Question 1

Technology is best defined as

Accepted Answer

A) society's pool of applied knowledge concerning the production of goods and services. 
B) the maximum output that can be obtained from a stock of physical capital. 
C) output inside the production possibilities curve. 
D) the utilization of more resources for the same amount of production. 
A) society's pool of applied knowledge concerning the production of goods and services. 
B) the maximum output that can be obtained from a stock of physical capital. 
C) output inside the production possibilities curve. 
D) the utilization of more resources for the same amount of production.

Question 2

The term "labor" for an economist includes

Accepted Answer

A) all skilled workers, but not the unskilled workers. 
B) all productive contributions of humankind. 
C) only the value of the work done by scientists. 
D) all employees who have high school diplomas. 
A) all skilled workers, but not the unskilled workers. 
B) all productive contributions of humankind. 
C) only the value of the work done by scientists. 
D) all employees who have high school diplomas.

Question 3

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

Accepted Answer

A) The economy has acquired new resources that are well suited for producing wool. 
B) Land that was once used to grow wheat is now being used to graze sheep. 
C) The economy is producing more bread by choosing to produce less wool. 
D) The technology for growing wheat has improved. 
A) The economy has acquired new resources that are well suited for producing wool. 
B) Land that was once used to grow wheat is now being used to graze sheep. 
C) The economy is producing more bread by choosing to produce less wool. 
D) The technology for growing wheat has improved.

Question 4

Which of the following is assumed when constructing a production possibilities curve?

Accepted Answer

A) a fixed amount of resources 
B) the efficient use of resources 
C) resources of a given quality 
D) All of the above are correct. 
A) a fixed amount of resources 
B) the efficient use of resources 
C) resources of a given quality 
D) All of the above are correct.

Question 5

Stephanie has decided to eat lunch between classes. She has ranked her choices, from highest to lowest as, (1)turkey sandwich, (2)tuna sandwich, (3)slice of cheese pizza, (4)cheeseburger. The opportunity cost of the eating turkey sandwich is

Accepted Answer

A) the combined value of the tuna sandwich, slice of cheese pizza and cheeseburger. 
B) the value of tuna sandwich, the next best choice. 
C) the value of the cheeseburger. 
D) zero since she has satisfied a want. 
A) the combined value of the tuna sandwich, slice of cheese pizza and cheeseburger. 
B) the value of tuna sandwich, the next best choice. 
C) the value of the cheeseburger. 
D) zero since she has satisfied a want.

Question 6

The use of goods and services for personal satisfaction is known as

Accepted Answer

A) the law of increasing relative cost. 
B) specialization. 
C) comparative advantage. 
D) consumption. 
A) the law of increasing relative cost. 
B) specialization. 
C) comparative advantage. 
D) consumption.

Question 7

A point outside a production possibilities curve indicates

Accepted Answer

A) that resources are not being used efficiently. 
B) an output combination that society cannot attain given its current level of resources and technology. 
C) that resources are being used very efficiently. 
D) that both goods are characterized by increasing costs. 
A) that resources are not being used efficiently. 
B) an output combination that society cannot attain given its current level of resources and technology. 
C) that resources are being used very efficiently. 
D) that both goods are characterized by increasing costs.

Question 8

The opportunity cost of more consumption of goods today is

Accepted Answer

A) lower consumption of goods in the future. 
B) fewer capital goods in the future. 
C) more capital goods today. 
D) more unemployment both today and in the future. 
A) lower consumption of goods in the future. 
B) fewer capital goods in the future. 
C) more capital goods today. 
D) more unemployment both today and in the future.

Question 9

Jane is a top-level executive and is very rich. Jane just ordered a car only to be told that she will have to wait three weeks for it to be delivered. Which of the following statements is true?

Accepted Answer

A) The car is not a scarce good. 
B) The car is a scarce good. 
C) Because Jane has unlimited funds, she incurs no opportunity cost in buying the car. 
D) Jane paid too much for a car that wasn't ready on time. 
A) The car is not a scarce good. 
B) The car is a scarce good. 
C) Because Jane has unlimited funds, she incurs no opportunity cost in buying the car. 
D) Jane paid too much for a car that wasn't ready on time.

Question 10

Entrepreneurs are important to market economies because

Accepted Answer

A) they engage in risk taking and innovation. 
B) they make up a large portion of low-skilled labor. 
C) they take few risks and thereby, suffer fewer bankruptcies. 
D) they represent the bulk of employment at large corporations. 
A) they engage in risk taking and innovation. 
B) they make up a large portion of low-skilled labor. 
C) they take few risks and thereby, suffer fewer bankruptcies. 
D) they represent the bulk of employment at large corporations.

Question 11

-Refer to the above figure. Which of the following points indicates an unobtainable point of production?

Accepted Answer

A) a 
B) d 
C) e 
D) More information is needed to answer the question. 
A) a 
B) d 
C) e 
D) More information is needed to answer the question.

Question 12

Scarcity

Accepted Answer

A) exists in all human societies. 
B) is a problem for less-developed nations only. 
C) used to be a problem, but is not an issue for modern industrial nations. 
D) afflicts greedy people only. 
A) exists in all human societies. 
B) is a problem for less-developed nations only. 
C) used to be a problem, but is not an issue for modern industrial nations. 
D) afflicts greedy people only.

Question 13

If an economy is operating at a point inside the production possibilities curve, then

Accepted Answer

A) society's resources are being inefficiently utilized. 
B) the curve will move to the left. 
C) society's resources are being used to produce too many consumer goods. 
D) economic policy must implemented to slow growth of the economy further. 
A) society's resources are being inefficiently utilized. 
B) the curve will move to the left. 
C) society's resources are being used to produce too many consumer goods. 
D) economic policy must implemented to slow growth of the economy further.

Question 14

In economic terminology, when a resource is used to produce output it is referred to as

Accepted Answer

A) an intangible. 
B) a factor of production. 
C) a service. 
D) a fifth element. 
A) an intangible. 
B) a factor of production. 
C) a service. 
D) a fifth element.

Question 15

What happens to the production possibilities curve if technology enables an economy to produce more of every good? Is there any tradeoff involved in this change?

Accepted Answer

If an economy is able to produ

Question 16

Efficiency is achieved

Accepted Answer

A) when output is being produced at a point inside a production possibilities curve. 
B) when producers are getting the maximum possible output from the available resources. 
C) when consumers are able to buy everything that they want. 
D) when prices of all goods and services go to zero. 
A) when output is being produced at a point inside a production possibilities curve. 
B) when producers are getting the maximum possible output from the available resources. 
C) when consumers are able to buy everything that they want. 
D) when prices of all goods and services go to zero.

Question 17

John and Mary work eight hours at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Accepted Answer

A) Mary has the absolute advantage in decorating wedding cakes. 
B) John has the absolute advantage in decorating wedding cakes. 
C) Mary has the comparative advantage in decorating wedding cakes. 
D) John has the comparative advantage in decorating ice-cream cakes. 
A) Mary has the absolute advantage in decorating wedding cakes. 
B) John has the absolute advantage in decorating wedding cakes. 
C) Mary has the comparative advantage in decorating wedding cakes. 
D) John has the comparative advantage in decorating ice-cream cakes.

Question 18

Economic growth appears on a production possibilities curve as

Accepted Answer

A) the curve shifting out away from the origin. 
B) the curve shifting in toward the origin. 
C) a change in the slope of the curve. 
D) the points outside the production possibilities curve. 
A) the curve shifting out away from the origin. 
B) the curve shifting in toward the origin. 
C) a change in the slope of the curve. 
D) the points outside the production possibilities curve.

Question 19

Human beings

Accepted Answer

A) have unlimited wants. 
B) think they have unlimited wants, but really have limited needs. 
C) have limited wants, but unlimited needs. 
D) know what their needs are, but do not know what their wants are. 
A) have unlimited wants. 
B) think they have unlimited wants, but really have limited needs. 
C) have limited wants, but unlimited needs. 
D) know what their needs are, but do not know what their wants are.

Question 20

Explain the difference between human needs and wants.

Accepted Answer

Needs are objectively undefinable. Needs

Exam 2: Scarcity and the World of Trade-Offs

Technology is best defined as

The term "labor" for an economist includes

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

Which of the following is assumed when constructing a production possibilities curve?

Stephanie has decided to eat lunch between classes. She has ranked her choices, from highest to lowest as, (1)turkey sandwich, (2)tuna sandwich, (3)slice of cheese pizza, (4)cheeseburger. The opportunity cost of the eating turkey sandwich is

The use of goods and services for personal satisfaction is known as

A point outside a production possibilities curve indicates

The opportunity cost of more consumption of goods today is

Jane is a top-level executive and is very rich. Jane just ordered a car only to be told that she will have to wait three weeks for it to be delivered. Which of the following statements is true?

Entrepreneurs are important to market economies because

-Refer to the above figure. Which of the following points indicates an unobtainable point of production?

Scarcity

If an economy is operating at a point inside the production possibilities curve, then

In economic terminology, when a resource is used to produce output it is referred to as

What happens to the production possibilities curve if technology enables an economy to produce more of every good? Is there any tradeoff involved in this change?

Efficiency is achieved

John and Mary work eight hours at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Economic growth appears on a production possibilities curve as

Human beings

Explain the difference between human needs and wants.

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

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