Question 1

The opportunity cost of increased production of some good can be measured with

Accepted Answer

A) the slope of a ray to the production possibilities curve. 
B) the area under the curve of a production possibilities curve. 
C) the area of the rectangle bounded by the axes and the point on the production possibilities curve. 
D) the slope of the production possibilities curve. 
E) All of the above are correct. 
A) the slope of a ray to the production possibilities curve. 
B) the area under the curve of a production possibilities curve. 
C) the area of the rectangle bounded by the axes and the point on the production possibilities curve. 
D) the slope of the production possibilities curve. 
E) All of the above are correct.

Question 2

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

Accepted Answer

A) No, an economy can also expand by invention and innovation. 
B) No, an economy can also grow by investment instead of capital spending. 
C) Yes, more capital is the only way to expand its production possibilities frontier. 
D) Yes, although more capital clearly has a high opportunity cost. 
E) Yes, because capital is the only constraining resource that limits growth. 
A) No, an economy can also expand by invention and innovation. 
B) No, an economy can also grow by investment instead of capital spending. 
C) Yes, more capital is the only way to expand its production possibilities frontier. 
D) Yes, although more capital clearly has a high opportunity cost. 
E) Yes, because capital is the only constraining resource that limits growth.

Question 3

The division of labor usually refers to splitting

Accepted Answer

A) the three coordination decisions among different sets of planners. 
B) the parts of a complex task among different workers. 
C) the production of consumption goods and capital goods among different workers. 
D) political leaders into radical and conservative camps each year. 
A) the three coordination decisions among different sets of planners. 
B) the parts of a complex task among different workers. 
C) the production of consumption goods and capital goods among different workers. 
D) political leaders into radical and conservative camps each year.

Question 4

A society which is inside its production possibilities frontier is efficient.

Accepted Answer

A) True 
 B)False

Question 5

Economists define "efficiency" as the absence of waste.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following must cope with scarcity?

Accepted Answer

A) individuals 
B) companies 
C) governments 
D) families 
E) All of the above are correct. 
A) individuals 
B) companies 
C) governments 
D) families 
E) All of the above are correct.

Question 7

A society's decision to produce more tanks may require it to forgo production of some cars.

Accepted Answer

A) True 
 B)False

Question 8

In the Wealth of Nations, Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

Accepted Answer

A) True 
 B)False

Question 9

A rational decision is one that

Accepted Answer

A) satisfies all desires. 
B) avoids the intentional allocation of resources. 
C) assigns available resources in the manner most preferred by decision makers. 
D) assigns available resources to the uses with the lowest opportunity costs. 
A) satisfies all desires. 
B) avoids the intentional allocation of resources. 
C) assigns available resources in the manner most preferred by decision makers. 
D) assigns available resources to the uses with the lowest opportunity costs.

Question 10

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not an example of a type of factor of production?

Accepted Answer

A) land 
B) labor 
C) government 
D) capital 
A) land 
B) labor 
C) government 
D) capital

Question 12

Scarcity is a concept that applies to all of the following except

Accepted Answer

A) time. 
B) natural resources. 
C) human wants. 
D) machinery. 
A) time. 
B) natural resources. 
C) human wants. 
D) machinery.

Question 13

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home.Is this statement true?

Accepted Answer

This statement could be true.Such import

Question 14

Figure 3-6  
-If an economy is producing inefficiently, it is

Accepted Answer

A) possible to increase production of all goods simultaneously. 
B) possible to increase production of one good at the expense of another. 
C) not possible to increase production of any good. 
D) not possible to increase economic growth. 
E) possible to increase production with no effort. 
A) possible to increase production of all goods simultaneously. 
B) possible to increase production of one good at the expense of another. 
C) not possible to increase production of any good. 
D) not possible to increase economic growth. 
E) possible to increase production with no effort.

Question 15

The money cost of a particular good will approximate its opportunity cost if

Accepted Answer

A) there are serious distortions in the market. 
B) the market functions well. 
C) there is much specialization in the market. 
D) nations are exploiting the law of comparative advantage. 
A) there are serious distortions in the market. 
B) the market functions well. 
C) there is much specialization in the market. 
D) nations are exploiting the law of comparative advantage.

Question 16

Figure 3-2  
-In Figure 3-2, a point such as E

Accepted Answer

A) is not obtainable. 
B) is an efficient use of resources. 
C) represents an inefficient allocation of resources. 
D) indicates that the society is a capitalist society. 
A) is not obtainable. 
B) is an efficient use of resources. 
C) represents an inefficient allocation of resources. 
D) indicates that the society is a capitalist society.

Question 17

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Accepted Answer

The market deals with efficiency in prod

Question 18

Voluntary exchange results in mutual gains.

Accepted Answer

A) True 
 B)False

Question 19

Figure 3-2  
-In Figure 3-2, a point such as D

Accepted Answer

A) can be obtained through new technology. 
B) can never be obtained. 
C) can only be obtained by a capitalist society. 
D) represents a misallocation of resources. 
A) can be obtained through new technology. 
B) can never be obtained. 
C) can only be obtained by a capitalist society. 
D) represents a misallocation of resources.

Question 20

The concept of "an invisible hand" led Adam Smith to believe that

Accepted Answer

A) if each person looks out for himself or herself, then chaos will inevitably ensue. 
B) pursuit of self-interest promotes economic well-being for society as a whole. 
C) governmental rule actually results in greater good than is apparent at the time. 
D) traditional religion is an appropriate guide for human behavior. 
E) All of the above are correct. 
A) if each person looks out for himself or herself, then chaos will inevitably ensue. 
B) pursuit of self-interest promotes economic well-being for society as a whole. 
C) governmental rule actually results in greater good than is apparent at the time. 
D) traditional religion is an appropriate guide for human behavior. 
E) All of the above are correct.

Exam 3: The Fundamental Economic Problem Scarcity and Choice

The opportunity cost of increased production of some good can be measured with

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

The division of labor usually refers to splitting

A society which is inside its production possibilities frontier is efficient.

Economists define "efficiency" as the absence of waste.

Which of the following must cope with scarcity?

A society's decision to produce more tanks may require it to forgo production of some cars.

In the Wealth of Nations, Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

A rational decision is one that

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Which of the following is not an example of a type of factor of production?

Scarcity is a concept that applies to all of the following except

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home.Is this statement true?

Figure 3-6 -If an economy is producing inefficiently, it is

The money cost of a particular good will approximate its opportunity cost if

Figure 3-2 -In Figure 3-2, a point such as E

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Voluntary exchange results in mutual gains.

Figure 3-2 -In Figure 3-2, a point such as D

The concept of "an invisible hand" led Adam Smith to believe that

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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