Question 1

A society can occasionally produce at a point beyond its production possibilities frontier if there is an economic crisis.

Accepted Answer

A) True 
 B)False

Question 2

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Accepted Answer

A) True 
 B)False

Question 3

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

A) True 
 B)False

Question 4

The market system provides a way

Accepted Answer

A) to allow specialization and exchange to work in tandem. 
B) to improve the well-being of mankind. 
C) to harness self-interest. 
D) to allocate goods and services. 
E) All of the responses are correct. 
A) to allow specialization and exchange to work in tandem. 
B) to improve the well-being of mankind. 
C) to harness self-interest. 
D) to allocate goods and services. 
E) All of the responses are correct.

Question 5

A production possibilities frontier shows the combinations of various goods that should be produced.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following must cope with scarcity?

Accepted Answer

A) Individuals 
B) Companies 
C) Governments 
D) Families 
E) All of the responses are correct. 
A) Individuals 
B) Companies 
C) Governments 
D) Families 
E) All of the responses are correct.

Question 7

Opportunity cost always arises when a trade-off decision is made.

Accepted Answer

A) True 
 B)False

Question 8

Do markets solve all of society's problems?

Accepted Answer

A) Yes, markets are efficient and work well under nearly all circumstances. 
B) Yes, markets solve the problems of production and distribution. 
C) No, they do not solve problems such as unemployment and inflation. 
D) No, they hardly solve any problems at all. 
E) Uncertain, economic theory has no answer to this question. 
A) Yes, markets are efficient and work well under nearly all circumstances. 
B) Yes, markets solve the problems of production and distribution. 
C) No, they do not solve problems such as unemployment and inflation. 
D) No, they hardly solve any problems at all. 
E) Uncertain, economic theory has no answer to this question.

Question 9

Economists define "efficiency" as the absence of waste.

Accepted Answer

A) True 
 B)False

Question 10

Economics only applies to

Accepted Answer

A) decision making by households. 
B) decision making by governments. 
C) decision making by business firms. 
D) all of these kinds of decisions. 
A) decision making by households. 
B) decision making by governments. 
C) decision making by business firms. 
D) all of these kinds of decisions.

Question 11

In order to make an optimal choice, we must use

Accepted Answer

A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis. 
A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis.

Question 12

Resources are used to create goods and services.

Accepted Answer

A) True 
 B)False

Question 13

Employment discrimination is a source of

Accepted Answer

A) economic inefficiency. 
B) increased economic growth. 
C) innovation. 
D) shifting production possibilities. 
E) All of the responses are correct. 
A) economic inefficiency. 
B) increased economic growth. 
C) innovation. 
D) shifting production possibilities. 
E) All of the responses are correct.

Question 14

Table 3-2   ​
-From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

Accepted Answer

A) 16 units of corn. 
B) 31 units of corn. 
C) 15 units of corn. 
D) 4 units of corn. 
E) 1 unit of corn. 
A) 16 units of corn. 
B) 31 units of corn. 
C) 15 units of corn. 
D) 4 units of corn. 
E) 1 unit of corn.

Question 15

Rational production decisions require an understanding of

Accepted Answer

A) trade-offs. 
B) opportunity costs. 
C) scarcity of resources. 
D) All of the responses are correct. 
A) trade-offs. 
B) opportunity costs. 
C) scarcity of resources. 
D) All of the responses are correct.

Question 16

Increasing opportunity cost tends to occur if

Accepted Answer

A) management is disorganized. 
B) markets do not equate money and opportunity cost. 
C) production is inefficient. 
D) resources are scarce. 
E) resources are specialized. 
A) management is disorganized. 
B) markets do not equate money and opportunity cost. 
C) production is inefficient. 
D) resources are scarce. 
E) resources are specialized.

Question 17

A society must make three sorts of decision: what goods to produce, how to produce them, and how to distribute them.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

List the three coordination decisions made by every economy.

Accepted Answer

A) Where? When? How? 
B) How? What? To whom? 
C) Why? Where? What? 
D) When? To Whom? Where? 
A) Where? When? How? 
B) How? What? To whom? 
C) Why? Where? What? 
D) When? To Whom? Where?

Question 20

Although specialization of labor increases efficiency of production, another step is necessary

Accepted Answer

A) to exchange goods among producers. 
B) to remain fully employed. 
C) to a reallocation of natural resources. 
D) to assure that exchange leads to mutual gains. 
E) All of the responses are correct. 
A) to exchange goods among producers. 
B) to remain fully employed. 
C) to a reallocation of natural resources. 
D) to assure that exchange leads to mutual gains. 
E) All of the responses are correct.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A society can occasionally produce at a point beyond its production possibilities frontier if there is an economic crisis.

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

Market economies are not constrained by scarcity; only planned economies have that problem.

The market system provides a way

A production possibilities frontier shows the combinations of various goods that should be produced.

Which of the following must cope with scarcity?

Opportunity cost always arises when a trade-off decision is made.

Do markets solve all of society's problems?

Economists define "efficiency" as the absence of waste.

Economics only applies to

In order to make an optimal choice, we must use

Resources are used to create goods and services.

Employment discrimination is a source of

Table 3-2 ​ -From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

Rational production decisions require an understanding of

Increasing opportunity cost tends to occur if

A society must make three sorts of decision: what goods to produce, how to produce them, and how to distribute them.

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

List the three coordination decisions made by every economy.

Although specialization of labor increases efficiency of production, another step is necessary

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 -From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is