Question 1

If an economy is producing inefficiently, it is

Accepted Answer

A)  possible to increase production of all goods simultaneously. 
B)  possible to increase production of one good at the expense of another. 
C)  not possible to increase production of any good. 
D)  not possible to increase economic growth. 
E)  possible to increase production with no effort. 
A)  possible to increase production of all goods simultaneously. 
B)  possible to increase production of one good at the expense of another. 
C)  not possible to increase production of any good. 
D)  not possible to increase economic growth. 
E)  possible to increase production with no effort.

Question 2

How are money cost and opportunity cost related to each other?

Accepted Answer

A)  If markets function well, they are closely related. 
B)  They are always identical in any economic system. 
C)  Opportunity cost always exceeds money cost. 
D)  Money cost is less than or equal to opportunity cost. 
E)  In a market economy, they are always equal to each other. 
A)  If markets function well, they are closely related. 
B)  They are always identical in any economic system. 
C)  Opportunity cost always exceeds money cost. 
D)  Money cost is less than or equal to opportunity cost. 
E)  In a market economy, they are always equal to each other.

Question 3

The term "satisficing" indicates an optimal choice.

Accepted Answer

A) True 
 B)False

Question 4

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

Accepted Answer

A) True 
 B)False

Question 5

The notion of opportunity cost can be represented graphically by the

Accepted Answer

A)  area inside the production possibilities frontier. 
B)  slope of the production possibilities frontier. 
C)  vertical distance from the horizontal axis to the production possibilities frontier. 
D)  horizontal distance from the vertical axis to the production possibilities frontier. 
E)  sum of the horizontal and vertical distances to the production possibilities frontier. 
A)  area inside the production possibilities frontier. 
B)  slope of the production possibilities frontier. 
C)  vertical distance from the horizontal axis to the production possibilities frontier. 
D)  horizontal distance from the vertical axis to the production possibilities frontier. 
E)  sum of the horizontal and vertical distances to the production possibilities frontier.

Question 6

Society can produce at a point outside the production possibilities frontier, but only if it is using all of its resources efficiently.

Accepted Answer

A) True 
 B)False

Question 7

Voluntary exchange results in mutual gains.

Accepted Answer

A) True 
 B)False

Question 8

Figure 3-3
  
-In Figure 3-3, a shift from A to B seems most consistent with which of the following?

Accepted Answer

A)  Society decided to give guns lower priority. 
B)  There have been more technological advances in guns than in butter. 
C)  There is a massive immigration of labor. 
D)  There are unemployed resources in both guns and butter. 
A)  Society decided to give guns lower priority. 
B)  There have been more technological advances in guns than in butter. 
C)  There is a massive immigration of labor. 
D)  There are unemployed resources in both guns and butter.

Question 9

A rational decision is one that

Accepted Answer

A)  satisfies all desires. 
B)  avoids the intentional allocation of resources. 
C)  assigns available resources in the manner most preferred by decision makers. 
D)  assigns available resources to the uses with the lowest opportunity costs. 
A)  satisfies all desires. 
B)  avoids the intentional allocation of resources. 
C)  assigns available resources in the manner most preferred by decision makers. 
D)  assigns available resources to the uses with the lowest opportunity costs.

Question 10

Because resources tend to be specialized, increased production of military goods tends to

Accepted Answer

A)  decrease the opportunity cost of more military goods. 
B)  increase the opportunity cost of more non-military goods. 
C)  increase the opportunity cost of more military goods. 
D)  change the position of the production possibilities curve. 
E)  alter the slope of the production possibilities curve. 
A)  decrease the opportunity cost of more military goods. 
B)  increase the opportunity cost of more non-military goods. 
C)  increase the opportunity cost of more military goods. 
D)  change the position of the production possibilities curve. 
E)  alter the slope of the production possibilities curve.

Question 11

A principle that economists emphasize is that the ____ of decision makers are always limited.

Accepted Answer

A)  ideas 
B)  goals 
C)  resources 
D)  opportunities 
E)  offices 
A)  ideas 
B)  goals 
C)  resources 
D)  opportunities 
E)  offices

Question 12

Adam Smith noted that people are adept at pursuing their own self-interests, and that ____ harnesses this self-interest remarkably well.

Accepted Answer

A)  a totalitarian regime 
B)  a market system 
C)  a democratic government 
D)  a closed system 
A)  a totalitarian regime 
B)  a market system 
C)  a democratic government 
D)  a closed system

Question 13

The opportunity cost of a college education includes wages lost while enrolled in school.

Accepted Answer

A) True 
 B)False

Question 14

A market economy allocates resources primarily in accordance with orders from government bureaucrats.

Accepted Answer

A) True 
 B)False

Question 15

President Barack Obama pushed forward a national health care plan to increase the availability of medical care for all Americans.How would one determine the opportunity cost of the proposal?

Accepted Answer

Every decision by government has an oppo

Question 16

Economics is generally concerned with

Accepted Answer

A)  the operation of banks and the stock market. 
B)  business management. 
C)  how resources are allocated among alternative goals. 
D)  the right time to start a business. 
A)  the operation of banks and the stock market. 
B)  business management. 
C)  how resources are allocated among alternative goals. 
D)  the right time to start a business.

Question 17

Scarcity is a concept that applies to all of the following except

Accepted Answer

A)  time. 
B)  natural resources. 
C)  human wants. 
D)  machinery. 
A)  time. 
B)  natural resources. 
C)  human wants. 
D)  machinery.

Question 18

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  bowed inward. 
D)  bowed outward. 
E)  undefined, because no market will exist in this case. 
A)  downward sloping. 
B)  upward sloping. 
C)  bowed inward. 
D)  bowed outward. 
E)  undefined, because no market will exist in this case.

Question 19

The money cost of a good will approximate the opportunity cost if

Accepted Answer

A)  there are serious distortions in the market. 
B)  the market functions well. 
C)  there is much specialization in the market. 
D)  nations are exploiting the law of comparative advantage. 
A)  there are serious distortions in the market. 
B)  the market functions well. 
C)  there is much specialization in the market. 
D)  nations are exploiting the law of comparative advantage.

Question 20

Few bother to think about what makes Florida oranges show up daily in South Dakota supermarkets, but the people of South Dakota are likely to think a great deal about this.Why does someone take the time and energy to assure that oranges which are grown in Florida move more than 1,000 miles before they appear on grocery shelves?

Accepted Answer

In a market economy, there is profit to

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

If an economy is producing inefficiently, it is

How are money cost and opportunity cost related to each other?

The term "satisficing" indicates an optimal choice.

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

The notion of opportunity cost can be represented graphically by the

Society can produce at a point outside the production possibilities frontier, but only if it is using all of its resources efficiently.

Voluntary exchange results in mutual gains.

Figure 3-3 -In Figure 3-3, a shift from A to B seems most consistent with which of the following?

A rational decision is one that

Because resources tend to be specialized, increased production of military goods tends to

A principle that economists emphasize is that the ____ of decision makers are always limited.

Adam Smith noted that people are adept at pursuing their own self-interests, and that ____ harnesses this self-interest remarkably well.

The opportunity cost of a college education includes wages lost while enrolled in school.

A market economy allocates resources primarily in accordance with orders from government bureaucrats.

President Barack Obama pushed forward a national health care plan to increase the availability of medical care for all Americans.How would one determine the opportunity cost of the proposal?

Economics is generally concerned with

Scarcity is a concept that applies to all of the following except

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

The money cost of a good will approximate the opportunity cost if

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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