Question 1

In economics, physical capital includes

Accepted Answer

A) money. 
B) bank accounts. 
C) machinery. 
D) shares of stock. 
A) money. 
B) bank accounts. 
C) machinery. 
D) shares of stock. C

Question 2

You have the option of consuming one cup of coffee or two donuts or three oranges. You picked the cup of coffee. Therefore the opportunity cost of this cup of coffee is

Accepted Answer

A) the price of the cup of coffee. 
B) the difference in the prices of these three products. 
C) the price of the donuts as they are usually consumed with coffee. 
D) either the donuts or the oranges, whichever you like more. 
A) the price of the cup of coffee. 
B) the difference in the prices of these three products. 
C) the price of the donuts as they are usually consumed with coffee. 
D) either the donuts or the oranges, whichever you like more. D

Question 3

Scarcity affects

Accepted Answer

A) only rich people. 
B) only poor people. 
C) only middle income people. 
D) all people. 
A) only rich people. 
B) only poor people. 
C) only middle income people. 
D) all people. D

Question 4

A point inside a society's production possibilities curve represents

Accepted Answer

A) an unattainable combination of outputs. 
B) an output combination that satisfies the needs of the population. 
C) an underutilization of productive resources. 
D) a technically superior output combination. 
A) an unattainable combination of outputs. 
B) an output combination that satisfies the needs of the population. 
C) an underutilization of productive resources. 
D) a technically superior output combination.

Question 5

Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume

Accepted Answer

A) the chairs in factory A are of higher quality. 
B) the workers in factory B have more job satisfaction. 
C) factory B can take advantage of division of labor and produce more efficiently. 
D) factory A can take advantage of division of labor and produce more efficiently 
A) the chairs in factory A are of higher quality. 
B) the workers in factory B have more job satisfaction. 
C) factory B can take advantage of division of labor and produce more efficiently. 
D) factory A can take advantage of division of labor and produce more efficiently

Question 6

-In the above figure, as more ukuleles are produced, the opportunity cost in terms of guitars is

Accepted Answer

A) decreasing. 
B) increasing. 
C) constant. 
D) zero. 
A) decreasing. 
B) increasing. 
C) constant. 
D) zero.

Question 7

The making and selling of a pencil for ten cents would likely NOT be possible, but for

Accepted Answer

A) relative advantage. 
B) the production possibilities curve. 
C) absolute advantage. 
D) the division of labor. 
A) relative advantage. 
B) the production possibilities curve. 
C) absolute advantage. 
D) the division of labor.

Question 8

Why is efficiency desirable?

Accepted Answer

A) It results in an equal distribution of income. 
B) It results in zero unemployment. 
C) It makes best use of the finite resources we have. 
D) It is the most politically popular solution. 
A) It results in an equal distribution of income. 
B) It results in zero unemployment. 
C) It makes best use of the finite resources we have. 
D) It is the most politically popular solution.

Question 9

Whenever the economy is producing the maximum amount of goods given the level of technology and the amount of resources

Accepted Answer

A) the number of resources used should be decreased since society must protect its scarce resources. 
B) the concept of opportunity costs does not exist. 
C) more goods will be available than customers want to buy. 
D) the economy is producing efficiently. 
A) the number of resources used should be decreased since society must protect its scarce resources. 
B) the concept of opportunity costs does not exist. 
C) more goods will be available than customers want to buy. 
D) the economy is producing efficiently.

Question 10

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the sacrifice of another is called

Accepted Answer

A) a Laffer Curve. 
B) a production possibilities curve. 
C) a bell curve. 
D) a supply curve. 
A) a Laffer Curve. 
B) a production possibilities curve. 
C) a bell curve. 
D) a supply curve.

Question 11

If all resources were perfectly adaptable for alternative uses, the production possibilities curve would

Accepted Answer

A) be bowed out. 
B) be bowed in. 
C) be a straight line. 
D) not exist. 
A) be bowed out. 
B) be bowed in. 
C) be a straight line. 
D) not exist.

Question 12

The production possibilities curve represents

Accepted Answer

A) the maximum amount of labor and capital available to society. 
B) the combinations of goods and services among which consumers are indifferent. 
C) the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. 
D) the maximum rate of growth of capital and labor in a country. 
A) the maximum amount of labor and capital available to society. 
B) the combinations of goods and services among which consumers are indifferent. 
C) the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. 
D) the maximum rate of growth of capital and labor in a country.

Question 13

A point outside a society's production possibilities curve is one that is

Accepted Answer

A) unattainable given the resources of the society. 
B) technologically inefficient. 
C) undesirable given the implied underemployment of resources. 
D) desirable since it satisfies the desires of the population. 
A) unattainable given the resources of the society. 
B) technologically inefficient. 
C) undesirable given the implied underemployment of resources. 
D) desirable since it satisfies the desires of the population.

Question 14

How are scarcity, choice, and opportunity cost related?

Accepted Answer

Since resources are scarce, we cannot ha

Question 15

-Refer to the above figure. How do you describe what is happening as the economy moves from point A to point C?

Accepted Answer

A) The economy has acquired new resources that are well suited for producing bread. 
B) Land that was once used to graze sheep is now being used to grow wheat. 
C) Resources are becoming unemployed. 
D) The technology for growing wheat has improved. 
A) The economy has acquired new resources that are well suited for producing bread. 
B) Land that was once used to graze sheep is now being used to grow wheat. 
C) Resources are becoming unemployed. 
D) The technology for growing wheat has improved.

Question 16

Technology is

Accepted Answer

A) society's pool of knowledge of how to produce goods and services. 
B) a resource like land or physical capital. 
C) computers and lasers. 
D) not obtainable by engaging in activities that increase human capital. 
A) society's pool of knowledge of how to produce goods and services. 
B) a resource like land or physical capital. 
C) computers and lasers. 
D) not obtainable by engaging in activities that increase human capital.

Question 17

Between points "b" and "c" in the above figure, the opportunity cost of 250 more bushels of corn is

Accepted Answer

A) 200 yards of cloth. 
B) 250 yards of cloth. 
C) 600 yards of cloth. 
D) 800 yards of cloth. 
A) 200 yards of cloth. 
B) 250 yards of cloth. 
C) 600 yards of cloth. 
D) 800 yards of cloth.

Question 18

Economists define technology as

Accepted Answer

A) machines such as computers. 
B) entrepreneurship. 
C) absolute advantage. 
D) society's knowledge concerning the production of goods. 
A) machines such as computers. 
B) entrepreneurship. 
C) absolute advantage. 
D) society's knowledge concerning the production of goods.

Question 19

Comparative advantage is the ability to

Accepted Answer

A) perform an activity at a lower opportunity cost. 
B) determine who your best trading partners are. 
C) determine the best use of capital goods. 
D) convince others of the best choices to make in their own self-interest. 
A) perform an activity at a lower opportunity cost. 
B) determine who your best trading partners are. 
C) determine the best use of capital goods. 
D) convince others of the best choices to make in their own self-interest.

Question 20

Which of the following statements is FALSE?

Accepted Answer

A) Economic goods are available in desired quantities at a zero price. 
B) A good is anything that gives satisfaction or happiness to individuals. 
C) Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation. 
D) Wants are unlimited and include all material and nonmaterial desires. 
A) Economic goods are available in desired quantities at a zero price. 
B) A good is anything that gives satisfaction or happiness to individuals. 
C) Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation. 
D) Wants are unlimited and include all material and nonmaterial desires.

Exam 2: Scarcity and the World of Trade-Offs

In economics, physical capital includes

You have the option of consuming one cup of coffee or two donuts or three oranges. You picked the cup of coffee. Therefore the opportunity cost of this cup of coffee is

Scarcity affects

A point inside a society's production possibilities curve represents

Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume

-In the above figure, as more ukuleles are produced, the opportunity cost in terms of guitars is

The making and selling of a pencil for ten cents would likely NOT be possible, but for

Why is efficiency desirable?

Whenever the economy is producing the maximum amount of goods given the level of technology and the amount of resources

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the sacrifice of another is called

If all resources were perfectly adaptable for alternative uses, the production possibilities curve would

The production possibilities curve represents

A point outside a society's production possibilities curve is one that is

How are scarcity, choice, and opportunity cost related?

-Refer to the above figure. How do you describe what is happening as the economy moves from point A to point C?

Technology is

Between points "b" and "c" in the above figure, the opportunity cost of 250 more bushels of corn is

Economists define technology as

Comparative advantage is the ability to

Which of the following statements is FALSE?

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters