Question 1

The concept of trade-offs would become irrelevant if

Accepted Answer

A)  we were dealing with a very simple, one-person economy. 
B)  poverty were eliminated. 
C)  scarcity were eliminated. 
D)  capital were eliminated. 
A)  we were dealing with a very simple, one-person economy. 
B)  poverty were eliminated. 
C)  scarcity were eliminated. 
D)  capital were eliminated.

Question 2

If an economy's production possibility frontier is negatively sloped and "bowed outward" from the origin, then the opportunity cost of producing a good

Accepted Answer

A)  increases as more of that good is produced. 
B)  decreases as more of that good is produced. 
C)  remains constant as more of that good is produced. 
D)  remains constant as less of that good is produced. 
A)  increases as more of that good is produced. 
B)  decreases as more of that good is produced. 
C)  remains constant as more of that good is produced. 
D)  remains constant as less of that good is produced.

Question 3

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow.   Figure 2.6
-Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf2 to ppf1?

Accepted Answer

A)  a decrease in the economy's capital stock 
B)  an increase in production efficiency 
C)  a change in consumer's tastes 
D)  economic growth 
A)  a decrease in the economy's capital stock 
B)  an increase in production efficiency 
C)  a change in consumer's tastes 
D)  economic growth

Question 4

Related to the Economics in Practice on page 36: The results of the survey conducted by Esther Duflo and Abhijit Banerjee found that in extremely poor societies

Accepted Answer

A)  household choice plays no role in consumption decisions. 
B)  all consumption decisions are made by the government. 
C)  household choice even plays a role in non-food-related consumption decisions. 
D)  the only consumption decisions in which household choice plays a role is in the consumption of biological needs such as food. 
A)  household choice plays no role in consumption decisions. 
B)  all consumption decisions are made by the government. 
C)  household choice even plays a role in non-food-related consumption decisions. 
D)  the only consumption decisions in which household choice plays a role is in the consumption of biological needs such as food.

Question 5

An institution through which buyers and sellers interact and engage in exchange is

Accepted Answer

A)  a central authority. 
B)  "laissez-faire." 
C)  a market. 
D)  a production frontier. 
A)  a central authority. 
B)  "laissez-faire." 
C)  a market. 
D)  a production frontier.

Question 6

The inputs into the process of production are called factors of production.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.   Figure 2.4
-According to Figure 2.4, Point E necessarily represents

Accepted Answer

A)  an impossible production point. 
B)  technological advancement. 
C)  overallocation of resources. 
D)  only motorcycles being produced. 
A)  an impossible production point. 
B)  technological advancement. 
C)  overallocation of resources. 
D)  only motorcycles being produced.

Question 8

Refer to the information provided in Figure 2.3 below to answer the question(s) that follow.   Figure 2.3
-Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is

Accepted Answer

A)  1/10. 
B)  -1/10. 
C)  10. 
D)  -10. 
A)  1/10. 
B)  -1/10. 
C)  10. 
D)  -10.

Question 9

An improvement in technology will cause the

Accepted Answer

A)  production possibility frontier to shift outward. 
B)  production possibility frontier to shift inward. 
C)  economy to move down the production possibility frontier. 
D)  economy to move closer to its production possibility frontier. 
A)  production possibility frontier to shift outward. 
B)  production possibility frontier to shift inward. 
C)  economy to move down the production possibility frontier. 
D)  economy to move closer to its production possibility frontier.

Question 10

If someone has a comparative advantage in growing pineapples,

Accepted Answer

A)  she can grow pineapples at a lower opportunity cost than other pineapple growers. 
B)  she also has an absolute advantage in growing pineapples. 
C)  she can grow more pineapples using the same resources than other pineapple growers. 
D)  pineapples are the only product she can grow. 
A)  she can grow pineapples at a lower opportunity cost than other pineapple growers. 
B)  she also has an absolute advantage in growing pineapples. 
C)  she can grow more pineapples using the same resources than other pineapple growers. 
D)  pineapples are the only product she can grow.

Question 11

An example of an investment is

Accepted Answer

A)  the purchase of an iPhone by a company for one of its salesmen. 
B)  the purchase of a share of Berkshire Hathaway stock. 
C)  the purchase of a government Treasury bill. 
D)  all of the above 
A)  the purchase of an iPhone by a company for one of its salesmen. 
B)  the purchase of a share of Berkshire Hathaway stock. 
C)  the purchase of a government Treasury bill. 
D)  all of the above

Question 12

Refer to the information provided in Table 2.2 below to answer the following question(s).
Table 2.2
 $$\begin{array} { | l | l | l | } 
\hline & \text { Molly } & \text { Pete } \
\hline \text { Avatar Desigrn } & 6 & 3 \
\hline \text { Tattoo Desigri } & 3 & 2 \
\hline
\end{array}$$
-Refer to Table 2.2. To maximize total production,

Accepted Answer

A)  Molly should specialize in avatar design and Pete should specialize in tattoo design. 
B)  Pete should specialize in avatar design and Molly should specialize in tattoo design. 
C)  Molly and Pete should both split their time between designing avatars and tattoos. 
D)  Molly should design avatars and tattoos, but Pete should only design avatars. 
A)  Molly should specialize in avatar design and Pete should specialize in tattoo design. 
B)  Pete should specialize in avatar design and Molly should specialize in tattoo design. 
C)  Molly and Pete should both split their time between designing avatars and tattoos. 
D)  Molly should design avatars and tattoos, but Pete should only design avatars.

Question 13

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the question(s) that follow.   Figure 2.2
-Refer to Figure 2.2. Full resource employment and production efficiency is represented by 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 14

An economy in which individual people and firms pursue their own self-interest without any central direction or regulation is a(n)

Accepted Answer

A)  command economy. 
B)  laissez-faire economy. 
C)  invisible-hand economy. 
D)  private-sector economy. 
A)  command economy. 
B)  laissez-faire economy. 
C)  invisible-hand economy. 
D)  private-sector economy.

Question 15

Because resources are not equally well suited to producing all goods,

Accepted Answer

A)  as more of a good is produced the inputs used to produce that good will increase in price. 
B)  the opportunity costs of producing a good will increase as more of that good is produced. 
C)  the opportunity costs of producing a good will decrease as more of that good is produced. 
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)  the opportunity costs of producing a good will increase as more of that good is produced. 
C)  the opportunity costs of producing a good will decrease as more of that good is produced. 
D)  as more of a good is produced the quality of that good declines and therefore the costs of production increase.

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

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes

Accepted Answer

A)  decreasing opportunity costs. 
B)  the fallacy of composition. 
C)  Ockham's razor. 
D)  the economic problem. 
A)  decreasing opportunity costs. 
B)  the fallacy of composition. 
C)  Ockham's razor. 
D)  the economic problem.

Question 18

An example of forgoing present benefits in order to receive future benefits is

Accepted Answer

A)  production. 
B)  saving. 
C)  consumption. 
D)  growth. 
A)  production. 
B)  saving. 
C)  consumption. 
D)  growth.

Question 19

Which of the following statements is not true for a command economy?

Accepted Answer

A)  Consumers have some choices concerning what they buy. 
B)  The government decides what is produced. 
C)  The amount of a good supplied always equals the amount of the good demanded. 
D)  The state decides how to distribute what is produced. 
A)  Consumers have some choices concerning what they buy. 
B)  The government decides what is produced. 
C)  The amount of a good supplied always equals the amount of the good demanded. 
D)  The state decides how to distribute what is produced.

Question 20

The process of using resources to produce ________ is known as investment.

Accepted Answer

A)  money 
B)  new capital 
C)  profit 
D)  inputs 
A)  money 
B)  new capital 
C)  profit 
D)  inputs

Exam 2: The Economic Problem: Scarcity and Choice

The concept of trade-offs would become irrelevant if

If an economy's production possibility frontier is negatively sloped and "bowed outward" from the origin, then the opportunity cost of producing a good

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow. Figure 2.6 -Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf2 to ppf1?

Related to the Economics in Practice on page 36: The results of the survey conducted by Esther Duflo and Abhijit Banerjee found that in extremely poor societies

An institution through which buyers and sellers interact and engage in exchange is

The inputs into the process of production are called factors of production.

Refer to the information provided in Figure 2.4 below to answer the question(s) that follow. Figure 2.4 -According to Figure 2.4, Point E necessarily represents

Refer to the information provided in Figure 2.3 below to answer the question(s) that follow. Figure 2.3 -Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is

An improvement in technology will cause the

If someone has a comparative advantage in growing pineapples,

An example of an investment is

Refer to the information provided in Table 2.2 below to answer the following question(s). Table 2.2 Molly Pete Avatar Desigrn 6 3 Tattoo Desigri 3 2 -Refer to Table 2.2. To maximize total production,

Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the question(s) that follow. Figure 2.2 -Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point

An economy in which individual people and firms pursue their own self-interest without any central direction or regulation is a(n)

Because resources are not equally well suited to producing all goods,

Private enterprise plays some role in production decisions for

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes

An example of forgoing present benefits in order to receive future benefits is

Which of the following statements is not true for a command economy?

The process of using resources to produce ________ is known as investment.

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 2.6 below to answer the question(s) that follow. Figure 2.6 -Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf² to ppf¹?