Question 1

Specialization of labor makes sense only if there is some means of exchange.

Accepted Answer

A) True 
 B)False

Question 2

Figure 3-2
  
-In Figure 3-2, a point such as E

Accepted Answer

A)  is not obtainable. 
B)  is an efficient use of resources. 
C)  represents an inefficient allocation of resources. 
D)  indicates that the society is a capitalist society. 
A)  is not obtainable. 
B)  is an efficient use of resources. 
C)  represents an inefficient allocation of resources. 
D)  indicates that the society is a capitalist society.

Question 3

Waiting in line to get a free ticket does not involve any opportunity cost.

Accepted Answer

A) True 
 B)False

Question 4

If a market system is functioning well, we can conclude that goods with

Accepted Answer

A)  high opportunity costs tend to have high money costs. 
B)  low opportunity costs tend to have high money costs. 
C)  high opportunity costs tend to have low money costs. 
D)  low opportunity costs tend to have zero money costs. 
E)  high opportunity costs tend to have zero money costs. 
A)  high opportunity costs tend to have high money costs. 
B)  low opportunity costs tend to have high money costs. 
C)  high opportunity costs tend to have low money costs. 
D)  low opportunity costs tend to have zero money costs. 
E)  high opportunity costs tend to have zero money costs.

Question 5

Money is scarce, but resources are not.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an example of opportunity cost not measured by money cost?

Accepted Answer

A)  the time spent eating a business lunch at a restaurant 
B)  the time spent preparing a meal eaten at home 
C)  the time spent studying to obtain an "A" in economics 
D)  the time spent repairing a car in one's own garage 
E)  All of the above are correct. 
A)  the time spent eating a business lunch at a restaurant 
B)  the time spent preparing a meal eaten at home 
C)  the time spent studying to obtain an "A" in economics 
D)  the time spent repairing a car in one's own garage 
E)  All of the above are correct.

Question 7

Figure 3-7
  
-What is the opportunity cost of moving from point B to point A in Figure 3-7?

Accepted Answer

A)  20 units of X 
B)  50 units of X 
C)  25 units of X 
D)  75 units of X 
A)  20 units of X 
B)  50 units of X 
C)  25 units of X 
D)  75 units of X

Question 8

The production possibilities frontier has a tendency to bow outward from the origin.

Accepted Answer

A) True 
 B)False

Question 9

See table below.Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?
 $$\begin{array} { c c } 
\underline { \text { Saturn Rings }} & \underline { \text { Machines }} \
30 &0\
20 & 5 \
10 & 8 \
0 & 10
\end{array}$$

Accepted Answer

Production exhibits increasing cost.The

Question 10

Inputs in production processes are called resources.

Accepted Answer

A) True 
 B)False

Question 11

Table 3-2
 $\begin{array}{ccc}
\underline { \text { Combination }} & \underline { \text { Cotton} } & \underline { \text { Corn} } \
 \text { A } & 12 & 16 \
\text { B } & 17 & 15 \
\text { C } & 21 & 13 \
\text { D } & 23 & 9 \
\text { E } & 24 & 5
\end{array}$
-In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

Accepted Answer

A)  4 units of corn. 
B)  8 units of corn. 
C)  14 units of corn. 
D)  16 units of corn. 
A)  4 units of corn. 
B)  8 units of corn. 
C)  14 units of corn. 
D)  16 units of corn.

Question 12

In the Wealth of Nations, Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

Accepted Answer

A) True 
 B)False

Question 13

How does scarcity affect the range of possible choices that decision makers face?

Accepted Answer

A)  It narrows the choice to a single option. 
B)  It narrows the range of choices. 
C)  It increases the possible methods for solving problems. 
D)  It clarifies the choices by highlighting the best solutions. 
E)  It simplifies the choices and therefore widens the range. 
A)  It narrows the choice to a single option. 
B)  It narrows the range of choices. 
C)  It increases the possible methods for solving problems. 
D)  It clarifies the choices by highlighting the best solutions. 
E)  It simplifies the choices and therefore widens the range.

Question 14

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Accepted Answer

A) True 
 B)False

Question 15

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Accepted Answer

A)  rational decisions are not always possible. 
B)  you can allocate your resources to what gives you the highest value. 
C)  you can create the supply to meet your own demand. 
D)  you can maximize social welfare by making optimal decisions. 
A)  rational decisions are not always possible. 
B)  you can allocate your resources to what gives you the highest value. 
C)  you can create the supply to meet your own demand. 
D)  you can maximize social welfare by making optimal decisions.

Question 16

If production involves decreasing opportunity cost, the production possibilities curve

Accepted Answer

A)  is "bowed inward." 
B)  is a straight line. 
C)  is "bowed outward." 
D)  is a wavy line. 
E)  has an unpredictable shape. 
A)  is "bowed inward." 
B)  is a straight line. 
C)  is "bowed outward." 
D)  is a wavy line. 
E)  has an unpredictable shape.

Question 17

Specialization and division of labor are made easier by the existence of money.

Accepted Answer

A) True 
 B)False

Question 18

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Accepted Answer

A) True 
 B)False

Question 19

Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

Accepted Answer

The curve should look like the figures i

Question 20

Karl Marx was critical of markets on the grounds that they are not efficient.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Specialization of labor makes sense only if there is some means of exchange.

Figure 3-2 -In Figure 3-2, a point such as E

Waiting in line to get a free ticket does not involve any opportunity cost.

If a market system is functioning well, we can conclude that goods with

Money is scarce, but resources are not.

Which of the following is an example of opportunity cost not measured by money cost?

Figure 3-7 -What is the opportunity cost of moving from point B to point A in Figure 3-7?

The production possibilities frontier has a tendency to bow outward from the origin.

See table below.Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings? 30 0 20 5 10 8 0 10

Inputs in production processes are called resources.

Table 3-2 A 12 16 B 17 15 C 21 13 D 23 9 E 24 5 -In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

In the Wealth of Nations, Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

How does scarcity affect the range of possible choices that decision makers face?

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

If production involves decreasing opportunity cost, the production possibilities curve

Specialization and division of labor are made easier by the existence of money.

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

Karl Marx was critical of markets on the grounds that they are not efficient.

What Is Economics?

The Economy: Myth and Reality

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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