Question 1

One common definition of economics is the study of

Accepted Answer

A) how scarcity increases opportunities to meet ends. 
B) how markets overcome scarcity. 
C) one goal and three tasks. 
D) how to use limited means to meet unlimited wants. 
E) wants versus needs. 
A) how scarcity increases opportunities to meet ends. 
B) how markets overcome scarcity. 
C) one goal and three tasks. 
D) how to use limited means to meet unlimited wants. 
E) wants versus needs.

Question 2

An economist claims that any point not on a production possibilities frontier cannot be best.What is his reasoning to support this?

Accepted Answer

A) A point inside the frontier implies that society is not facing up to the problem of scarcity. 
B) A point inside the frontier limits growth, and growth is always a goal worth pursuing. 
C) A point inside the frontier represents inflation, and inflation is a dangerous situation. 
D) A point inside the frontier results in fewer goods, and more is always better. 
E) A point inside the frontier is inefficient and represents wasted resources. 
A) A point inside the frontier implies that society is not facing up to the problem of scarcity. 
B) A point inside the frontier limits growth, and growth is always a goal worth pursuing. 
C) A point inside the frontier represents inflation, and inflation is a dangerous situation. 
D) A point inside the frontier results in fewer goods, and more is always better. 
E) A point inside the frontier is inefficient and represents wasted resources.

Question 3

Adam Smith noted that people are adept at which of the following?

Accepted Answer

A) Confusing themselves if given the chance. 
B) Proving the truth of "Murphy's Law." 
C) Denying themselves for the sake of others. 
D) Pursuing their own self-interest. 
E) All of the responses are correct. 
A) Confusing themselves if given the chance. 
B) Proving the truth of "Murphy's Law." 
C) Denying themselves for the sake of others. 
D) Pursuing their own self-interest. 
E) All of the responses are correct.

Question 4

What is the opportunity cost of economic growth?

Accepted Answer

A) Investment in the current time period 
B) Improved technology in the current time period 
C) Capital goods in the current time period 
D) Consumption in the current time period 
A) Investment in the current time period 
B) Improved technology in the current time period 
C) Capital goods in the current time period 
D) Consumption in the current time period

Question 5

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Accepted Answer

A) The Plan of the Ages. 
B) The General Theory of Money, Taxes, and Income. 
C) The Wealth of Nations. 
D) Principles of Economics. 
E) Concepts in Moral Philosophy. 
A) The Plan of the Ages. 
B) The General Theory of Money, Taxes, and Income. 
C) The Wealth of Nations. 
D) Principles of Economics. 
E) Concepts in Moral Philosophy.

Question 6

Because resources tend to be specialized, if a society chooses to increase production of military goods, this tends to

Accepted Answer

A) result in a decrease in the opportunity cost of more military goods. 
B) result in an increase in the opportunity cost of more nonmilitary goods. 
C) result in an increase in 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) result in a decrease in the opportunity cost of more military goods. 
B) result in an increase in the opportunity cost of more nonmilitary goods. 
C) result in an increase in 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 7

Table 3-2   ​
-In Table 3-2, from combination C, the opportunity cost of 2 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 8

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000.His cousin offered him $3,000 for the ticket.Given this information, Ted's opportunity cost of this ticket is

Accepted Answer

A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000. 
A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000.

Question 9

Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college.Do you agree? Explain.

Accepted Answer

No.Although estimates of the rate of ret

Question 10

If two persons trade, one must gain at the expense of the other.

Accepted Answer

A) True 
 B)False

Question 11

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Accepted Answer

A) True 
 B)False

Question 12

What determines the position and shape of a society's production possibilities frontier?

Accepted Answer

A) The physical resources of that society 
B) The skills of the workforce 
C) The level of technology of the society 
D) The amount of factories in the society 
E) All of the responses are correct. 
A) The physical resources of that society 
B) The skills of the workforce 
C) The level of technology of the society 
D) The amount of factories in the society 
E) All of the responses are correct.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Is faster economic growth unambiguously better?

Accepted Answer

A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain, economic growth has no answer to this question. 
A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain, economic growth has no answer to this question.

Question 15

The main reason that finished goods are scarce is that

Accepted Answer

A) raw material resources are scarce. 
B) factories are not operated efficiently. 
C) distribution systems are clogged. 
D) taxes are destroying work incentives. 
E) All of the responses are correct. 
A) raw material resources are scarce. 
B) factories are not operated efficiently. 
C) distribution systems are clogged. 
D) taxes are destroying work incentives. 
E) All of the responses are correct.

Question 16

The opportunity cost of a college education does not include any income that is foregone while enrolled in school, since this is not measured using monetary costs.

Accepted Answer

A) True 
 B)False

Question 17

The principle of comparative advantage helps explain trade between nations.

Accepted Answer

A) True 
 B)False

Question 18

The production possibilities frontier can show a manufacturer's possible combinations of output resulting from the combination of two goods.

Accepted Answer

A) True 
 B)False

Question 19

A decrease in the unemployment rate will shift the production possibilities frontier outward from the origin.

Accepted Answer

A) True 
 B)False

Question 20

If production involves constant opportunity cost, the production possibilities frontier

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.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

One common definition of economics is the study of

An economist claims that any point not on a production possibilities frontier cannot be best.What is his reasoning to support this?

Adam Smith noted that people are adept at which of the following?

What is the opportunity cost of economic growth?

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Because resources tend to be specialized, if a society chooses to increase production of military goods, this tends to

Table 3-2 ​ -In Table 3-2, from combination C, the opportunity cost of 2 more units of cotton would be

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000.His cousin offered him $3,000 for the ticket.Given this information, Ted's opportunity cost of this ticket is

Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college.Do you agree? Explain.

If two persons trade, one must gain at the expense of the other.

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

What determines the position and shape of a society's production possibilities frontier?

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

Is faster economic growth unambiguously better?

The main reason that finished goods are scarce is that

The opportunity cost of a college education does not include any income that is foregone while enrolled in school, since this is not measured using monetary costs.

The principle of comparative advantage helps explain trade between nations.

The production possibilities frontier can show a manufacturer's possible combinations of output resulting from the combination of two goods.

A decrease in the unemployment rate will shift the production possibilities frontier outward from the origin.

If production involves constant opportunity cost, the production possibilities frontier

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

Filters

Table 3-2 -In Table 3-2, from combination C, the opportunity cost of 2 more units of cotton would be