Question 1

An example of a natural resource is:

Accepted Answer

A) oil in the ground. 
B) oil in storage tanks. 
C) a factory. 
D) a computer program. 
A) oil in the ground. 
B) oil in storage tanks. 
C) a factory. 
D) a computer program.

Question 2

Use the following to answer questions 
Exhibit: Sugar and Freight Trains  
-(Exhibit: Sugar and Freight Trains)
Suppose the economy is operating at point B.The opportunity cost of producing the third freight train would be:

Accepted Answer

A) 6 tons of sugar. 
B) 19 tons of sugar. 
C) 45 tons of sugar. 
D) 80 tons of sugar. 
A) 6 tons of sugar. 
B) 19 tons of sugar. 
C) 45 tons of sugar. 
D) 80 tons of sugar.

Question 3

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future.In the context of production possibilities, this is most comparable to:

Accepted Answer

A) producing at any point on the production possibilities curve. 
B) producing at a point inside the production possibilities curve. 
C) producing relatively more consumer goods and relatively fewer capital goods. 
D) producing relatively more capital goods and relatively fewer consumer goods. 
A) producing at any point on the production possibilities curve. 
B) producing at a point inside the production possibilities curve. 
C) producing relatively more consumer goods and relatively fewer capital goods. 
D) producing relatively more capital goods and relatively fewer consumer goods.

Question 4

The slope of a typical production possibilities curve is:

Accepted Answer

A) 0. 
B) vertical. 
C) positive. 
D) negative. 
A) 0. 
B) vertical. 
C) positive. 
D) negative.

Question 5

The best example of an increase in capital is:

Accepted Answer

A) The discovery of new oil reserves. 
B) new computer software. 
C) legal immigration of computer programmers. 
D) conversion of military facilities to civilian uses. 
A) The discovery of new oil reserves. 
B) new computer software. 
C) legal immigration of computer programmers. 
D) conversion of military facilities to civilian uses.

Question 6

Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces.

Accepted Answer

A) Brazil has a comparative advantage in automobile production and should specialize in coffee. 
B) Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles. 
C) Brazil has a comparative advantage in coffee production and should specialize in coffee production. 
D) Brazil has a comparative advantage in automobile production and should specialize in automobile production. 
A) Brazil has a comparative advantage in automobile production and should specialize in coffee. 
B) Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles. 
C) Brazil has a comparative advantage in coffee production and should specialize in coffee production. 
D) Brazil has a comparative advantage in automobile production and should specialize in automobile production.

Question 7

The law of increasing opportunity cost says that:

Accepted Answer

A) opportunity costs of production always tend to increase. 
B) increases in wages cause increases in the opportunity costs of production. 
C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. 
D) along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less. 
A) opportunity costs of production always tend to increase. 
B) increases in wages cause increases in the opportunity costs of production. 
C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. 
D) along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less.

Question 8

Inefficiency occurs when an economy is operating outside its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 9

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:

Accepted Answer

A) economic growth. 
B) comparative advantage. 
C) full employment. 
D) inefficient production. 
A) economic growth. 
B) comparative advantage. 
C) full employment. 
D) inefficient production.

Question 10

Use the following to answer questions 
Exhibit: Bicycles and Radishes 1  
-(Exhibit: Bicycles and Radishes 1)
The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles.The axes of both graphs are measured in equivalent units.Country A is now operating at point M, and Country B is now operating at point N.The opportunity cost of producing an additional ton of radishes would be greater in:

Accepted Answer

A) Country A. 
B) Country B. 
C) neither; the opportunity cost would be the same in both countries. 
D) there is not enough information given to answer the question. 
A) Country A. 
B) Country B. 
C) neither; the opportunity cost would be the same in both countries. 
D) there is not enough information given to answer the question.

Question 11

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is ____ __ pound(s)
Of potatoes.

Accepted Answer

A) 1/2 
B) 2 
C) 100 
D) 200 
A) 1/2 
B) 2 
C) 100 
D) 200

Question 12

Factors of production are:

Accepted Answer

A) the resources the economy has available to produce goods and services. 
B) generally unlimited in modern economies. 
C) always employed in modern economies. 
D) the knowledge that can be applied to the production of goods and services. 
A) the resources the economy has available to produce goods and services. 
B) generally unlimited in modern economies. 
C) always employed in modern economies. 
D) the knowledge that can be applied to the production of goods and services.

Question 13

Use the following to answer questions 
Exhibit: Sugar and Freight Trains  
-(Exhibit: Sugar and Freight Trains)
The "bowed-out" shape of the production possibilities curve shown here demonstrates:

Accepted Answer

A) that freight trains cost more than sugar. 
B) that sugar costs more than freight trains. 
C) that the opportunity cost of additional freight trains increases as the economy produces more and more of them. 
D) that the opportunity cost of additional freight trains decreases as the economy produces more and more of them. 
A) that freight trains cost more than sugar. 
B) that sugar costs more than freight trains. 
C) that the opportunity cost of additional freight trains increases as the economy produces more and more of them. 
D) that the opportunity cost of additional freight trains decreases as the economy produces more and more of them.

Question 14

Which of the following is an example of capital?

Accepted Answer

A) a gravel truck 
B) a savings account 
C) a share of General Motors stock 
D) a lake 
A) a gravel truck 
B) a savings account 
C) a share of General Motors stock 
D) a lake

Question 15

Use the following to answer questions 
Exhibit: Strawberries and Submarines  
-(Exhibit: Strawberries and Submarines)
Suppose the economy is now operating at point A.The first submarine, which is achieved at point B, would have an opportunity cost of _______ million tons of strawberries.

Accepted Answer

A) 50 
B) 150 
C) 400 
D) 950 
A) 50 
B) 150 
C) 400 
D) 950

Question 16

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

Accepted Answer

A) economic growth. 
B) full employment. 
C) inefficiency. 
D) idle factors of production. 
A) economic growth. 
B) full employment. 
C) inefficiency. 
D) idle factors of production.

Question 17

During the Great Depression:

Accepted Answer

A) By 1933, 25 percent of the nation's workers had lost their jobs. 
B) output reached its lowest level in 1929. 
C) the production possibilities curve shifted sharply inward, which explains the drop in output, jobs, and overall prosperity. 
D) firms increased output but used fewer workers. 
A) By 1933, 25 percent of the nation's workers had lost their jobs. 
B) output reached its lowest level in 1929. 
C) the production possibilities curve shifted sharply inward, which explains the drop in output, jobs, and overall prosperity. 
D) firms increased output but used fewer workers.

Question 18

A source of economic growth is:

Accepted Answer

A) idle factors of production. 
B) unemployment. 
C) more money. 
D) more factors of production. 
A) idle factors of production. 
B) unemployment. 
C) more money. 
D) more factors of production.

Question 19

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Accepted Answer

A) economic growth. 
B) full employment. 
C) efficiency. 
D) idle factors of production or inefficient use of resources. 
A) economic growth. 
B) full employment. 
C) efficiency. 
D) idle factors of production or inefficient use of resources.

Question 20

If countries do not engage in international trade:

Accepted Answer

A) they give up the ability to specialize in production. 
B) worldwide levels of production are lower. 
C) the world will be operating inside its production possibilities curve. 
D) all of the above are true. 
A) they give up the ability to specialize in production. 
B) worldwide levels of production are lower. 
C) the world will be operating inside its production possibilities curve. 
D) all of the above are true.

An example of a natural resource is:

Use the following to answer questions Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point B.The opportunity cost of producing the third freight train would be:

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future.In the context of production possibilities, this is most comparable to:

The slope of a typical production possibilities curve is:

The best example of an increase in capital is:

Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces.

The law of increasing opportunity cost says that:

Inefficiency occurs when an economy is operating outside its production possibilities curve.

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is __ pound(s) Of potatoes.

Factors of production are:

Use the following to answer questions Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) The "bowed-out" shape of the production possibilities curve shown here demonstrates:

Which of the following is an example of capital?

Use the following to answer questions Exhibit: Strawberries and Submarines -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point A.The first submarine, which is achieved at point B, would have an opportunity cost of _______ million tons of strawberries.

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

During the Great Depression:

A source of economic growth is:

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

If countries do not engage in international trade:

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

An example of a natural resource is:

Use the following to answer questions Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point B.The opportunity cost of producing the third freight train would be:

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future.In the context of production possibilities, this is most comparable to:

The slope of a typical production possibilities curve is:

The best example of an increase in capital is:

Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces.

The law of increasing opportunity cost says that:

Inefficiency occurs when an economy is operating outside its production possibilities curve.

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is ____ __ pound(s) Of potatoes.

Factors of production are:

Use the following to answer questions Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) The "bowed-out" shape of the production possibilities curve shown here demonstrates:

Which of the following is an example of capital?

Use the following to answer questions Exhibit: Strawberries and Submarines -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point A.The first submarine, which is achieved at point B, would have an opportunity cost of _______ million tons of strawberries.

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

During the Great Depression:

A source of economic growth is:

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

If countries do not engage in international trade:

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

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is __ pound(s) Of potatoes.