Question 1

A technological improvement can cause the production possibilities curve to shift outward because

Accepted Answer

A) it increases costs and contributes to lower production rates. 
B) maximum feasible outputs of both goods increase. 
C) production will fall, but jobs will be saved. 
D) it causes increases in unemployment. 
A) it increases costs and contributes to lower production rates. 
B) maximum feasible outputs of both goods increase. 
C) production will fall, but jobs will be saved. 
D) it causes increases in unemployment.

Question 2

Trading off capital goods for increasing amounts of consumer goods today will most likely result in

Accepted Answer

A) increased long-term growth. 
B) decreased long-term growth. 
C) decreased prices in consumer goods. 
D) increases in the quantity of consumer goods. 
A) increased long-term growth. 
B) decreased long-term growth. 
C) decreased prices in consumer goods. 
D) increases in the quantity of consumer goods.

Question 3

How would you illustrate economic growth with the production possibilities curve? Explain.

Accepted Answer

Economic growth can be illustr

Question 4

A person goes to college to become an engineer. This is an example of an

Accepted Answer

A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labor. 
A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labor.

Question 5

-When the economy moves from point D to E in the above table, the opportunity cost of a computer in terms of televisions is

Accepted Answer

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

Question 6

The basic problem in economics is

Accepted Answer

A) unlimited needs. 
B) scarcity. 
C) demand. 
D) limited resources. 
A) unlimited needs. 
B) scarcity. 
C) demand. 
D) limited resources.

Question 7

When deriving the production possibilities curve, it is assumed that

Accepted Answer

A) the amount of each good that is to be produced is fixed. 
B) the prices of resources are fixed along the curve. 
C) most resources can be used to produce only one good. 
D) resources are efficiently used. 
A) the amount of each good that is to be produced is fixed. 
B) the prices of resources are fixed along the curve. 
C) most resources can be used to produce only one good. 
D) resources are efficiently used.

Question 8

When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that

Accepted Answer

A) the average standard of living in the world will go down. 
B) the average standard of living in the world will go up. 
C) the world will move from a point on the production possibilities curve to a point inside the curve. 
D) worldwide economic efficiency will decrease. 
A) the average standard of living in the world will go down. 
B) the average standard of living in the world will go up. 
C) the world will move from a point on the production possibilities curve to a point inside the curve. 
D) worldwide economic efficiency will decrease.

Question 9

A point on a production possibilities curve indicates

Accepted Answer

A) resources are not being used efficiently. 
B) resources are being used efficiently. 
C) opportunity costs are constant. 
D) an output combination that can be attained only if society gets more resources or there is technological change. 
A) resources are not being used efficiently. 
B) resources are being used efficiently. 
C) opportunity costs are constant. 
D) an output combination that can be attained only if society gets more resources or there is technological change.

Question 10

-In the above figure, the combination of personal computers and televisions shown by point w

Accepted Answer

A) is an efficient use of society's resources because it is below the production possibilities curve. 
B) is more desirable than point x because producing at point w does not put a strain on society's resources. 
C) is attainable but involves the inefficient use of some of society's resources. 
D) is beyond the capacity of society to produce. 
A) is an efficient use of society's resources because it is below the production possibilities curve. 
B) is more desirable than point x because producing at point w does not put a strain on society's resources. 
C) is attainable but involves the inefficient use of some of society's resources. 
D) is beyond the capacity of society to produce.

Question 11

Why specialize?

Accepted Answer

A) Because assigning each worker a variety of tasks makes her more productive. 
B) It usually increases productivity. 
C) To decrease our dependence on each other. 
D) There is no economic rationale for specialization. 
A) Because assigning each worker a variety of tasks makes her more productive. 
B) It usually increases productivity. 
C) To decrease our dependence on each other. 
D) There is no economic rationale for specialization.

Question 12

Division of labor means that

Accepted Answer

A) the labor market in the United States is geographically segmented. 
B) some employees join labor unions and others do not. 
C) management and labor are always in conflict. 
D) the production process is divided into smaller tasks. 
A) the labor market in the United States is geographically segmented. 
B) some employees join labor unions and others do not. 
C) management and labor are always in conflict. 
D) the production process is divided into smaller tasks.

Question 13

Using productive resources to make capital goods requires that we

Accepted Answer

A) get everyone to agree on the best use of those resources. 
B) get government approval of our plan to make capital goods. 
C) forgo some level of current consumption. 
D) prove that the existence of the capital goods will not cause any environmental damage. 
A) get everyone to agree on the best use of those resources. 
B) get government approval of our plan to make capital goods. 
C) forgo some level of current consumption. 
D) prove that the existence of the capital goods will not cause any environmental damage.

Question 14

The production possibilities curve bows out because

Accepted Answer

A) production is efficient. 
B) of the law of increasing additional cost. 
C) production is inefficient. 
D) resources are not being fully utilized. 
A) production is efficient. 
B) of the law of increasing additional cost. 
C) production is inefficient. 
D) resources are not being fully utilized.

Question 15

A straight-line production possibilities curve takes this shape because

Accepted Answer

A) the opportunity cost of producing a good is constant. 
B) the opportunity cost of producing more of a good is decreasing. 
C) resources are better suited for producing one output than another. 
D) resources are fixed. 
A) the opportunity cost of producing a good is constant. 
B) the opportunity cost of producing more of a good is decreasing. 
C) resources are better suited for producing one output than another. 
D) resources are fixed.

Question 16

Division of labor refers to

Accepted Answer

A) dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B) the separation of hourly workers from salaried workers. 
C) assigning different workers to different tasks. 
D) separating union workers from nonunion workers. 
A) dividing tasks up into several subtasks and having one person perform these subtasks in a certain order. 
B) the separation of hourly workers from salaried workers. 
C) assigning different workers to different tasks. 
D) separating union workers from nonunion workers.

Question 17

Which is the best example of specialization?

Accepted Answer

A) A high school math teacher who teaches only calculus. 
B) A firm that produces both luggage and cooking oil. 
C) A person whose job includes accounting, personnel and maintenance tasks. 
D) A high school math teacher who teaches algebra and calculus. 
A) A high school math teacher who teaches only calculus. 
B) A firm that produces both luggage and cooking oil. 
C) A person whose job includes accounting, personnel and maintenance tasks. 
D) A high school math teacher who teaches algebra and calculus.

Question 18

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Accepted Answer

A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve. 
A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve.

Question 19

Explain why even the most affluent people, businesses and counties never solve the problem of scarcity.

Accepted Answer

Scarcity is a problem that is never comp

Question 20

Comparative advantage is always a(n)________ concept.

Accepted Answer

A) absolute 
B) efficiency 
C) relative 
D) monetary 
A) absolute 
B) efficiency 
C) relative 
D) monetary

Exam 2: Scarcity and the World of Trade-Offs

A technological improvement can cause the production possibilities curve to shift outward because

Trading off capital goods for increasing amounts of consumer goods today will most likely result in

How would you illustrate economic growth with the production possibilities curve? Explain.

A person goes to college to become an engineer. This is an example of an

-When the economy moves from point D to E in the above table, the opportunity cost of a computer in terms of televisions is

The basic problem in economics is

When deriving the production possibilities curve, it is assumed that

When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that

A point on a production possibilities curve indicates

-In the above figure, the combination of personal computers and televisions shown by point w

Why specialize?

Division of labor means that

Using productive resources to make capital goods requires that we

The production possibilities curve bows out because

A straight-line production possibilities curve takes this shape because

Division of labor refers to

Which is the best example of specialization?

-Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat, then we know that

Explain why even the most affluent people, businesses and counties never solve the problem of scarcity.

Comparative advantage is always a(n)________ concept.

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