Question 1

If production involves constant opportunity cost, the production possibilities curve

Accepted Answer

A) is "bowed inward." 
B) is a straight line. 
C) is "bowed outward." 
D) is a wavy line. 
E) has an unpredictable shape. 
A) is "bowed inward." 
B) is a straight line. 
C) is "bowed outward." 
D) is a wavy line. 
E) has an unpredictable shape.

Question 2

The central question in economics is how to

Accepted Answer

A) make the best use of scarce resources. 
B) use government planning agencies. 
C) induce people to want less. 
D) increase human knowledge. 
A) make the best use of scarce resources. 
B) use government planning agencies. 
C) induce people to want less. 
D) increase human knowledge.

Question 3

Which of the following characteristics of a PPF indicates that tradeoffs must be made?

Accepted Answer

A) the downward slope 
B) the upward slope 
C) the constant slope 
D) the curvature 
A) the downward slope 
B) the upward slope 
C) the constant slope 
D) the curvature

Question 4

Which of the following ideas of Adam Smith has religious overtones?

Accepted Answer

A) comparative advantage 
B) aggregate demand 
C) perfect competition 
D) rational expectations 
E) invisible hand 
A) comparative advantage 
B) aggregate demand 
C) perfect competition 
D) rational expectations 
E) invisible hand

Question 5

What are the three coordination tasks which markets resolve?

Accepted Answer

They are (1) how to produce an

Question 6

A student has a chance to see Katy Perry in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

Accepted Answer

A) she will get a lower grade on the economics exam. 
B) the opportunity cost of the concert is time spent studying. 
C) this decision implies a trade-off. 
D) All of the above are correct. 
A) she will get a lower grade on the economics exam. 
B) the opportunity cost of the concert is time spent studying. 
C) this decision implies a trade-off. 
D) All of the above are correct.

Question 7

The market system provides a way

Accepted Answer

A) to allow specialization and exchange to work in tandem. 
B) to improve the well-being of mankind. 
C) to harness self-interest. 
D) to allocate goods and services. 
E) All of the above are correct. 
A) to allow specialization and exchange to work in tandem. 
B) to improve the well-being of mankind. 
C) to harness self-interest. 
D) to allocate goods and services. 
E) All of the above are correct.

Question 8

Explain the relationship between opportunity costs and money costs.Can they be treated as identical?

Accepted Answer

The two costs are usually closely tied b

Question 9

In order to make an optimal choice we must use

Accepted Answer

A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis. 
A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis.

Question 10

Karl Marx was critical of markets on the grounds that they are not efficient.

Accepted Answer

A) True 
 B)False

Question 11

Figure 3-1  
-According to Figure 3-1, the opportunity cost of one more bushel of wheat is

Accepted Answer

A) higher at B than at D. 
B) lower at B than at D. 
C) equal at B and D. 
D) impossible to determine from the information given. 
A) higher at B than at D. 
B) lower at B than at D. 
C) equal at B and D. 
D) impossible to determine from the information given.

Question 12

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Accepted Answer

A) The Plan of the Ages. 
B) The General Theory of Money, Taxes, and Income. 
C) The Wealth of Nations. 
D) Principles of Economics. 
E) Concepts in Moral Philosophy. 
A) The Plan of the Ages. 
B) The General Theory of Money, Taxes, and Income. 
C) The Wealth of Nations. 
D) Principles of Economics. 
E) Concepts in Moral Philosophy.

Question 13

One popular definition of economics is the study of

Accepted Answer

A) how scarcity increases opportunities to meet ends. 
B) how markets overcome scarcity. 
C) one goal and three tasks. 
D) how to use limited means to meet unlimited wants. 
E) wants versus needs. 
A) how scarcity increases opportunities to meet ends. 
B) how markets overcome scarcity. 
C) one goal and three tasks. 
D) how to use limited means to meet unlimited wants. 
E) wants versus needs.

Question 14

Which of the following observations is true?

Accepted Answer

A) Free markets will achieve all of society's goals. 
B) The ability to buy goods is divided equally among consumers. 
C) The market deals with efficiency in production through the profit motive. 
D) The market system encourages firms to use inputs wastefully. 
A) Free markets will achieve all of society's goals. 
B) The ability to buy goods is divided equally among consumers. 
C) The market deals with efficiency in production through the profit motive. 
D) The market system encourages firms to use inputs wastefully.

Question 15

Hutch Technology makes computer monitors, which sell for $100 each.What is the opportunity cost of ten monitors?

Accepted Answer

A) $1,000. 
B) the other goods that could be produced with the resources that produce the ten monitors 
C) the profits that Hutch earns when it sells the ten monitors 
D) the profits that Hutch loses if it does not produce the monitors 
E) All of the above are correct. 
A) $1,000. 
B) the other goods that could be produced with the resources that produce the ten monitors 
C) the profits that Hutch earns when it sells the ten monitors 
D) the profits that Hutch loses if it does not produce the monitors 
E) All of the above are correct.

Question 16

As the term "opportunity cost" is defined in the text, the opportunity cost of going to college includes

Accepted Answer

A) both tuition and the value of the student's time. 
B) tuition but not the value of the student's time, which is a cash cost. 
C) the value of the student's time but not tuition, which is a monetary cost. 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
E) neither tuition nor the value of the student's time, at least at subsidized state universities. 
A) both tuition and the value of the student's time. 
B) tuition but not the value of the student's time, which is a cash cost. 
C) the value of the student's time but not tuition, which is a monetary cost. 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. 
E) neither tuition nor the value of the student's time, at least at subsidized state universities.

Question 17

Money is scarce, but resources are not.

Accepted Answer

A) True 
 B)False

Question 18

If an economy is operating inefficiently, then

Accepted Answer

A) the economy can increase production of consumption goods without reducing capital goods. 
B) there is always a positive opportunity cost to increasing output. 
C) output can only be increased through capital investment. 
D) output cannot be increased. 
A) the economy can increase production of consumption goods without reducing capital goods. 
B) there is always a positive opportunity cost to increasing output. 
C) output can only be increased through capital investment. 
D) output cannot be increased.

Question 19

If you discover that the opportunity cost of raising your economics grade is zero, you

Accepted Answer

A) are studying too hard and receiving a higher grade than is optimal for you. 
B) must be on the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
C) must be inside the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
D) must be producing more of other goods than is optimal for you. 
A) are studying too hard and receiving a higher grade than is optimal for you. 
B) must be on the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
C) must be inside the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
D) must be producing more of other goods than is optimal for you.

Question 20

Opportunity cost is the combined value of all other alternatives that go unchosen.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem Scarcity and Choice

If production involves constant opportunity cost, the production possibilities curve

The central question in economics is how to

Which of the following characteristics of a PPF indicates that tradeoffs must be made?

Which of the following ideas of Adam Smith has religious overtones?

What are the three coordination tasks which markets resolve?

A student has a chance to see Katy Perry in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

The market system provides a way

Explain the relationship between opportunity costs and money costs.Can they be treated as identical?

In order to make an optimal choice we must use

Karl Marx was critical of markets on the grounds that they are not efficient.

Figure 3-1 -According to Figure 3-1, the opportunity cost of one more bushel of wheat is

Adam Smith's book, one of the first systematic treatments of economics, was entitled

One popular definition of economics is the study of

Which of the following observations is true?

Hutch Technology makes computer monitors, which sell for $100 each.What is the opportunity cost of ten monitors?

As the term "opportunity cost" is defined in the text, the opportunity cost of going to college includes

Money is scarce, but resources are not.

If an economy is operating inefficiently, then

If you discover that the opportunity cost of raising your economics grade is zero, you

Opportunity cost is the combined value of all other alternatives that go unchosen.

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

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