Question 1

Is faster economic growth unambiguously better?

Accepted Answer

A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain, economic growth has no answer to this question. 
A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain, economic growth has no answer to this question.

Question 2

A market system (market economy)depends on the market to

Accepted Answer

A) find the most efficient way of using resources. 
B) determine how large the budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide minimum incomes for everyone. 
E) All of the responses are correct. 
A) find the most efficient way of using resources. 
B) determine how large the budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide minimum incomes for everyone. 
E) All of the responses are correct.

Question 3

Millionaires do not face the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 4

Explain the relationship between opportunity costs and money costs. Can they be treated as identical?

Accepted Answer

The two costs are usually closely tied b

Question 5

The first economist to point out the importance of specialization of labor was

Accepted Answer

A) Leonardo da Vinci. 
B) Adam Smith. 
C) David Ricardo. 
D) John Maynard Keynes. 
E) Enrico Caruso. 
A) Leonardo da Vinci. 
B) Adam Smith. 
C) David Ricardo. 
D) John Maynard Keynes. 
E) Enrico Caruso.

Question 6

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

Accepted Answer

A) No, an economy can also expand by invention and innovation. 
B) No, an economy can also grow by investment instead of capital spending. 
C) Yes, more capital is the only way to expand its production possibilities frontier. 
D) Yes, although more capital clearly has a high opportunity cost. 
E) Yes, because capital is the only constraining resource that limits growth. 
A) No, an economy can also expand by invention and innovation. 
B) No, an economy can also grow by investment instead of capital spending. 
C) Yes, more capital is the only way to expand its production possibilities frontier. 
D) Yes, although more capital clearly has a high opportunity cost. 
E) Yes, because capital is the only constraining resource that limits growth.

Question 7

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 8

Free markets promote all of society's goals.

Accepted Answer

A) True 
 B)False

Question 9

-Table 3-2 The concept of opportunity cost can be represented graphically by the

Accepted Answer

A) area inside the production possibilities frontier. 
B) slope of the production possibilities frontier. 
C) vertical distance from the horizontal axis to the production possibilities frontier. 
D) horizontal distance from the vertical axis to the production possibilities frontier. 
E) sum of the horizontal and vertical distances to the production possibilities frontier. 
A) area inside the production possibilities frontier. 
B) slope of the production possibilities frontier. 
C) vertical distance from the horizontal axis to the production possibilities frontier. 
D) horizontal distance from the vertical axis to the production possibilities frontier. 
E) sum of the horizontal and vertical distances to the production possibilities frontier.

Question 10

One role that markets play is

Accepted Answer

A) to allocate resources. 
B) provide revenues for governments to spend. 
C) distribute income equally. 
D) provide for all human wants. 
A) to allocate resources. 
B) provide revenues for governments to spend. 
C) distribute income equally. 
D) provide for all human wants.

Question 11

Adam Smith believed that markets coordinated the self-interests of consumers.

Accepted Answer

A) True 
 B)False

Question 12

See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

Accepted Answer

Production exhibits increasing cost. The

Question 13

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 14

In terms of efficiency, any point on a production possibilities frontier is as good another.

Accepted Answer

A) True 
 B)False

Question 15

Centrally planned economies are not constrained by the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 16

Which of these options best reflects Jim's opportunity cost of operating his own business?

Accepted Answer

A) The total amount of money he spends to obtain capital equipment 
B) The value of Jim's managerial skills that are used to run the business 
C) The cost of hiring his laborers 
D) All of the responses are correct. 
A) The total amount of money he spends to obtain capital equipment 
B) The value of Jim's managerial skills that are used to run the business 
C) The cost of hiring his laborers 
D) All of the responses are correct.

Question 17

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 18

What is the opportunity cost of economic growth?

Accepted Answer

A) Investment in the current time period 
B) Improved technology in the current time period 
C) Capital goods in the current time period 
D) Consumption in the current time period 
A) Investment in the current time period 
B) Improved technology in the current time period 
C) Capital goods in the current time period 
D) Consumption in the current time period

Question 19

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 20

Which of the following observations is true?

Accepted Answer

A) Free markets will achieve all of society's goals. 
B) The ability to buy goods is divided equally among consumers. 
C) The market leads to efficiency in production through the profit motive. 
D) The market system encourages firms to use inputs wastefully. 
A) Free markets will achieve all of society's goals. 
B) The ability to buy goods is divided equally among consumers. 
C) The market leads to efficiency in production through the profit motive. 
D) The market system encourages firms to use inputs wastefully.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Is faster economic growth unambiguously better?

A market system (market economy)depends on the market to

Millionaires do not face the problem of scarcity.

Explain the relationship between opportunity costs and money costs. Can they be treated as identical?

The first economist to point out the importance of specialization of labor was

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

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

Free markets promote all of society's goals.

-Table 3-2 The concept of opportunity cost can be represented graphically by the

One role that markets play is

Adam Smith believed that markets coordinated the self-interests of consumers.

See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

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

In terms of efficiency, any point on a production possibilities frontier is as good another.

Centrally planned economies are not constrained by the problem of scarcity.

Which of these options best reflects Jim's opportunity cost of operating his own business?

The main reason that finished goods are scarce is that

What is the opportunity cost of economic growth?

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

Which of the following observations is true?

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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