Question 1

If countries do not engage in international trade:

Accepted Answer

A) they give up the ability to specialize in production. 
B) worldwide levels of production are lower. 
C) the world will be operating inside its production possibilities curve. 
D) all of the above are true. 
A) they give up the ability to specialize in production. 
B) worldwide levels of production are lower. 
C) the world will be operating inside its production possibilities curve. 
D) all of the above are true.

Question 2

Improvements in technology will shift the production possibilities curve outward.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) occur naturally. 
B) be part of a factory or building. 
C) be a skill or talent possessed by a person. 
D) be possible to use it to produce other goods and services. 
A) occur naturally. 
B) be part of a factory or building. 
C) be a skill or talent possessed by a person. 
D) be possible to use it to produce other goods and services.

Question 4

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibilities curve is:

Accepted Answer

A) bowed out from the origin. 
B) bowed in toward the origin. 
C) a straight line. 
D) a vertical line. 
A) bowed out from the origin. 
B) bowed in toward the origin. 
C) a straight line. 
D) a vertical line.

Question 5

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)A move from alternative Y to alternative X would:

Accepted Answer

A) result in greater unemployment. 
B) decrease potential growth. 
C) increase potential growth. 
D) result in greater underemployment. 
A) result in greater unemployment. 
B) decrease potential growth. 
C) increase potential growth. 
D) result in greater underemployment.

Question 6

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

Accepted Answer

A) economic growth. 
B) full employment. 
C) inefficiency. 
D) idle factors of production. 
A) economic growth. 
B) full employment. 
C) inefficiency. 
D) idle factors of production.

Question 7

Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces.

Accepted Answer

A) Brazil has a comparative advantage in automobile production and should specialize in coffee. 
B) Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles. 
C) Brazil has a comparative advantage in coffee production and should specialize in coffee production. 
D) Brazil has a comparative advantage in automobile production and should specialize in automobile production. 
A) Brazil has a comparative advantage in automobile production and should specialize in coffee. 
B) Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles. 
C) Brazil has a comparative advantage in coffee production and should specialize in coffee production. 
D) Brazil has a comparative advantage in automobile production and should specialize in automobile production.

Question 8

A factor of production that has been produced for use in the production of other goods and services is:

Accepted Answer

A) labor. 
B) money. 
C) capital. 
D) natural resources. 
A) labor. 
B) money. 
C) capital. 
D) natural resources.

Question 9

If the production possibilities curve were a straight line sloping down from left to right, this would suggest that:

Accepted Answer

A) more of both goods could be produced moving along the curve. 
B) the two products must have the same price. 
C) no factor of production has any particular comparative advantage over other resources. 
D) the utility of the two goods must be equal to consumers. 
A) more of both goods could be produced moving along the curve. 
B) the two products must have the same price. 
C) no factor of production has any particular comparative advantage over other resources. 
D) the utility of the two goods must be equal to consumers.

Question 10

A factor of production that is produced in order to produce something else is called:

Accepted Answer

A) money. 
B) labor. 
C) technology. 
D) capital. 
A) money. 
B) labor. 
C) technology. 
D) capital.

Question 11

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Accepted Answer

A) True 
 B)False

Question 12

Society can operate on the production possibilities curve only if it has achieved efficiency.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer questions  
-(Exhibit: Consumer and Capital Goods)If the economy is operating at point Y on currently relevant Curve 1, this means that:

Accepted Answer

A) the economy is at full employment and is efficient. 
B) the economy is less than fully employed. 
C) the economy is not efficient. 
D) economic growth is not possible in the future. 
A) the economy is at full employment and is efficient. 
B) the economy is less than fully employed. 
C) the economy is not efficient. 
D) economic growth is not possible in the future.

Question 14

To be considered capital, a factor of production must:

Accepted Answer

A) have been produced. 
B) occur naturally. 
C) be part of a factory or building. 
D) be a skill or talent possessed by a person. 
A) have been produced. 
B) occur naturally. 
C) be part of a factory or building. 
D) be a skill or talent possessed by a person.

Question 15

Use the following to answer questions  
-(Exhibit: Production Possibilities Curve 1)Resource underutilization occurs at point _____ with respect to Curve __ ___ .

Accepted Answer

A) I; y 
B) I; x 
C) J; z 
D) F; x 
A) I; y 
B) I; x 
C) J; z 
D) F; x

Question 16

Use the following to answer questions  
  
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)The movement from point G on Curve 1 to point E on Curve 2 means that the:

Accepted Answer

A) economy has grown. 
B) economy has become more efficient. 
C) quality and/or the quantity of the factors of production has decreased. 
D) demand for military goods has risen. 
A) economy has grown. 
B) economy has become more efficient. 
C) quality and/or the quantity of the factors of production has decreased. 
D) demand for military goods has risen.

Question 17

An example of capital is:

Accepted Answer

A) cash. 
B) a factory building. 
C) money in a checking account. 
D) the existing state of technology. 
A) cash. 
B) a factory building. 
C) money in a checking account. 
D) the existing state of technology.

Question 18

According to the textbook, the dramatic global shift toward market capitalist economies in the 1980s and 1990s is in large part the result of:

Accepted Answer

A) an emphasis on individual ownership and decision making power yielding freedom not available under socialist systems. 
B) the philosophical and theoretical arguments of communism and socialism being finally proved correct. 
C) the realization that government controls will allocate resources on the basis of comparative advantage. 
D) a shift to more capital-intensive production. 
A) an emphasis on individual ownership and decision making power yielding freedom not available under socialist systems. 
B) the philosophical and theoretical arguments of communism and socialism being finally proved correct. 
C) the realization that government controls will allocate resources on the basis of comparative advantage. 
D) a shift to more capital-intensive production.

Question 19

The present position of a nation on its production possibilities curve will influence the future position of the production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions   
-(Exhibit: Sugar and Freight Trains)The downward slope of the production possibilities curve implies:

Accepted Answer

A) resources in the economy are scarce. 
B) the economy must be controlled by the government. 
C) sugar is more important than freight trains. 
D) the economy produces more sugar than freight trains. 
A) resources in the economy are scarce. 
B) the economy must be controlled by the government. 
C) sugar is more important than freight trains. 
D) the economy produces more sugar than freight trains.

Exam 2: Confronting Scarcity: Choices in Production

If countries do not engage in international trade:

Improvements in technology will shift the production possibilities curve outward.

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

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibilities curve is:

Use the following to answer questions Production P ossibilities S chedule 2 V W X Y Z Capital goods per period 0 1 2 3 4 Consumer goods per period 20 18 14 8 0 -(Exhibit: Production Possibilities Schedule 2)A move from alternative Y to alternative X would:

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces.

A factor of production that has been produced for use in the production of other goods and services is:

If the production possibilities curve were a straight line sloping down from left to right, this would suggest that:

A factor of production that is produced in order to produce something else is called:

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Society can operate on the production possibilities curve only if it has achieved efficiency.

Use the following to answer questions -(Exhibit: Consumer and Capital Goods)If the economy is operating at point Y on currently relevant Curve 1, this means that:

To be considered capital, a factor of production must:

Use the following to answer questions -(Exhibit: Production Possibilities Curve 1)Resource underutilization occurs at point _____ with respect to Curve __ ___ .

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods)The movement from point G on Curve 1 to point E on Curve 2 means that the:

An example of capital is:

According to the textbook, the dramatic global shift toward market capitalist economies in the 1980s and 1990s is in large part the result of:

The present position of a nation on its production possibilities curve will influence the future position of the production possibilities curve.

Use the following to answer questions -(Exhibit: Sugar and Freight Trains)The downward slope of the production possibilities curve implies:

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

Use the following to answer questions -(Exhibit: Production Possibilities Curve 1)Resource underutilization occurs at point _ with respect to Curve _ .