Question 1

Economics is often described as a science of constrained choice. How do you justify this argument?

Accepted Answer

Economics deals with the allocation of l

Question 2

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

Accepted Answer

Money price can be higher than opportuni

Question 3

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home. Is this statement true?

Accepted Answer

This statement can be true. Such imports

Question 4

Table 3-1   Suppose a farmer is currently producing 50 bushels of corn and 10 bushels of peanuts. According to Table 3-1, the opportunity cost of 10 additional bushels of peanuts is

Accepted Answer

A)  8 bushels of corn. 
B)  42 bushels of corn. 
C)  50 bushels of corn. 
D)  impossible to determine from the information given. 
A)  8 bushels of corn. 
B)  42 bushels of corn. 
C)  50 bushels of corn. 
D)  impossible to determine from the information given.

Question 5

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 6

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.

Question 7

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 8

"OPEC is exploiting the United States by selling us oil at inflated prices." Agree or disagree.

Accepted Answer

Trade is voluntary and only takes place

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A market system is not considered an effective way of controlling self-interest.

Accepted Answer

A) True 
 B)False

Question 11

The problem of scarcity

Accepted Answer

A)  applies to market-based economies. 
B)  applies to centrally planned economies. 
C)  applies only to the economies of less-developed countries. 
D)  applies to all of these economies, not just one type. 
A)  applies to market-based economies. 
B)  applies to centrally planned economies. 
C)  applies only to the economies of less-developed countries. 
D)  applies to all of these economies, not just one type.

Question 12

The U.S. government spent over $4 trillion in budget year 2018.

Accepted Answer

A) True 
 B)False

Question 13

Efficient production can be carried out anywhere on or below the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an example of opportunity cost not measured by money cost?

Accepted Answer

A)  The time spent eating a business lunch at a restaurant 
B)  The time spent preparing a meal eaten at home 
C)  The time spent studying to obtain an "A" in economics 
D)  The time spent repairing a car in one's own garage 
E)  All of the responses are correct. 
A)  The time spent eating a business lunch at a restaurant 
B)  The time spent preparing a meal eaten at home 
C)  The time spent studying to obtain an "A" in economics 
D)  The time spent repairing a car in one's own garage 
E)  All of the responses are correct.

Question 15

In Figure 3-2, a point such as D

Accepted Answer

A)  cannot be obtained with the current level of resources and technology. 
B)  can never be obtained. 
C)  can only be obtained by a capitalist society. 
D)  represents a misallocation of resources. 
A)  cannot be obtained with the current level of resources and technology. 
B)  can never be obtained. 
C)  can only be obtained by a capitalist society. 
D)  represents a misallocation of resources.

Question 16

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 17

The profit motive leads firms to use inputs efficiently.

Accepted Answer

A) True 
 B)False

Question 18

The economic problem of scarcity

Accepted Answer

A)  is unique to a capitalist economy. 
B)  requires that choices be made among alternatives. 
C)  disappears as technology advances. 
D)  affects only less-developed countries. 
A)  is unique to a capitalist economy. 
B)  requires that choices be made among alternatives. 
C)  disappears as technology advances. 
D)  affects only less-developed countries.

Question 19

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following characteristics of a production possibilities frontier indicates that trade-offs must be made?

Accepted Answer

A)  The downward slope 
B)  The upward slope 
C)  The constant slope 
D)  The curvature 
A)  The downward slope 
B)  The upward slope 
C)  The constant slope 
D)  The curvature

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Economics is often described as a science of constrained choice. How do you justify this argument?

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home. Is this statement true?

Table 3-1 Suppose a farmer is currently producing 50 bushels of corn and 10 bushels of peanuts. According to Table 3-1, the opportunity cost of 10 additional bushels of peanuts is

The market system provides a way

If production involves constant opportunity cost, the production possibilities frontier

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

"OPEC is exploiting the United States by selling us oil at inflated prices." Agree or disagree.

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

A market system is not considered an effective way of controlling self-interest.

The problem of scarcity

The U.S. government spent over $4 trillion in budget year 2018.

Efficient production can be carried out anywhere on or below the production possibilities frontier.

Which of the following is an example of opportunity cost not measured by money cost?

In Figure 3-2, a point such as D

Economics only applies to

The profit motive leads firms to use inputs efficiently.

The economic problem of scarcity

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Which of the following characteristics of a production possibilities frontier indicates that trade-offs must be made?

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

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 Us Economy

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