Question 1

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  True

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

Every economic decision involves a trade-off because of

Accepted Answer

A) theory. 
B) opportunism. 
C) consumption. 
D) scarcity. 
E) efficiency. 
A) theory. 
B) opportunism. 
C) consumption. 
D) scarcity. 
E) efficiency. D

Question 4

Probably the most important source of efficiency in production is

Accepted Answer

A) investing in more capital goods. 
B) consuming rationally. 
C) expanding the production possibilities frontier. 
D) increasing inputs of energy and raw materials. 
E) the specialization of labor. 
A) investing in more capital goods. 
B) consuming rationally. 
C) expanding the production possibilities frontier. 
D) increasing inputs of energy and raw materials. 
E) the specialization of labor.

Question 5

Monetary costs and opportunity costs are always identical.

Accepted Answer

A) True 
 B)False

Question 6

Which principle states that as the production of one good expands, the opportunity cost of producing another unit of this good generally increases?

Accepted Answer

A) Principle of total cost 
B) Principle of increasing cost 
C) Principle of opportunity cost 
D) Principle of increasing marginal utility 
A) Principle of total cost 
B) Principle of increasing cost 
C) Principle of opportunity cost 
D) Principle of increasing marginal utility

Question 7

Figure 3-2  
-In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

Accepted Answer

A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage. 
A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage.

Question 8

Inefficiency in an economy can be caused by

Accepted Answer

A) misallocating resources. 
B) underemploying resources. 
C) discrimination. 
D) All of the above are correct. 
A) misallocating resources. 
B) underemploying resources. 
C) discrimination. 
D) All of the above are correct.

Question 9

Figure 3-5  
-At present, faculty in the Economics Department teach introductory and upper-level courses.Which graph in Figure 3-5 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 10

Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

Accepted Answer

The curve should look like the figures i

Question 11

A production possibilities curve has a downward slope because

Accepted Answer

A) increased production of one good always reduces the additional profit of production. 
B) decreased production of one good is associated with lower profit from that good. 
C) economists have a negative view of life and human nature. 
D) increased production of one good always reduces production of the other. 
E) increased production of one good necessarily causes production of other goods to increase. 
A) increased production of one good always reduces the additional profit of production. 
B) decreased production of one good is associated with lower profit from that good. 
C) economists have a negative view of life and human nature. 
D) increased production of one good always reduces production of the other. 
E) increased production of one good necessarily causes production of other goods to increase.

Question 12

Free markets​ can:

Accepted Answer

A) ​prouduce goods and services with maximum efficiency 
B) ​solve unemployment 
C) ​protect the environment 
D) ​all of these 
A) ​prouduce goods and services with maximum efficiency 
B) ​solve unemployment 
C) ​protect the environment 
D) ​all of these

Question 13

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) bowed inward. 
D) bowed outward. 
E) undefined, because no market will exist in this case. 
A) downward sloping. 
B) upward sloping. 
C) bowed inward. 
D) bowed outward. 
E) undefined, because no market will exist in this case.

Question 14

Do markets solve all of society's problems?

Accepted Answer

A) Yes, markets are efficient and work well under nearly all circumstances. 
B) Yes, markets solve the problems of production and distribution. 
C) No, they do not solve problems such as unemployment and inflation. 
D) No, they hardly solve any problems at all. 
E) Uncertain, economic theory has no answer to this question. 
A) Yes, markets are efficient and work well under nearly all circumstances. 
B) Yes, markets solve the problems of production and distribution. 
C) No, they do not solve problems such as unemployment and inflation. 
D) No, they hardly solve any problems at all. 
E) Uncertain, economic theory has no answer to this question.

Question 15

At various times, the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close.How can one rationally decide which bases to shut down, given the necessity of jobs?

Accepted Answer

One must examine the opportunity cost of

Question 16

Is faster economic growth unambiguously better?

Accepted Answer

A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain-economic growth has no answer to this question. 
A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain-economic growth has no answer to this question.

Question 17

If two persons trade, one must gain at the expense of the other.

Accepted Answer

A) True 
 B)False

Question 18

Opportunity cost always arises when a trade-off decision is made.

Accepted Answer

A) True 
 B)False

Question 19

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

Accepted Answer

A) bowed outward. 
B) bowed inward. 
C) as a straight line (but not horizontal). 
D) as a horizontal straight line. 
A) bowed outward. 
B) bowed inward. 
C) as a straight line (but not horizontal). 
D) as a horizontal straight line.

Question 20

An optimal decision is one that is selected based on an analysis of

Accepted Answer

A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs. 
A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs.

Exam 3: The Fundamental Economic Problem Scarcity and Choice

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

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

Every economic decision involves a trade-off because of

Probably the most important source of efficiency in production is

Monetary costs and opportunity costs are always identical.

Which principle states that as the production of one good expands, the opportunity cost of producing another unit of this good generally increases?

Figure 3-2 -In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

Inefficiency in an economy can be caused by

Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

A production possibilities curve has a downward slope because

Free markets​ can:

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Do markets solve all of society's problems?

At various times, the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close.How can one rationally decide which bases to shut down, given the necessity of jobs?

Is faster economic growth unambiguously better?

If two persons trade, one must gain at the expense of the other.

Opportunity cost always arises when a trade-off decision is made.

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

An optimal decision is one that is selected based on an analysis of

What Is Economics

The Economy Myth and Reality

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

Filters

Free markets can: