Question 1

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 2

A society that relies on a market-based economy will always protect the natural environment.

Accepted Answer

A) True 
 B)False

Question 3

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 that 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

Question 4

Figure 3-6  
-In Figure 3-6, assume this economy is currently operating at point D.What is the opportunity cost of moving to B?

Accepted Answer

A) About 200 bushels of wheat 
B) 200 bushels of soybeans 
C) Infinite, B cannot be produced at any cost. 
D) 0 
A) About 200 bushels of wheat 
B) 200 bushels of soybeans 
C) Infinite, B cannot be produced at any cost. 
D) 0

Question 5

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

Accepted Answer

A) The dollar cost of the cone he or she selected 
B) The other types of ice cream he or she could have selected 
C) Zero, because the good was not a durable good 
D) Zero, because the good was free 
A) The dollar cost of the cone he or she selected 
B) The other types of ice cream he or she could have selected 
C) Zero, because the good was not a durable good 
D) Zero, because the good was free

Question 6

Rob took the afternoon off from his job as a tire salesman to mow his lawn.Rob told his wife that this made sense because he would be saving the $50 he would have to pay a lawn service, noting that this would be the opportunity cost to the family.Rob's wife disagreed.What did Rob's wife say?

Accepted Answer

A) The opportunity cost would be Rob's lost income from selling tires that afternoon plus the $50. 
B) The opportunity cost would be Rob's lost income from selling tires that afternoon minus the $50. 
C) That Rob just wanted to take the afternoon off. 
D) The opportunity cost would be Rob's lost income from selling tires that afternoon. 
A) The opportunity cost would be Rob's lost income from selling tires that afternoon plus the $50. 
B) The opportunity cost would be Rob's lost income from selling tires that afternoon minus the $50. 
C) That Rob just wanted to take the afternoon off. 
D) The opportunity cost would be Rob's lost income from selling tires that afternoon.

Question 7

Specialization of labor makes sense only if there is some means of exchange.

Accepted Answer

A) True 
 B)False

Question 8

When a firm or economy is operating efficiently, it is operating

Accepted Answer

A) outside its production possibilities frontier. 
B) inside its production possibilities frontier. 
C) on its production possibilities frontier. 
D) at the intersection of the production possibilities frontier and the vertical axis. 
E) at the intersection of the production possibilities frontier and the horizontal axis. 
A) outside its production possibilities frontier. 
B) inside its production possibilities frontier. 
C) on its production possibilities frontier. 
D) at the intersection of the production possibilities frontier and the vertical axis. 
E) at the intersection of the production possibilities frontier and the horizontal axis.

Question 9

Although finished goods are scarce, the inputs to produce them are not scarce.

Accepted Answer

A) True 
 B)False

Question 10

How do economists define efficiency? Elaborate.

Accepted Answer

Economists define efficiency as the abse

Question 11

The major coordination tasks can be summarized with the questions

Accepted Answer

A) who, what, when, where. 
B) how, what, for whom. 
C) how, what, why. 
D) how, why, for whom. 
E) who, how, what. 
A) who, what, when, where. 
B) how, what, for whom. 
C) how, what, why. 
D) how, why, for whom. 
E) who, how, what.

Question 12

In a centrally planned economy, resources are allocated primarily in accordance with directives from government agencies.

Accepted Answer

A) True 
 B)False

Question 13

Economists define efficiency as

Accepted Answer

A) output maximization. 
B) the absence of waste. 
C) input maximization. 
D) the presence of surplus. 
A) output maximization. 
B) the absence of waste. 
C) input maximization. 
D) the presence of surplus.

Question 14

Opportunity costs exist for

Accepted Answer

A) households but not businesses or governments. 
B) businesses but not households or governments. 
C) businesses and households but not governments. 
D) households, businesses, and governments. 
A) households but not businesses or governments. 
B) businesses but not households or governments. 
C) businesses and households but not governments. 
D) households, businesses, and governments.

Question 15

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Accepted Answer

If economic agents engage in voluntary t

Question 16

Figure 3-2  
-In Figure 3-2, a move from a point like B to a point such as D

Accepted Answer

A) is not possible. 
B) can be attained with a more efficient allocation of resources. 
C) can be attained if there is an improvement in technology. 
D) can be attained if unused resources are put into production. 
A) is not possible. 
B) can be attained with a more efficient allocation of resources. 
C) can be attained if there is an improvement in technology. 
D) can be attained if unused resources are put into production.

Question 17

Figure 3-2  
-In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

Accepted Answer

A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage. 
A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage.

Question 18

The problem of scarcity

Accepted Answer

A) has been "cooked up" by disenchanted anticapitalists. 
B) exists because resources are limited relative to wants. 
C) is solved by promoting economic growth. 
D) is caused by artificially high prices. 
A) has been "cooked up" by disenchanted anticapitalists. 
B) exists because resources are limited relative to wants. 
C) is solved by promoting economic growth. 
D) is caused by artificially high prices.

Question 19

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 20

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Accepted Answer

The market deals with efficiency in prod

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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

A society that relies on a market-based economy will always protect the natural environment.

Figure 3-6 -In Figure 3-6, assume this economy is currently operating at point D.What is the opportunity cost of moving to B?

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

Rob took the afternoon off from his job as a tire salesman to mow his lawn.Rob told his wife that this made sense because he would be saving the $50 he would have to pay a lawn service, noting that this would be the opportunity cost to the family.Rob's wife disagreed.What did Rob's wife say?

Specialization of labor makes sense only if there is some means of exchange.

When a firm or economy is operating efficiently, it is operating

Although finished goods are scarce, the inputs to produce them are not scarce.

How do economists define efficiency? Elaborate.

The major coordination tasks can be summarized with the questions

In a centrally planned economy, resources are allocated primarily in accordance with directives from government agencies.

Economists define efficiency as

Opportunity costs exist for

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Figure 3-2 -In Figure 3-2, a move from a point like B to a point such as D

Figure 3-2 -In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

The problem of scarcity

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

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

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

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