Question 1

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

Accepted Answer

A)  Volume of physical resources 
B)  Level of labor skills 
C)  Level of technology 
D)  Amount of factories on hand 
E)  All of the responses are correct. 
A)  Volume of physical resources 
B)  Level of labor skills 
C)  Level of technology 
D)  Amount of factories on hand 
E)  All of the responses are correct.

Question 2

The divergence between money costs and opportunity costs will be greatest in which of the following situations?

Accepted Answer

A)  A university purchases 100 computers. 
B)  A university employs people from town in the cafeteria (the other alternative is to work at a paper mill). 
C)  A university employs otherwise unemployed teenagers to paint crosswalks and curbs. 
D)  A university replaces the roof of the fine arts building. 
A)  A university purchases 100 computers. 
B)  A university employs people from town in the cafeteria (the other alternative is to work at a paper mill). 
C)  A university employs otherwise unemployed teenagers to paint crosswalks and curbs. 
D)  A university replaces the roof of the fine arts building.

Question 3

A market system solves the

Accepted Answer

A)  "what" and "how" decisions but not the "to whom." 
B)  "what" and "to whom" decisions but not the "how." 
C)  "how" and "to whom" decisions but not the "what." 
D)  "what," "how," and "to whom" decisions. 
A)  "what" and "how" decisions but not the "to whom." 
B)  "what" and "to whom" decisions but not the "how." 
C)  "how" and "to whom" decisions but not the "what." 
D)  "what," "how," and "to whom" decisions.

Question 4

Free markets can

Accepted Answer

A)  produce goods and services with maximum efficiency. 
B)  permanently solve unemployment. 
C)  completely protect the environment. 
D)  All of these responses are correct. 
A)  produce goods and services with maximum efficiency. 
B)  permanently solve unemployment. 
C)  completely protect the environment. 
D)  All of these responses are correct.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If a society produces at a point on the production possibilities frontier, this is consistent with the full employment of resources.

Accepted Answer

A) True 
 B)False

Question 7

If production involves increasing opportunity cost, then on the production possibilities frontier, moving to a point closer to the horizontal axis will increase the opportunity cost of

Accepted Answer

A)  the good that is shown on the horizontal axis. 
B)  the good that is shown on the vertical axis. 
C)  both of the goods shown on the axes. 
D)  neither of the goods shown on the axes. 
A)  the good that is shown on the horizontal axis. 
B)  the good that is shown on the vertical axis. 
C)  both of the goods shown on the axes. 
D)  neither of the goods shown on the axes.

Question 8

Which of the following events create an outward shift of the production possibilities curve?

Accepted Answer

A)  The United States moves resources from the production of goods for domestic production to the production of goods for export. 
B)  Tax reductions reduce the cost and increase the amount of investment in factories, machinery, and research and development. 
C)  There is an migration of young people to another country where there is more political freedom. 
D)  The unemployment rate falls from 33 percent to 12 percent. 
A)  The United States moves resources from the production of goods for domestic production to the production of goods for export. 
B)  Tax reductions reduce the cost and increase the amount of investment in factories, machinery, and research and development. 
C)  There is an migration of young people to another country where there is more political freedom. 
D)  The unemployment rate falls from 33 percent to 12 percent.

Question 9

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 10

Optimal decisions take into account

Accepted Answer

A)  the resources available. 
B)  the alternatives that were not available to choose. 
C)  the gratification produced by an outcome. 
D)  the effect on the distribution of income. 
E)  the outcomes that are not feasible. 
A)  the resources available. 
B)  the alternatives that were not available to choose. 
C)  the gratification produced by an outcome. 
D)  the effect on the distribution of income. 
E)  the outcomes that are not feasible.

Question 11

In Figure 3-4, for which of the following would this statement be true: "To get more apples we have to give up wheat." A movement from

Accepted Answer

A)  A to E. 
B)  C to D. 
C)  D to C. 
D)  D to E. 
E)  B to C. 
A)  A to E. 
B)  C to D. 
C)  D to C. 
D)  D to E. 
E)  B to C.

Question 12

If the budget deficit was eliminated, the federal government would have more money than it could spend.

Accepted Answer

A) True 
 B)False

Question 13

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Accepted Answer

A) True 
 B)False

Question 14

If a society uses the market system, only markets are available to solve all of its problems.

Accepted Answer

A) True 
 B)False

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

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 17

Hutch Technology makes computer monitors, which sell for $100 each. What is the opportunity cost of 10 monitors?

Accepted Answer

A)  $1,000 
B)  The other goods that could be produced with the resources that produce the 10 monitors 
C)  The profits that Hutch earns when 10 monitors are sold 
D)  The lost profits that Hutch if the monitors are not produced 
E)  All of the responses are correct. 
A)  $1,000 
B)  The other goods that could be produced with the resources that produce the 10 monitors 
C)  The profits that Hutch earns when 10 monitors are sold 
D)  The lost profits that Hutch if the monitors are not produced 
E)  All of the responses are correct.

Question 18

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home. The researcher included all costs including the imputed value of time involved to prepare the meal at home. This study illustrates the

Accepted Answer

A)  value of marginal analysis. 
B)  law of increasing costs. 
C)  difference between real costs and money costs. 
D)  cost disease of the service sector. 
A)  value of marginal analysis. 
B)  law of increasing costs. 
C)  difference between real costs and money costs. 
D)  cost disease of the service sector.

Question 19

Opportunity cost can always be measured in money terms.

Accepted Answer

A) True 
 B)False

Question 20

Economic growth solves the problem of scarcity.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

The divergence between money costs and opportunity costs will be greatest in which of the following situations?

A market system solves the

Free markets can

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

If a society produces at a point on the production possibilities frontier, this is consistent with the full employment of resources.

If production involves increasing opportunity cost, then on the production possibilities frontier, moving to a point closer to the horizontal axis will increase the opportunity cost of

Which of the following events create an outward shift of the production possibilities curve?

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

Optimal decisions take into account

In Figure 3-4, for which of the following would this statement be true: "To get more apples we have to give up wheat." A movement from

If the budget deficit was eliminated, the federal government would have more money than it could spend.

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

If a society uses the market system, only markets are available to solve all of its problems.

The main reason that finished goods are scarce is that

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

Hutch Technology makes computer monitors, which sell for $100 each. What is the opportunity cost of 10 monitors?

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home. The researcher included all costs including the imputed value of time involved to prepare the meal at home. This study illustrates the

Opportunity cost can always be measured in money terms.

Economic growth solves the problem of scarcity.

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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