Question 1

Because resources tend to be specialized,increased production of military goods tends to

Accepted Answer

A)  decrease the opportunity cost of more military goods. 
B)  increase the opportunity cost of more non-military goods. 
C)  increase 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)  decrease the opportunity cost of more military goods. 
B)  increase the opportunity cost of more non-military goods. 
C)  increase 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 2

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 3

Generally,the opportunity cost and the money cost of a good

Accepted Answer

A)  are identical only if the good sells in a free market. 
B)  are different. 
C)  matter only to the purchaser of the good. 
D)  are not reflected in its price. 
A)  are identical only if the good sells in a free market. 
B)  are different. 
C)  matter only to the purchaser of the good. 
D)  are not reflected in its price.

Question 4

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 above 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 above are correct.

Question 5

Table 3-2
  
-From the data given in Table 3-2,the opportunity cost of increased cotton in moving from A to B is

Accepted Answer

A)  16 units of corn. 
B)  31 units of corn. 
C)  15 units of corn. 
D)  4 units of corn. 
E)  1 unit of corn. 
A)  16 units of corn. 
B)  31 units of corn. 
C)  15 units of corn. 
D)  4 units of corn. 
E)  1 unit of corn.

Question 6

What mechanism assures that firms produce outputs that consumers actually desire?

Accepted Answer

A)  governmental regulations on the mix of outputs 
B)  altruism 
C)  the desire for profit 
D)  a desire to serve others without thought of reward 
E)  All of the above are correct. 
A)  governmental regulations on the mix of outputs 
B)  altruism 
C)  the desire for profit 
D)  a desire to serve others without thought of reward 
E)  All of the above are correct.

Question 7

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 8

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 above 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 above are correct.

Question 9

Society can produce at a point outside the production possibilities frontier,but only if it is using all of its resources efficiently.

Accepted Answer

A) True 
 B)False

Question 10

The total amount of consumption of a society can be increased if

Accepted Answer

A)  firms allow each worker to perform multiple tasks. 
B)  resources are allocated by a central planning group. 
C)  individuals engage in specialization and voluntary trade. 
D)  barter exchange is used in place of money. 
A)  firms allow each worker to perform multiple tasks. 
B)  resources are allocated by a central planning group. 
C)  individuals engage in specialization and voluntary trade. 
D)  barter exchange is used in place of money.

Question 11

When the federal budget deficit was eliminated in the late 1990s the

Accepted Answer

A)  Congress and President Clinton easily agreed on spending priorities. 
B)  Congress and President Clinton still disagreed on spending priorities. 
C)  federal government no longer faced any budgetary problems. 
D)  federal government was able to satisfy all of its constituents. 
A)  Congress and President Clinton easily agreed on spending priorities. 
B)  Congress and President Clinton still disagreed on spending priorities. 
C)  federal government no longer faced any budgetary problems. 
D)  federal government was able to satisfy all of its constituents.

Question 12

A student has a chance to see Eric Clapton in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

Accepted Answer

A)  she will get a lower grade on the economics exam. 
B)  the opportunity cost of the concert is time spent studying. 
C)  this decision implies a trade-off. 
D)  All of the above are correct. 
A)  she will get a lower grade on the economics exam. 
B)  the opportunity cost of the concert is time spent studying. 
C)  this decision implies a trade-off. 
D)  All of the above are correct.

Question 13

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

Accepted Answer

A) True 
 B)False

Question 14

Rational decision making must always be based on the concept of opportunity cost.

Accepted Answer

A) True 
 B)False

Question 15

In a properly functioning economy,money costs approximate opportunity costs.

Accepted Answer

A) True 
 B)False

Question 16

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 commissary (people prefer this job to working in the paper factory). 
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 commissary (people prefer this job to working in the paper factory). 
C)  A university employs otherwise unemployed teenagers to paint crosswalks and curbs. 
D)  A university replaces the roof of the fine arts building.

Question 17

The money cost of a good will approximate the opportunity cost if

Accepted Answer

A)  there are serious distortions in the market. 
B)  the market functions well. 
C)  there is much specialization in the market. 
D)  nations are exploiting the law of comparative advantage. 
A)  there are serious distortions in the market. 
B)  the market functions well. 
C)  there is much specialization in the market. 
D)  nations are exploiting the law of comparative advantage.

Question 18

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 19

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 20

Opportunity cost is the value of the next best alternative that is given up.

Accepted Answer

A) True 
 B)False

Because resources tend to be specialized,increased production of military goods tends to

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

Generally,the opportunity cost and the money cost of a good

The main reason that finished goods are scarce is that

Table 3-2 -From the data given in Table 3-2,the opportunity cost of increased cotton in moving from A to B is

What mechanism assures that firms produce outputs that consumers actually desire?

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

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

Society can produce at a point outside the production possibilities frontier,but only if it is using all of its resources efficiently.

The total amount of consumption of a society can be increased if

When the federal budget deficit was eliminated in the late 1990s the

A student has a chance to see Eric Clapton in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

Rational decision making must always be based on the concept of opportunity cost.

In a properly functioning economy,money costs approximate opportunity costs.

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

The money cost of a good will approximate the opportunity cost if

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.

Opportunity cost is the value of the next best alternative that is given up.

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

Filters

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Because resources tend to be specialized,increased production of military goods tends to

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

Generally,the opportunity cost and the money cost of a good

The main reason that finished goods are scarce is that

Table 3-2 -From the data given in Table 3-2,the opportunity cost of increased cotton in moving from A to B is

What mechanism assures that firms produce outputs that consumers actually desire?

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

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

Society can produce at a point outside the production possibilities frontier,but only if it is using all of its resources efficiently.

The total amount of consumption of a society can be increased if

When the federal budget deficit was eliminated in the late 1990s the

A student has a chance to see Eric Clapton in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

The production possibilities frontier can be used to show a manufacturer's possible combinations of output of two goods.

Rational decision making must always be based on the concept of opportunity cost.

In a properly functioning economy,money costs approximate opportunity costs.

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

The money cost of a good will approximate the opportunity cost if

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.

Opportunity cost is the value of the next best alternative that is given up.

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

Filters