Question 1

Resources are used to create goods and services.

Accepted Answer

A) True 
 B)False

Question 2

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 3

An optimal decision is one that is selected based on an analysis of

Accepted Answer

A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs. 
A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs.

Question 4

Goods that are actually produced by firms are not really limited in supply, because the firms can always produce more of them.

Accepted Answer

A) True 
 B)False

Question 5

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 6

What is the basic task that economists expect the market to carry out?

Accepted Answer

A) Deal with the fundamental problem of scarcity 
B) Balance the government's budget 
C) Lessen wants to the level of income available 
D) Meet all human wants 
A) Deal with the fundamental problem of scarcity 
B) Balance the government's budget 
C) Lessen wants to the level of income available 
D) Meet all human wants

Question 7

Waiting in line for a free ticket involves no opportunity cost.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The production possibilities frontier has a tendency to bow outward from the origin.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

The principle of comparative advantage helps explain trade between nations.

Accepted Answer

A) True 
 B)False

Question 12

In a well-functioning market, high opportunity costs will be reflected in high monetary costs.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

If a farmer's opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans, then his or her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.

Accepted Answer

A) True 
 B)False

Question 16

The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that

Accepted Answer

A) expansion of output in one industry means expansion cannot occur in another industry. 
B) expansion of output in one industry means output in another industry must contract. 
C) output cannot be increased in any industry. 
D) output of all industries must contract until more resources are found. 
A) expansion of output in one industry means expansion cannot occur in another industry. 
B) expansion of output in one industry means output in another industry must contract. 
C) output cannot be increased in any industry. 
D) output of all industries must contract until more resources are found.

Question 17

Those from across the spectrum of political views tend to approve of markets because

Accepted Answer

A) markets are effective in solving many of society's problems. 
B) markets work well in all cases and can be relied upon to solve problems. 
C) their goals are similar enough that they can rely on the same means. 
D) production is the most important goal, and market systems are very productive. 
E) All of these perspectives listed in these responses are correct. 
A) markets are effective in solving many of society's problems. 
B) markets work well in all cases and can be relied upon to solve problems. 
C) their goals are similar enough that they can rely on the same means. 
D) production is the most important goal, and market systems are very productive. 
E) All of these perspectives listed in these responses are correct.

Question 18

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

A) True 
 B)False

Question 19

If you discover that the opportunity cost of raising your economics grade is zero, you

Accepted Answer

A) are studying too hard and receiving a higher grade than is optimal for you. 
B) must be on the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
C) must be inside the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
D) must be producing more of other goods than is optimal for you. 
A) are studying too hard and receiving a higher grade than is optimal for you. 
B) must be on the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
C) must be inside the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. 
D) must be producing more of other goods than is optimal for you.

Question 20

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.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Resources are used to create goods and services.

The production possibilities frontier for a country is usually drawn

An optimal decision is one that is selected based on an analysis of

Goods that are actually produced by firms are not really limited in supply, because the firms can always produce more of them.

The major coordination tasks can be summarized with the questions

What is the basic task that economists expect the market to carry out?

Waiting in line for a free ticket involves no opportunity cost.

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

The production possibilities frontier has a tendency to bow outward from the origin.

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

The principle of comparative advantage helps explain trade between nations.

In a well-functioning market, high opportunity costs will be reflected in high monetary costs.

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

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.

If a farmer's opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans, then his or her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.

The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that

Those from across the spectrum of political views tend to approve of markets because

Market economies are not constrained by scarcity; only planned economies have that problem.

If you discover that the opportunity cost of raising your economics grade is zero, you

The economic problem of scarcity

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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