Question 1

A production possibilities curve measures opportunity cost in dollar terms.

Accepted Answer

A) True 
 B)False

Question 2

When the government provides national defense, it is:

Accepted Answer

A) providing goods and services. 
B) enforcing the legal system. 
C) maintaining the money supply. 
D) stabilizing the economy. 
A) providing goods and services. 
B) enforcing the legal system. 
C) maintaining the money supply. 
D) stabilizing the economy.

Question 3

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _______ , and it is measured _______ .

Accepted Answer

A) opportunity cost; in terms of the money it costs 
B) increasing cost; in terms of the amount of money spent doing so 
C) constant cost; by the slope of the production possibilities curve at that level 
D) opportunity cost; by the slope of the production possibilities curve at that level 
A) opportunity cost; in terms of the money it costs 
B) increasing cost; in terms of the amount of money spent doing so 
C) constant cost; by the slope of the production possibilities curve at that level 
D) opportunity cost; by the slope of the production possibilities curve at that level

Question 4

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is ____ __ pound(s)of potatoes.

Accepted Answer

A) 1/2 
B) 2 
C) 100 
D) 200 
A) 1/2 
B) 2 
C) 100 
D) 200

Question 5

The concept of comparative advantage is based upon:

Accepted Answer

A) absolute labor productivity. 
B) relative labor costs. 
C) dollar prices of labor. 
D) relative opportunity costs. 
A) absolute labor productivity. 
B) relative labor costs. 
C) dollar prices of labor. 
D) relative opportunity costs.

Question 6

One of the two criteria for a resource to be considered as a natural resource is that it must:

Accepted Answer

A) have been produced. 
B) not be part of the environment. 
C) be part of a factory or building. 
D) be available for the production of goods and services. 
A) have been produced. 
B) not be part of the environment. 
C) be part of a factory or building. 
D) be available for the production of goods and services.

Question 7

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Accepted Answer

A) True 
 B)False

Question 8

The best example of a market capitalist economy is:

Accepted Answer

A) Russia. 
B) China before 1979. 
C) Cuba. 
D) the United States. 
A) Russia. 
B) China before 1979. 
C) Cuba. 
D) the United States.

Question 9

Economic resources used in the production process are called:

Accepted Answer

A) free gifts of the natural environment. 
B) factors of production. 
C) consumer items. 
D) money capital. 
A) free gifts of the natural environment. 
B) factors of production. 
C) consumer items. 
D) money capital.

Question 10

The law of increasing opportunity costs is a result of the fact that:

Accepted Answer

A) the value of the dollar has declined over time. 
B) wage rates rise as the economy reaches full employment. 
C) consumers tend to value a good more when they don't have much of it. 
D) resources are not equally productive in all output categories. 
A) the value of the dollar has declined over time. 
B) wage rates rise as the economy reaches full employment. 
C) consumers tend to value a good more when they don't have much of it. 
D) resources are not equally productive in all output categories.

Question 11

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future.In the context of production possibilities, this is most comparable to:

Accepted Answer

A) producing at any point on the production possibilities curve. 
B) producing at a point inside the production possibilities curve. 
C) producing relatively more consumer goods and relatively fewer capital goods. 
D) producing relatively more capital goods and relatively fewer consumer goods. 
A) producing at any point on the production possibilities curve. 
B) producing at a point inside the production possibilities curve. 
C) producing relatively more consumer goods and relatively fewer capital goods. 
D) producing relatively more capital goods and relatively fewer consumer goods.

Question 12

Government's role of providing national defense is considered:

Accepted Answer

A) enforcing a legal system. 
B) providing certain goods and services. 
C) redistributing income. 
D) expanding economic growth. 
A) enforcing a legal system. 
B) providing certain goods and services. 
C) redistributing income. 
D) expanding economic growth.

Question 13

The best example of a command socialist economy is:

Accepted Answer

A) Russia. 
B) China after 1979. 
C) Cuba. 
D) the United States. 
A) Russia. 
B) China after 1979. 
C) Cuba. 
D) the United States.

Question 14

If a production possibilities curve were bowed in or convex to the origin of a graph, it would demonstrate:

Accepted Answer

A) increasing opportunity cost. 
B) decreasing opportunity cost. 
C) constant opportunity cost. 
D) fluctuating opportunity cost. 
A) increasing opportunity cost. 
B) decreasing opportunity cost. 
C) constant opportunity cost. 
D) fluctuating opportunity cost.

Question 15

Use the following to answer questions Production P ossibilities S chedule 2

$\begin{array}{cccccc}
&V & W & X & Y & Z\
\hline\text { Capital goods per period } & 0 & 1 & 2 & 3 & 4 \
\text { Consumer goods per period } & 20 & 18 & 14 & 8 & 0
\end{array}$
-(Exhibit: Production Possibilities Schedule 2)If an economy is producing at alternative W, the opportunity cost to it of producing at X is _______ unit(s)of consumer goods per period.

Accepted Answer

A) 0 
B) 1 
C) 4 
D) 18 
A) 0 
B) 1 
C) 4 
D) 18

Question 16

If the U.S.economy adds to the capital stock, this may require a temporary decrease in the amount of present consumption.

Accepted Answer

A) True 
 B)False

Question 17

Without government, the "for whom" question could not be solved.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions   
-(Exhibit: Sugar and Freight Trains)Suppose the economy is operating at point C.The opportunity cost of producing the fourth freight train would be:

Accepted Answer

A) 19 tons of sugar. 
B) 45 tons of sugar. 
C) 80 tons of sugar. 
D) 3 freight trains. 
A) 19 tons of sugar. 
B) 45 tons of sugar. 
C) 80 tons of sugar. 
D) 3 freight trains.

Question 19

Use the following to answer questions   
-(Exhibit: Strawberries and Submarines)As the economy moves from point A towards, say, point D, it will find that the opportunity cost of each additional submarine:

Accepted Answer

A) falls. 
B) rises. 
C) remains unchanged. 
D) none of the above 
A) falls. 
B) rises. 
C) remains unchanged. 
D) none of the above

Question 20

Improvements in technology provide benefits to:

Accepted Answer

A) consumers, through lower prices. 
B) workers, although some jobs may be eliminated. 
C) firms, through lower production costs. 
D) all of the above. 
A) consumers, through lower prices. 
B) workers, although some jobs may be eliminated. 
C) firms, through lower production costs. 
D) all of the above.

Exam 2: Confronting Scarcity: Choices in Production

A production possibilities curve measures opportunity cost in dollar terms.

When the government provides national defense, it is:

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _______ , and it is measured _______ .

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is ____ __ pound(s)of potatoes.

The concept of comparative advantage is based upon:

One of the two criteria for a resource to be considered as a natural resource is that it must:

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

The best example of a market capitalist economy is:

Economic resources used in the production process are called:

The law of increasing opportunity costs is a result of the fact that:

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future.In the context of production possibilities, this is most comparable to:

Government's role of providing national defense is considered:

The best example of a command socialist economy is:

If a production possibilities curve were bowed in or convex to the origin of a graph, it would demonstrate:

If the U.S.economy adds to the capital stock, this may require a temporary decrease in the amount of present consumption.

Without government, the "for whom" question could not be solved.

Use the following to answer questions -(Exhibit: Sugar and Freight Trains)Suppose the economy is operating at point C.The opportunity cost of producing the fourth freight train would be:

Use the following to answer questions -(Exhibit: Strawberries and Submarines)As the economy moves from point A towards, say, point D, it will find that the opportunity cost of each additional submarine:

Improvements in technology provide benefits to:

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro Inflation and Unemployment

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _ , and it is measured _ .

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is __ pound(s)of potatoes.