Question 1

The law of increasing opportunity cost indicates that the production possibilities curve has a constant slope.

Accepted Answer

A) True 
 B)False

Question 2

Technology is:

Accepted Answer

A) knowledge that can be applied to the production of goods and services. 
B) generally unlimited in modern economies. 
C) a graphical illustration of the alternative combinations of goods and services an economy can produce. 
D) the resources the economy has available to produce goods and services. 
A) knowledge that can be applied to the production of goods and services. 
B) generally unlimited in modern economies. 
C) a graphical illustration of the alternative combinations of goods and services an economy can produce. 
D) the resources the economy has available to produce goods and services.

Question 3

Use the following to answer questions   
-(Exhibit: Sugar and Freight Trains)The "bowed-out" shape of the production possibilities curve shown here demonstrates:

Accepted Answer

A) that freight trains cost more than sugar. 
B) that sugar costs more than freight trains. 
C) that the opportunity cost of additional freight trains increases as the economy produces more and more of them. 
D) that the opportunity cost of additional freight trains decreases as the economy produces more and more of them. 
A) that freight trains cost more than sugar. 
B) that sugar costs more than freight trains. 
C) that the opportunity cost of additional freight trains increases as the economy produces more and more of them. 
D) that the opportunity cost of additional freight trains decreases as the economy produces more and more of them.

Question 4

Which of the following explains why the U.S.economy produces more than the Chinese economy?

Accepted Answer

A) The United States buys more goods from China than China buys from the United States. 
B) In comparison to China, the United States has stronger environmental protection rules. 
C) The population of the United States is less than 1/4 the population of China. 
D) The United States has more capital per worker available than China. 
A) The United States buys more goods from China than China buys from the United States. 
B) In comparison to China, the United States has stronger environmental protection rules. 
C) The population of the United States is less than 1/4 the population of China. 
D) The United States has more capital per worker available than China.

Question 5

The proposition that states that as output increases for one good in an economy that is on its production possibilities curve, the cost of additional units of the good on the horizontal axis will be greater and greater is the:

Accepted Answer

A) Law of absolute advantage. 
B) Law of increasing opportunity cost. 
C) Law of policy ineffectiveness. 
D) Law of demand. 
A) Law of absolute advantage. 
B) Law of increasing opportunity cost. 
C) Law of policy ineffectiveness. 
D) Law of demand.

Question 6

Use the following to answer questions  
-(Exhibit: Production Possibilities Curve 1)Efficiency is achieved at point _____ with respect to Curve _____.

Accepted Answer

A) G; y 
B) I; z 
C) H; x 
D) F; x 
A) G; y 
B) I; z 
C) H; x 
D) F; x

Question 7

International trade is possible in part through:

Accepted Answer

A) inefficiently employing resources. 
B) restricting the rate of growth of output. 
C) generalization in the production of all goods. 
D) specialization in the production of goods. 
A) inefficiently employing resources. 
B) restricting the rate of growth of output. 
C) generalization in the production of all goods. 
D) specialization in the production of goods.

Question 8

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)The production of 14 units of consumer goods and 1 unit of capital goods per period would:

Accepted Answer

A) result in full employment. 
B) result in no unused resources. 
C) result in some unused or inefficiently used resources. 
D) increase economic growth. 
A) result in full employment. 
B) result in no unused resources. 
C) result in some unused or inefficiently used resources. 
D) increase economic growth.

Question 9

Which of the following is not capital?

Accepted Answer

A) a computer in the office of an accountant 
B) a migrant worker in the fields of California 
C) a wrench in an auto-repair shop 
D) a new machine used for producing microchips 
A) a computer in the office of an accountant 
B) a migrant worker in the fields of California 
C) a wrench in an auto-repair shop 
D) a new machine used for producing microchips

Question 10

Use the following to answer questions 
  
-(Exhibit: Production Possibilities Curve 2)The point representing a combination of consumer goods and capital goods that can be attained only by economic growth is point:

Accepted Answer

A) N. 
B) P. 
C) Q. 
D) R. 
A) N. 
B) P. 
C) Q. 
D) R.

Question 11

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

Accepted Answer

A) True 
 B)False

Question 12

Before its political collapse, the former Soviet Union had a(n):

Accepted Answer

A) market capitalist economy. 
B) mixed economy. 
C) command socialist economy. 
D) economy not described by any of the above. 
A) market capitalist economy. 
B) mixed economy. 
C) command socialist economy. 
D) economy not described by any of the above.

Question 13

If an economy is operating efficiently and with full employment, the production of more of one commodity will necessarily lead to less of something else being produced because of:

Accepted Answer

A) the unlimited wants of people. 
B) perfectly adaptability of resources in the production of various goods. 
C) scarcity. 
D) the lack of money capital. 
A) the unlimited wants of people. 
B) perfectly adaptability of resources in the production of various goods. 
C) scarcity. 
D) the lack of money capital.

Question 14

The slope of a typical production possibilities curve is:

Accepted Answer

A) 0. 
B) vertical. 
C) positive. 
D) negative. 
A) 0. 
B) vertical. 
C) positive. 
D) negative.

Question 15

Use the following to answer questions 
Production Possibilities Schedule 1 $$\begin{array} { | l | c | c | c | c | c | c | } 
\hline { \text { Alternatives } } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \
\hline \begin{array} { l } 
\text { Consumer goods } \
\text { per period }
\end{array} & 0 & 1 & 2 & 3 & 4 & 5 \
\hline \begin{array} { l } 
\text { Capital goods per } \
\text { period }
\end{array} & 30 & 28 & 24 & 18 & 10 & 0 \
\hline
\end{array}$$
-(Exhibit: Production Possibilities Schedule 1)If the economy produces 10 units of one capital goods per period, it also can produce at most _______ unit(s)of consumer goods per period.

Accepted Answer

A) 5 
B) 4 
C) 3 
D) 2 
A) 5 
B) 4 
C) 3 
D) 2

Question 16

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

Accepted Answer

A) export both sweaters and machinery to Britain. 
B) import both sweaters and machinery from Britain. 
C) export sweaters to Britain and import machinery from Britain. 
D) import sweaters from Britain and export machinery to Britain. 
A) export both sweaters and machinery to Britain. 
B) import both sweaters and machinery from Britain. 
C) export sweaters to Britain and import machinery from Britain. 
D) import sweaters from Britain and export machinery to Britain.

Question 17

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

Accepted Answer

A) labor and a natural resource. 
B) labor and capital. 
C) a natural resource and capital. 
D) a natural resource and entrepreneurship. 
A) labor and a natural resource. 
B) labor and capital. 
C) a natural resource and capital. 
D) a natural resource and entrepreneurship.

Question 18

An example of a natural resource is:

Accepted Answer

A) oil in the ground. 
B) oil in storage tanks. 
C) a factory. 
D) a computer program. 
A) oil in the ground. 
B) oil in storage tanks. 
C) a factory. 
D) a computer program.

Question 19

Use the following to answer questions  
-(Exhibit: Bicycles and Radishes 1)The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles.The axes of both graphs are measured in equivalent units.Country A is now operating at point M, and Country B is now operating at point N.Suppose Country B wants to be able to produce more radishes and more bicycles.To do this, it must:

Accepted Answer

A) Use its resources more efficiently. 
B) achieve full employment in its use of resources. 
C) acquire more capital, more labor, more natural resources, and/or better technology. 
D) do all of the above. 
A) Use its resources more efficiently. 
B) achieve full employment in its use of resources. 
C) acquire more capital, more labor, more natural resources, and/or better technology. 
D) do all of the above.

Question 20

Economists are generally in support of:

Accepted Answer

A) government restrictions on trade. 
B) free international trade. 
C) tariffs to restrict trade. 
D) subsidizing exports. 
A) government restrictions on trade. 
B) free international trade. 
C) tariffs to restrict trade. 
D) subsidizing exports.

Exam 2: Confronting Scarcity: Choices in Production

The law of increasing opportunity cost indicates that the production possibilities curve has a constant slope.

Technology is:

Use the following to answer questions -(Exhibit: Sugar and Freight Trains)The "bowed-out" shape of the production possibilities curve shown here demonstrates:

Which of the following explains why the U.S.economy produces more than the Chinese economy?

The proposition that states that as output increases for one good in an economy that is on its production possibilities curve, the cost of additional units of the good on the horizontal axis will be greater and greater is the:

Use the following to answer questions -(Exhibit: Production Possibilities Curve 1)Efficiency is achieved at point _____ with respect to Curve _____.

International trade is possible in part through:

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)The production of 14 units of consumer goods and 1 unit of capital goods per period would:

Which of the following is not capital?

Use the following to answer questions -(Exhibit: Production Possibilities Curve 2)The point representing a combination of consumer goods and capital goods that can be attained only by economic growth is point:

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

Before its political collapse, the former Soviet Union had a(n):

If an economy is operating efficiently and with full employment, the production of more of one commodity will necessarily lead to less of something else being produced because of:

The slope of a typical production possibilities curve is:

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

An example of a natural resource is:

Economists are generally in support of:

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)Efficiency is achieved at point _ with respect to Curve _.