Question 1

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Accepted Answer

A) Because sometimes the market does not function well. 
B) Because opportunity costs are different for different goods. 
C) Because there are trade-offs involved in any decision. 
D) Because of existence of efficient markets. 
A) Because sometimes the market does not function well. 
B) Because opportunity costs are different for different goods. 
C) Because there are trade-offs involved in any decision. 
D) Because of existence of efficient markets.

Question 2

Money costs and opportunity costs are concepts that are

Accepted Answer

A) not related in any meaningful way. 
B) used by tax accountants. 
C) related through the relative prices of goods and services. 
D) used by economists to learn the most efficient level of output. 
A) not related in any meaningful way. 
B) used by tax accountants. 
C) related through the relative prices of goods and services. 
D) used by economists to learn the most efficient level of output.

Question 3

In an economy, unemployment exists only at points that are on the interior of the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 4

Scarcity can be measured only through the use of monetary costs.

Accepted Answer

A) True 
 B)False

Question 5

The fundamental goal of economics is to

Accepted Answer

A) provide all people with five yachts and two automobiles. 
B) redistribute income and eliminate poverty. 
C) reduce unemployment so that welfare payments are not necessary. 
D) learn to handle the scarcity of virtually all resources. 
A) provide all people with five yachts and two automobiles. 
B) redistribute income and eliminate poverty. 
C) reduce unemployment so that welfare payments are not necessary. 
D) learn to handle the scarcity of virtually all resources.

Question 6

A society's decision to produce more tanks may require it to reduce the production of some cars.

Accepted Answer

A) True 
 B)False

Question 7

Specialization in production

Accepted Answer

A) raises productivity. 
B) requires money. 
C) stimulates exchange. 
D) All of the responses are correct. 
A) raises productivity. 
B) requires money. 
C) stimulates exchange. 
D) All of the responses are correct.

Question 8

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

Accepted Answer

A) True 
 B)False

Question 9

For a given production possibilities frontier, which points are attainable?

Accepted Answer

A) Points inside the frontier 
B) Points outside the frontier 
C) Points on or outside the frontier 
D) Points on the frontier only 
E) Points on or inside the frontier 
A) Points inside the frontier 
B) Points outside the frontier 
C) Points on or outside the frontier 
D) Points on the frontier only 
E) Points on or inside the frontier

Question 10

Which type of economy must answer the questions of what goods to produce, how to produce them, and for whom to produce them?

Accepted Answer

A) A centrally planned economy 
B) A market-based economy 
C) A developing economy 
D) All types of economies must answer these questions. 
A) A centrally planned economy 
B) A market-based economy 
C) A developing economy 
D) All types of economies must answer these questions.

Question 11

Although all points on the production possibilities frontier are efficient, that alone does not determine which point is "best" for the society.

Accepted Answer

A) True 
 B)False

Question 12

All of the points inside a production possibilities frontier are ____; all of the points on the production possibilities frontier are ____.

Accepted Answer

A) efficient; inefficient 
B) inefficient; efficient 
C) attainable; unattainable 
D) rational; zero-cost 
E) unattainable; efficient 
A) efficient; inefficient 
B) inefficient; efficient 
C) attainable; unattainable 
D) rational; zero-cost 
E) unattainable; efficient

Question 13

From a society's viewpoint, when all resources are fully employed, a decision to have more of one thing means we must give up something else.

Accepted Answer

A) True 
 B)False

Question 14

What are the three coordination tasks that markets resolve?

Accepted Answer

They are (1) how to produce an

Question 15

The production possibilities frontier for a country is usually drawn

Accepted Answer

A) as a straight line, sloping downward. 
B) as a straight line, sloping upward. 
C) bowed outward from the origin. 
D) bowed inward toward the origin. 
E) as a dotted line when sloping downward and as a full line when sloping upward. 
A) as a straight line, sloping downward. 
B) as a straight line, sloping upward. 
C) bowed outward from the origin. 
D) bowed inward toward the origin. 
E) as a dotted line when sloping downward and as a full line when sloping upward.

Question 16

Given its size, the United States does not have to worry about limitations on resources.

Accepted Answer

A) True 
 B)False

Question 17

A government, based upon its policy decisions, can determine the position and shape of the production possibilities frontier that the economy faces.

Accepted Answer

A) True 
 B)False

Question 18

Every economic decision involves a trade-off because of

Accepted Answer

A) theory. 
B) opportunism. 
C) consumption. 
D) scarcity. 
E) efficiency. 
A) theory. 
B) opportunism. 
C) consumption. 
D) scarcity. 
E) efficiency.

Question 19

Opportunity cost is the combined value of all of the other alternatives that go unselected.

Accepted Answer

A) True 
 B)False

Question 20

A student has a chance to see Katy Perry in concert.The student also has a major economics exam the next day.If the student goes to the concert,

Accepted Answer

A) attending the concert may impact her grade on the economics exam. 
B) one opportunity cost of attending the concert is the time that could have been used to study. 
C) this decision involves a trade-off. 
D) All of the responses are correct. 
A) attending the concert may impact her grade on the economics exam. 
B) one opportunity cost of attending the concert is the time that could have been used to study. 
C) this decision involves a trade-off. 
D) All of the responses are correct.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Money costs and opportunity costs are concepts that are

In an economy, unemployment exists only at points that are on the interior of the production possibilities frontier.

Scarcity can be measured only through the use of monetary costs.

The fundamental goal of economics is to

A society's decision to produce more tanks may require it to reduce the production of some cars.

Specialization in production

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

For a given production possibilities frontier, which points are attainable?

Which type of economy must answer the questions of what goods to produce, how to produce them, and for whom to produce them?

Although all points on the production possibilities frontier are efficient, that alone does not determine which point is "best" for the society.

All of the points inside a production possibilities frontier are ____; all of the points on the production possibilities frontier are ____.

From a society's viewpoint, when all resources are fully employed, a decision to have more of one thing means we must give up something else.

What are the three coordination tasks that markets resolve?

The production possibilities frontier for a country is usually drawn

Given its size, the United States does not have to worry about limitations on resources.

A government, based upon its policy decisions, can determine the position and shape of the production possibilities frontier that the economy faces.

Every economic decision involves a trade-off because of

Opportunity cost is the combined value of all of the other alternatives that go unselected.

A student has a chance to see Katy Perry in concert.The student also has a major economics exam the next day.If the student goes to the concert,

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

All of the points inside a production possibilities frontier are ; all of the points on the production possibilities frontier are .