Question 1

Which of the following is NOT an economic resource?

Accepted Answer

A) Money 
B) Low-skilled labor 
C) Coal 
D) An engineer 
A) Money 
B) Low-skilled labor 
C) Coal 
D) An engineer

Question 2

The shape of the production possibilities curve in the above figure indicates that

Accepted Answer

A) production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs. 
B) production of both corn and cloth is characterized by increasing costs. 
C) production of both corn and cloth is characterized by constant costs. 
D) production of corn is characterized by constant costs and the production of cloth is characterized by increasing costs. 
A) production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs. 
B) production of both corn and cloth is characterized by increasing costs. 
C) production of both corn and cloth is characterized by constant costs. 
D) production of corn is characterized by constant costs and the production of cloth is characterized by increasing costs.

Question 3

Wants

Accepted Answer

A) is another term for needs. 
B) refer to services while needs refer to goods. 
C) is the term used by economists instead of needs because needs are not objectively definable. 
D) are used by economists and refer to the same thing as needs when used by psychologists. 
A) is another term for needs. 
B) refer to services while needs refer to goods. 
C) is the term used by economists instead of needs because needs are not objectively definable. 
D) are used by economists and refer to the same thing as needs when used by psychologists.

Question 4

Scarcity implies that

Accepted Answer

A) the satisfaction of one person's want means another person's want can also be satisfied. 
B) the satisfaction of one person's want means another person will be more than satisfied. 
C) the satisfaction of one person's want means another person's want cannot be satisfied. 
D) no person's wants can be satisfied. 
A) the satisfaction of one person's want means another person's want can also be satisfied. 
B) the satisfaction of one person's want means another person will be more than satisfied. 
C) the satisfaction of one person's want means another person's want cannot be satisfied. 
D) no person's wants can be satisfied.

Question 5

-Refer to the above figure. The shape of the production possibility curve indicates that production of

Accepted Answer

A) wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs. 
B) wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs. 
C) both goods are characterized by increasing costs. 
D) both goods are characterized by decreasing costs. 
A) wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs. 
B) wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs. 
C) both goods are characterized by increasing costs. 
D) both goods are characterized by decreasing costs.

Question 6

If an economy produces only steel and wheat, a new fertilizer will

Accepted Answer

A) cause the production of wheat to increase at every point on a production possibilities curve but not affect the production of steel, that is the curve moves outward on the wheat axis only. 
B) cause the production of both wheat and steel to increase at every point along the production possibilities curve, that is the curve moves outward on both the wheat axis and the steel axis. 
C) not affect the production of either wheat or steel. 
D) cause the production of steel to increase at every point along the production possibilities curve but not affect the production of wheat, that is the curve moves outward on the steel axis only. 
A) cause the production of wheat to increase at every point on a production possibilities curve but not affect the production of steel, that is the curve moves outward on the wheat axis only. 
B) cause the production of both wheat and steel to increase at every point along the production possibilities curve, that is the curve moves outward on both the wheat axis and the steel axis. 
C) not affect the production of either wheat or steel. 
D) cause the production of steel to increase at every point along the production possibilities curve but not affect the production of wheat, that is the curve moves outward on the steel axis only.

Question 7

Services can be thought of as

Accepted Answer

A) unvalued goods. 
B) unwanted goods. 
C) free goods. 
D) intangible goods. 
A) unvalued goods. 
B) unwanted goods. 
C) free goods. 
D) intangible goods.

Question 8

Which of the following is NOT an example of investment in human capital?

Accepted Answer

A) A medical student's internship 
B) The purchase of a personal computer for playing games 
C) A mechanic attends a training workshop on a new type of engine 
D) Johnny learns how to read 
A) A medical student's internship 
B) The purchase of a personal computer for playing games 
C) A mechanic attends a training workshop on a new type of engine 
D) Johnny learns how to read

Question 9

Economists are concerned with an individual's

Accepted Answer

A) needs because needs represent the most important goods to an individual. 
B) needs because economists define needs to be the goods people need to survive. 
C) wants because, unlike needs, wants lead to shortages in the economy. 
D) wants because the existence of wants leads to scarcity. 
A) needs because needs represent the most important goods to an individual. 
B) needs because economists define needs to be the goods people need to survive. 
C) wants because, unlike needs, wants lead to shortages in the economy. 
D) wants because the existence of wants leads to scarcity.

Question 10

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1)chat with her friends, (2)study economics or (3)take a nap. The opportunity cost of chatting with her friends is

Accepted Answer

A) the combined value of studying economics and taking a nap. 
B) the value of studying economics, the next best use of time. 
C) the value of chatting with her friends. 
D) zero since she does not pay her friends to talk to her. 
A) the combined value of studying economics and taking a nap. 
B) the value of studying economics, the next best use of time. 
C) the value of chatting with her friends. 
D) zero since she does not pay her friends to talk to her.

Question 11

-How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

Accepted Answer

A) In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. 
B) In the economy represented by a straight-line production possibilities curve, neither good is scarce. 
C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. 
D) In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced. 
A) In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. 
B) In the economy represented by a straight-line production possibilities curve, neither good is scarce. 
C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. 
D) In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.

Question 12

-In the above figure, the opportunity cost of moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles is

Accepted Answer

A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 50 guitars. 
A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 50 guitars.

Question 13

-In the above figure, the opportunity cost of moving from point D to point E is

Accepted Answer

A) 75 guitars. 
B) 55 guitars. 
C) 100 ukuleles. 
D) 100 guitars. 
A) 75 guitars. 
B) 55 guitars. 
C) 100 ukuleles. 
D) 100 guitars.

Question 14

The high opportunity cost of voting in the United States is due to

Accepted Answer

A) the value of time devoted to casting a ballot. 
B) the inability of candidates to differentiate themselves from one another. 
C) the inability of the typical voter to change the election outcome by voting. 
D) the confusion generated by the voting machines. 
A) the value of time devoted to casting a ballot. 
B) the inability of candidates to differentiate themselves from one another. 
C) the inability of the typical voter to change the election outcome by voting. 
D) the confusion generated by the voting machines.

Question 15

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

Accepted Answer

Disagree. Economics is the study of how

Question 16

-Refer to the above figure. Production at Point E

Accepted Answer

A) would indicate that this economy is producing beyond its capabilities. 
B) would indicate production at a level below that which is attainable. 
C) is not attainable with given resources and technology. 
D) would demonstrate a total lack of technical expertise. 
A) would indicate that this economy is producing beyond its capabilities. 
B) would indicate production at a level below that which is attainable. 
C) is not attainable with given resources and technology. 
D) would demonstrate a total lack of technical expertise.

Question 17

The value of the best alternative sacrificed to obtain something you want is referred to as

Accepted Answer

A) explicit cost. 
B) opportunity cost. 
C) marginal cost. 
D) sunk cost. 
A) explicit cost. 
B) opportunity cost. 
C) marginal cost. 
D) sunk cost.

Question 18

-According to the above table, the opportunity cost of each additional computer in terms of televisions

Accepted Answer

A) remains constant. 
B) falls as more computers are produced. 
C) increases as more computers are produced. 
D) is meaningless because the cost of computers cannot be expressed in terms of televisions. 
A) remains constant. 
B) falls as more computers are produced. 
C) increases as more computers are produced. 
D) is meaningless because the cost of computers cannot be expressed in terms of televisions.

Question 19

Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of

Accepted Answer

A) division of labor. 
B) microeconomics. 
C) comparative advantage. 
D) absolute advantage. 
A) division of labor. 
B) microeconomics. 
C) comparative advantage. 
D) absolute advantage.

Question 20

If Vice President Smith is a better typist than his assistant, he is said to have a(n)________ advantage in typing over his assistant.

Accepted Answer

A) absolute 
B) unusual 
C) relative 
D) overwhelming 
A) absolute 
B) unusual 
C) relative 
D) overwhelming

Exam 2: Scarcity and the World of Trade-Offs

Which of the following is NOT an economic resource?

The shape of the production possibilities curve in the above figure indicates that

Wants

Scarcity implies that

-Refer to the above figure. The shape of the production possibility curve indicates that production of

If an economy produces only steel and wheat, a new fertilizer will

Services can be thought of as

Which of the following is NOT an example of investment in human capital?

Economists are concerned with an individual's

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1)chat with her friends, (2)study economics or (3)take a nap. The opportunity cost of chatting with her friends is

-How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

-In the above figure, the opportunity cost of moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles is

-In the above figure, the opportunity cost of moving from point D to point E is

The high opportunity cost of voting in the United States is due to

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

-Refer to the above figure. Production at Point E

The value of the best alternative sacrificed to obtain something you want is referred to as

-According to the above table, the opportunity cost of each additional computer in terms of televisions

Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of

If Vice President Smith is a better typist than his assistant, he is said to have a(n)________ advantage in typing over his assistant.

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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