Question 1

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Accepted Answer

A) True 
 B)False

Question 2

By specializing in the production of particular goods in which it has a comparative advantage, a nation is:

Accepted Answer

A) less likely to make efficient use of available resources. 
B) less likely to engage in international trade. 
C) able to become self-sufficient. 
D) able to operate efficiently. 
A) less likely to make efficient use of available resources. 
B) less likely to engage in international trade. 
C) able to become self-sufficient. 
D) able to operate efficiently.

Question 3

Without government, the "for whom" question could not be solved.

Accepted Answer

A) True 
 B)False

Question 4

The slope of a production possibilities curve is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

In the 1980s, the federal government undertook a major build-up of the military sector, leading to reports that prices charged by military contractors were spiraling upward.According to production possibilities analysis, this result is not surprising due to:

Accepted Answer

A) the law of increasing opportunity cost. 
B) economic efficiency. 
C) technical efficiency. 
D) resource underutilization. 
A) the law of increasing opportunity cost. 
B) economic efficiency. 
C) technical efficiency. 
D) resource underutilization.

Question 6

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

Accepted Answer

A) labor and a natural resource. 
B) labor and capital. 
C) a natural resource and capital. 
D) a natural resource and entrepreneurship. 
A) labor and a natural resource. 
B) labor and capital. 
C) a natural resource and capital. 
D) a natural resource and entrepreneurship.

Question 7

Use the following to answer questions 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
  
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)
The movement from point G on Curve 1 to point E on Curve 2 means that the:

Accepted Answer

A) economy has grown. 
B) economy has become less efficient. 
C) quality and/or the quantity of the factors of production has decreased. 
D) demand for military goods has risen. 
A) economy has grown. 
B) economy has become less efficient. 
C) quality and/or the quantity of the factors of production has decreased. 
D) demand for military goods has risen.

Question 8

The model that shows the goods and services the economy is capable of producing is the model of:

Accepted Answer

A) utility. 
B) the fallacy of composition. 
C) production possibilities. 
D) scarcity. 
A) utility. 
B) the fallacy of composition. 
C) production possibilities. 
D) scarcity.

Question 9

Use the following to answer questions 
Exhibit: Guns and Butter  
-(Exhibit: Guns and Butter)
This production possibilities curve is:

Accepted Answer

A) linear and because of the constant cost and 
B) bowed in toward the origin because of increasing opportunity costs. 
C) bowed in toward the origin because of constant cost of guns and butter. 
D) bowed out from the origin because of increasing opportunity costs. 
A) linear and because of the constant cost and 
B) bowed in toward the origin because of increasing opportunity costs. 
C) bowed in toward the origin because of constant cost of guns and butter. 
D) bowed out from the origin because of increasing opportunity costs.

Question 10

The concept of comparative advantage is based upon:

Accepted Answer

A) absolute labor productivity. 
B) relative labor costs. 
C) dollar prices of labor. 
D) relative opportunity costs. 
A) absolute labor productivity. 
B) relative labor costs. 
C) dollar prices of labor. 
D) relative opportunity costs.

Question 11

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Accepted Answer

A) True 
 B)False

Question 12

Use the following to answer questions 
Exhibit: Guns and Butter  
-(Exhibit: Guns and Butter)
If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:

Accepted Answer

A) indicates you can have more butter and guns simultaneously. 
B) makes it clear that this economy experiences decreasing opportunity costs. 
C) involves a loss of 8 units of guns per period. 
D) involves a loss of 4 units of guns per period. 
A) indicates you can have more butter and guns simultaneously. 
B) makes it clear that this economy experiences decreasing opportunity costs. 
C) involves a loss of 8 units of guns per period. 
D) involves a loss of 4 units of guns per period.

Question 13

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

Accepted Answer

A) True 
 B)False

Question 14

By specializing in the production of particular goods, a nation is:

Accepted Answer

A) less likely to make efficient use of available resources. 
B) more likely to engage in international trade. 
C) able to become self-sufficient. 
D) unable to develop a comparative advantage. 
A) less likely to make efficient use of available resources. 
B) more likely to engage in international trade. 
C) able to become self-sufficient. 
D) unable to develop a comparative advantage.

Question 15

Countries import some goods and export other goods primarily because of:

Accepted Answer

A) unemployment. 
B) self-sufficiency. 
C) comparative advantage. 
D) the law of increasing opportunity cost. 
A) unemployment. 
B) self-sufficiency. 
C) comparative advantage. 
D) the law of increasing opportunity cost.

Question 16

Human capital is:

Accepted Answer

A) the set of acquired skills and abilities that workers bring to the production of goods and services. 
B) the financial wealth the economy has available to produce goods and services. 
C) the ability to produce one of two goods at relatively lower cost. 
D) a factor of production only if it occurs naturally. 
A) the set of acquired skills and abilities that workers bring to the production of goods and services. 
B) the financial wealth the economy has available to produce goods and services. 
C) the ability to produce one of two goods at relatively lower cost. 
D) a factor of production only if it occurs naturally.

Question 17

The slope of a production possibilities curve is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
  
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)
If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

Accepted Answer

A) resources are fully employed. 
B) economic growth has taken place. 
C) there is inefficiency and/or unemployment. 
D) the economy is maximizing its economic objectives. 
A) resources are fully employed. 
B) economic growth has taken place. 
C) there is inefficiency and/or unemployment. 
D) the economy is maximizing its economic objectives.

Question 19

Any factor of production is capital if it:

Accepted Answer

A) was produced and can be used to produce other goods and services. 
B) generates utility. 
C) uses human effort to produce goods and services. 
D) is included in financial capital. 
A) was produced and can be used to produce other goods and services. 
B) generates utility. 
C) uses human effort to produce goods and services. 
D) is included in financial capital.

Question 20

When the government provides national defense, it is:

Accepted Answer

A) providing goods and services. 
B) enforcing the legal system. 
C) maintaining the money supply. 
D) stabilizing the economy. 
A) providing goods and services. 
B) enforcing the legal system. 
C) maintaining the money supply. 
D) stabilizing the economy.

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

By specializing in the production of particular goods in which it has a comparative advantage, a nation is:

Without government, the "for whom" question could not be solved.

The slope of a production possibilities curve is based on opportunity cost.

In the 1980s, the federal government undertook a major build-up of the military sector, leading to reports that prices charged by military contractors were spiraling upward.According to production possibilities analysis, this result is not surprising due to:

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) The movement from point G on Curve 1 to point E on Curve 2 means that the:

The model that shows the goods and services the economy is capable of producing is the model of:

Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) This production possibilities curve is:

The concept of comparative advantage is based upon:

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

By specializing in the production of particular goods, a nation is:

Countries import some goods and export other goods primarily because of:

Human capital is:

The slope of a production possibilities curve is based on opportunity cost.

Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

Any factor of production is capital if it:

When the government provides national defense, it is:

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters

Exam 2: Confronting Scarcity: Choices in Production

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

By specializing in the production of particular goods in which it has a comparative advantage, a nation is:

Without government, the "for whom" question could not be solved.

The slope of a production possibilities curve is based on opportunity cost.

In the 1980s, the federal government undertook a major build-up of the military sector, leading to reports that prices charged by military contractors were spiraling upward.According to production possibilities analysis, this result is not surprising due to:

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) The movement from point G on Curve 1 to point E on Curve 2 means that the:

The model that shows the goods and services the economy is capable of producing is the model of:

Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) This production possibilities curve is:

The concept of comparative advantage is based upon:

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

By specializing in the production of particular goods, a nation is:

Countries import some goods and export other goods primarily because of:

Human capital is:

The slope of a production possibilities curve is based on opportunity cost.

Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

Any factor of production is capital if it:

When the government provides national defense, it is:

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters