Question 1

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

Accepted Answer

A) volume of physical resources 
B) level of labor skills 
C) level of technology 
D) amount of factories on hand 
E) All of the above are correct. 
A) volume of physical resources 
B) level of labor skills 
C) level of technology 
D) amount of factories on hand 
E) All of the above are correct.

Question 2

Which of the following does not determine the position and shape of a society's PPF?

Accepted Answer

A) physical resources 
B) price level 
C) skills and technology 
D) past construction of factories and research 
A) physical resources 
B) price level 
C) skills and technology 
D) past construction of factories and research

Question 3

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Accepted Answer

A) True 
 B)False

Question 4

According to Baumol and Blinder, recognition of the usefulness of markets

Accepted Answer

A) labels a person as an apologist (defender) of capital. 
B) extends to some socialist countries, for example, China. 
C) should make totally free markets good for any society. 
D) makes one a radical. 
A) labels a person as an apologist (defender) of capital. 
B) extends to some socialist countries, for example, China. 
C) should make totally free markets good for any society. 
D) makes one a radical.

Question 5

Efficient production can be carried out anywhere on or below the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 6

What is Jim's opportunity cost of operating his own business?

Accepted Answer

A) the total amount of money he puts into capital equipment 
B) the value of his labor that is put into the business 
C) the cost of hiring his laborers 
D) All of the above are correct. 
A) the total amount of money he puts into capital equipment 
B) the value of his labor that is put into the business 
C) the cost of hiring his laborers 
D) All of the above are correct.

Question 7

A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally) for $75.To a ticket holder, the opportunity cost of actually attending the concert is

Accepted Answer

A) $45. 
B) $50. 
C) $75. 
D) $115. 
A) $45. 
B) $50. 
C) $75. 
D) $115.

Question 8

The principle of comparative advantage helps explain trade between nations.

Accepted Answer

A) True 
 B)False

Question 9

Economics examines the options open to households, business firms, governments, and entire societies by the limited resources at their command.

Accepted Answer

A) True 
 B)False

Question 10

The law of comparative advantage explains why

Accepted Answer

A) individuals choose specialized careers. 
B) firms specialize in the production of certain goods. 
C) nations develop strengths in certain industries. 
D) All of the above are correct. 
A) individuals choose specialized careers. 
B) firms specialize in the production of certain goods. 
C) nations develop strengths in certain industries. 
D) All of the above are correct.

Question 11

The fundamental goal of economics is to

Accepted Answer

A) allow everyone to have five yachts and two automobiles. 
B) redistribute income and eliminate poverty. 
C) reduce unemployment so that lower welfare payments are necessary. 
D) learn to cope with the scarcity of virtually all resources. 
A) allow everyone to have five yachts and two automobiles. 
B) redistribute income and eliminate poverty. 
C) reduce unemployment so that lower welfare payments are necessary. 
D) learn to cope with the scarcity of virtually all resources.

Question 12

The most important way in which inefficiency occurs is

Accepted Answer

A) producing more military goods instead of civilian goods. 
B) limiting economic growth by limiting capital spending. 
C) unemployment of labor and other resources. 
D) producing outside the production possibilities frontier. 
E) All of the above are correct. 
A) producing more military goods instead of civilian goods. 
B) limiting economic growth by limiting capital spending. 
C) unemployment of labor and other resources. 
D) producing outside the production possibilities frontier. 
E) All of the above are correct.

Question 13

Economic growth solves the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 14

Rational production decisions require an understanding of

Accepted Answer

A) trade-offs. 
B) opportunity costs. 
C) scarcity of resources. 
D) All of the above are correct. 
A) trade-offs. 
B) opportunity costs. 
C) scarcity of resources. 
D) All of the above are correct.

Question 15

Figure 3-3  
-In Figure 3-3, a shift from A to B seems most consistent with which of the following?

Accepted Answer

A) Society decided to give guns lower priority. 
B) There have been more technological advances in guns than in butter. 
C) There is a massive immigration of labor. 
D) There are unemployed resources in both guns and butter. 
A) Society decided to give guns lower priority. 
B) There have been more technological advances in guns than in butter. 
C) There is a massive immigration of labor. 
D) There are unemployed resources in both guns and butter.

Question 16

Centrally planned economies are not constrained by the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 17

In a properly functioning economy, money costs approximate opportunity costs.

Accepted Answer

A) True 
 B)False

Question 18

​Goods are distributed among people by means of:

Accepted Answer

A) ​a central authority 
B) ​prices 
C) ​markets 
D) ​all of these 
A) ​a central authority 
B) ​prices 
C) ​markets 
D) ​all of these

Question 19

The main reason that finished goods are scarce is that

Accepted Answer

A) raw material resources are scarce. 
B) factories are not operated efficiently. 
C) distribution systems are clogged. 
D) taxes are destroying work incentives. 
E) All of the above are correct. 
A) raw material resources are scarce. 
B) factories are not operated efficiently. 
C) distribution systems are clogged. 
D) taxes are destroying work incentives. 
E) All of the above are correct.

Question 20

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

Accepted Answer

Money price can be higher than opportuni

Exam 3: The Fundamental Economic Problem Scarcity and Choice

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

Which of the following does not determine the position and shape of a society's PPF?

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

According to Baumol and Blinder, recognition of the usefulness of markets

Efficient production can be carried out anywhere on or below the production possibilities frontier.

What is Jim's opportunity cost of operating his own business?

A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally) for $75.To a ticket holder, the opportunity cost of actually attending the concert is

The principle of comparative advantage helps explain trade between nations.

Economics examines the options open to households, business firms, governments, and entire societies by the limited resources at their command.

The law of comparative advantage explains why

The fundamental goal of economics is to

The most important way in which inefficiency occurs is

Economic growth solves the problem of scarcity.

Rational production decisions require an understanding of

Figure 3-3 -In Figure 3-3, a shift from A to B seems most consistent with which of the following?

Centrally planned economies are not constrained by the problem of scarcity.

In a properly functioning economy, money costs approximate opportunity costs.

​Goods are distributed among people by means of:

The main reason that finished goods are scarce is that

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

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

Goods are distributed among people by means of: