrease in the production of brooms.

Question 2

Explain why an economist would say,"There is no such thing as a free lunch."

Accepted Answer

All resources are scarce.Any time a scar

Question 3

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus.Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.   On the basis of your calculations in Table 1.2
-The law of increasing opportunity costs applies to

Accepted Answer

A) Both B-1 and Stealth bombers. 
B) B-1 bombers but not to Stealth bombers. 
C) Stealth bombers but not to B-1 bombers. 
D) Neither bomber. 
A) Both B-1 and Stealth bombers. 
B) B-1 bombers but not to Stealth bombers. 
C) Stealth bombers but not to B-1 bombers. 
D) Neither bomber.

Question 4

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus.Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  
-The lowest opportunity cost anywhere in Table 1.2 for Stealth bombers in terms of B-1 bombers is

Accepted Answer

A) .4 B-1 bomber per Stealth bomber. 
B) .3 B-1 bomber per Stealth bomber. 
C) .2 B-1 bomber per Stealth bomber. 
D) .10 B-1 bomber per Stealth bomber. 
A) .4 B-1 bomber per Stealth bomber. 
B) .3 B-1 bomber per Stealth bomber. 
C) .2 B-1 bomber per Stealth bomber. 
D) .10 B-1 bomber per Stealth bomber.

Question 5

With respect to factors of production,which of the following statements is not true?

Accepted Answer

A) Factors of production are also known as resources. 
B) In order to produce any good or service,it is necessary to have factors of production. 
C) Factors of production include land,labor,capital,and entrepreneurship. 
D) Only those resources that are privately owned are counted as factors of production. 
A) Factors of production are also known as resources. 
B) In order to produce any good or service,it is necessary to have factors of production. 
C) Factors of production include land,labor,capital,and entrepreneurship. 
D) Only those resources that are privately owned are counted as factors of production.

Question 6

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus.Complete the table by calculating the required opportunity costs for brushes and combs.   On the basis of your calculations in Table 1.3
-what is the opportunity cost of producing at point M rather than point N?

Accepted Answer

A) 23 combs. 
B) 21 combs. 
C) 1 brush. 
D) 2 brushes. 
A) 23 combs. 
B) 21 combs. 
C) 1 brush. 
D) 2 brushes.

Question 7

When a curve shifts,the underlying relationship between the two variables has changed.

Accepted Answer

A) True 
 B)False

Question 8

If an economy is producing inside the production possibilities curve,then

Accepted Answer

A) There is full employment of resources. 
B) It is operating efficiently. 
C) It can produce more of one good without giving up some of another good. 
D) There are not enough resources available to produce more output. 
A) There is full employment of resources. 
B) It is operating efficiently. 
C) It can produce more of one good without giving up some of another good. 
D) There are not enough resources available to produce more output.

Question 9

In using a guns and butter production possibilities curve with increasing opportunity cost,producing more and more tanks

Accepted Answer

A) Lowers the cost of each individual tank. 
B) Can be done at a constant opportunity cost. 
C) Requires us to give up larger and larger amounts of butter per tank produced. 
D) Is not possible due to scarcity. 
A) Lowers the cost of each individual tank. 
B) Can be done at a constant opportunity cost. 
C) Requires us to give up larger and larger amounts of butter per tank produced. 
D) Is not possible due to scarcity.

Question 10

A production possibilities curve indicates the

Accepted Answer

A) Combinations of goods and services an economy is actually producing. 
B) Maximum combinations of goods and services an economy can produce given its available resources and technology. 
C) Maximum combinations of goods and services an economy can produce given unlimited resources. 
D) Average combinations of goods and services an economy can produce given its available resources and technology. 
A) Combinations of goods and services an economy is actually producing. 
B) Maximum combinations of goods and services an economy can produce given its available resources and technology. 
C) Maximum combinations of goods and services an economy can produce given unlimited resources. 
D) Average combinations of goods and services an economy can produce given its available resources and technology.

Question 11

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce.

Accepted Answer

A) True 
 B)False

Question 12

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus.Complete the table by calculating the required opportunity costs for brushes and combs.   On the basis of your calculations in Table 1.3
-the law of increasing opportunity costs applies to

Accepted Answer

A) Both brushes and combs. 
B) Combs but not brushes. 
C) Brushes but not combs. 
D)  Neither brushes nor combs 
A) Both brushes and combs. 
B) Combs but not brushes. 
C) Brushes but not combs. 
D)  Neither brushes nor combs

Question 13

Producing at a point inside the production possibilities curve

Accepted Answer

A) Means society must be using its resources efficiently. 
B) Is unattainable given the present level of technology. 
C) Is feasible when the nation is at war but not feasible when the nation is at peace. 
D) Suggests we are forgoing the ability to produce more of both goods. 
A) Means society must be using its resources efficiently. 
B) Is unattainable given the present level of technology. 
C) Is feasible when the nation is at war but not feasible when the nation is at peace. 
D) Suggests we are forgoing the ability to produce more of both goods.

Question 14

Opportunity cost is

Accepted Answer

A) Measured only in dollars and cents. 
B) The total dollar cost to society of producing the goods. 
C) The difficulty associated with using one good in place of another. 
D) The best alternative that must be given up in order to get something else. 
A) Measured only in dollars and cents. 
B) The total dollar cost to society of producing the goods. 
C) The difficulty associated with using one good in place of another. 
D) The best alternative that must be given up in order to get something else.

Question 15

If an economy experiences increasing opportunity costs with respect to two goods,then the production possibilities curve between the two goods will be

Accepted Answer

A) Bowed outward or concave from below. 
B) A straight,downward-sloping line. 
C) Bowed inward or convex from below. 
D) Bowed outward until the two goods are equal, and then bowed inward. 
A) Bowed outward or concave from below. 
B) A straight,downward-sloping line. 
C) Bowed inward or convex from below. 
D) Bowed outward until the two goods are equal, and then bowed inward.

Question 16

Opportunity cost may be defined as the

Accepted Answer

A) Goods or services that are forgone in order to obtain something else. 
B) Dollar prices paid for final goods and services. 
C) Dollar cost of producing a particular product. 
D) Difference between wholesale and retail prices. 
A) Goods or services that are forgone in order to obtain something else. 
B) Dollar prices paid for final goods and services. 
C) Dollar cost of producing a particular product. 
D) Difference between wholesale and retail prices.

Question 17

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus.Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  
-The highest opportunity cost anywhere in Table 1.1 for B-1 bombers in terms of Stealth bombers is

Accepted Answer

A) 1 Stealth bomber per B-1 bomber. 
B) 3 Stealth bombers per B-1 bomber. 
C) 2 Stealth bombers per B-1 bomber. 
D) 0.5 Stealth bomber per B-1 bomber. 
A) 1 Stealth bomber per B-1 bomber. 
B) 3 Stealth bombers per B-1 bomber. 
C) 2 Stealth bombers per B-1 bomber. 
D) 0.5 Stealth bomber per B-1 bomber.

Question 18

Government intervention may achieve a more optimal outcome than the market mechanism when addressing

Accepted Answer

A) Inefficient bureaucracy. 
B) Consumption of cigarettes. 
C) Theme park construction. 
D) None of the choices are correct. 
A) Inefficient bureaucracy. 
B) Consumption of cigarettes. 
C) Theme park construction. 
D) None of the choices are correct.

Question 19

Use the following figure to answer questions: Figure 1.4  
-A movement from point C to point A in Figure 1.4 results in

Accepted Answer

A) More efficient production. 
B) Permanent unemployment of workers producing plasma televisions. 
C) A reallocation of resources from MP3 player production to plasma television production. 
D) A reallocation of resources from plasma television production to MP3 player production. 
A) More efficient production. 
B) Permanent unemployment of workers producing plasma televisions. 
C) A reallocation of resources from MP3 player production to plasma television production. 
D) A reallocation of resources from plasma television production to MP3 player production.

Question 20

When an economy is producing efficiently,it is

Accepted Answer

A) Producing a combination of goods and services beyond the production possibilities curve. 
B) Getting the most goods and services from the available resources. 
C) Experiencing decreasing opportunity costs. 
D) Producing equal amounts of all goods. 
A) Producing a combination of goods and services beyond the production possibilities curve. 
B) Getting the most goods and services from the available resources. 
C) Experiencing decreasing opportunity costs. 
D) Producing equal amounts of all goods.

Exam 1: Economics: the Core Issues Appendix: Using Graphs

Use the following figure to answer questions: Figure 1.3 -Using Figure 1.3 and PP1,at point A,

Explain why an economist would say,"There is no such thing as a free lunch."

With respect to factors of production,which of the following statements is not true?

When a curve shifts,the underlying relationship between the two variables has changed.

If an economy is producing inside the production possibilities curve,then

In using a guns and butter production possibilities curve with increasing opportunity cost,producing more and more tanks

A production possibilities curve indicates the

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce.

Producing at a point inside the production possibilities curve

Opportunity cost is

If an economy experiences increasing opportunity costs with respect to two goods,then the production possibilities curve between the two goods will be

Opportunity cost may be defined as the

Government intervention may achieve a more optimal outcome than the market mechanism when addressing

Use the following figure to answer questions: Figure 1.4 -A movement from point C to point A in Figure 1.4 results in

When an economy is producing efficiently,it is

The Us Economy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand Appendix: the Keynesian Cross

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice Appendix: Indifference Curves

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty Glossary Index Reference Tables

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