Question 1

Efficiency is defined as minimizing waste.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following quotations best captures the idea of opportunity cost?

Accepted Answer

A)  "Opportunity knocks but once." 
B)  "Every choice involves a sacrifice." 
C)  "Let's not ask for the moon; we have the stars." 
D)  "Fools rush in where wise men fear to tread." 
E)  "All that glitters is not gold." 
A)  "Opportunity knocks but once." 
B)  "Every choice involves a sacrifice." 
C)  "Let's not ask for the moon; we have the stars." 
D)  "Fools rush in where wise men fear to tread." 
E)  "All that glitters is not gold."

Question 3

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

Accepted Answer

A) True 
 B)False

Question 4

A market society will always protect the natural environment.

Accepted Answer

A) True 
 B)False

Question 5

In the 1960s,the lyrics of a rock song asked,"Did you ever have to make up your mind to say yes to one and leave the others behind?" What economic principle was demonstrated in the song? Explain.

Accepted Answer

The principle is that of oppor

Question 6

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

Accepted Answer

A)  A point inside the frontier implies that society is not facing up to the problem of scarcity. 
B)  A point inside the frontier limits growth, and growth is always a goal worth pursuing. 
C)  A point inside the frontier represents inflation, and inflation is a dangerous situation. 
D)  A point inside the frontier results in fewer goods, and more is always better. 
E)  A point inside the frontier is inefficient, and represents wasted resources. 
A)  A point inside the frontier implies that society is not facing up to the problem of scarcity. 
B)  A point inside the frontier limits growth, and growth is always a goal worth pursuing. 
C)  A point inside the frontier represents inflation, and inflation is a dangerous situation. 
D)  A point inside the frontier results in fewer goods, and more is always better. 
E)  A point inside the frontier is inefficient, and represents wasted resources.

Question 7

The concavity or bowed-out shape of the production possibilities frontier is the result of

Accepted Answer

A)  the law of downward-sloping demand. 
B)  the law of upward-sloping demand. 
C)  the principle of increasing cost. 
D)  complementarity in consumption. 
A)  the law of downward-sloping demand. 
B)  the law of upward-sloping demand. 
C)  the principle of increasing cost. 
D)  complementarity in consumption.

Question 8

Figure 3-2
  
-In Figure 3-2,the production possibilities frontier has a bowed-out shape because of the law of

Accepted Answer

A)  decreasing costs. 
B)  increasing costs. 
C)  demand. 
D)  comparative advantage. 
A)  decreasing costs. 
B)  increasing costs. 
C)  demand. 
D)  comparative advantage.

Question 9

An optimal decision is one that chooses

Accepted Answer

A)  the most desirable alternative among the possibilities permitted by the resources available. 
B)  the lowest cost method of meeting goals, without regard to quality or any other feature. 
C)  among various possible goals and offends no one, so that all are equally happy. 
D)  among equally important goals, and thereby avoids the "indispensable necessity" syndrome. 
E)  among possible goals in such a way that spends as little money as possible. 
A)  the most desirable alternative among the possibilities permitted by the resources available. 
B)  the lowest cost method of meeting goals, without regard to quality or any other feature. 
C)  among various possible goals and offends no one, so that all are equally happy. 
D)  among equally important goals, and thereby avoids the "indispensable necessity" syndrome. 
E)  among possible goals in such a way that spends as little money as possible.

Question 10

A point lying inside (under)a production possibilities curve indicates that

Accepted Answer

A)  the economy is saving money. 
B)  there are no associated opportunity costs. 
C)  more output could be produced with existing resources. 
D)  technology limits production. 
A)  the economy is saving money. 
B)  there are no associated opportunity costs. 
C)  more output could be produced with existing resources. 
D)  technology limits production.

Question 11

A normal production possibilities frontier has a

Accepted Answer

A)  positive slope, and is steeper near the horizontal axis than near the vertical axis. 
B)  negative slope, and is steeper near the horizontal axis than near the vertical axis. 
C)  positive slope, and is steeper near the vertical axis than near the horizontal axis. 
D)  negative slope, and is steeper near the vertical axis than near the horizontal axis. 
E)  zero slope, and it does not touch the horizontal axis. 
A)  positive slope, and is steeper near the horizontal axis than near the vertical axis. 
B)  negative slope, and is steeper near the horizontal axis than near the vertical axis. 
C)  positive slope, and is steeper near the vertical axis than near the horizontal axis. 
D)  negative slope, and is steeper near the vertical axis than near the horizontal axis. 
E)  zero slope, and it does not touch the horizontal axis.

Question 12

Specialization of labor makes sense only if there is some means of exchange.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

If the economy of Gwondanaland is growing more rapidly than the economy of Japan,most likely

Accepted Answer

A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan. 
A)  Japan has more current investment than Gwondanaland. 
B)  Japan has more government spending than Gwondanaland. 
C)  Japan spends more on capital goods than Gwondanaland. 
D)  Gwondanaland has lower current consumption than Japan. 
E)  Gwondanaland has lower current investment than Japan.

Question 15

According to the law of comparative advantage,a doctor who is also a talented auto mechanic should

Accepted Answer

A)  get a part-time job at a gas station. 
B)  do her own auto repairs and those of her neighbors. 
C)  hire a professional mechanic to repair her car. 
D)  only repair the cars of other doctors. 
A)  get a part-time job at a gas station. 
B)  do her own auto repairs and those of her neighbors. 
C)  hire a professional mechanic to repair her car. 
D)  only repair the cars of other doctors.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

From a society's viewpoint,when all resources are fully employed,a decision to have more of one thing means we must give up some of another thing.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is considered by economists to be the most fundamentally scarce?

Accepted Answer

A)  money 
B)  ideas 
C)  needs 
D)  food 
E)  physical resources 
A)  money 
B)  ideas 
C)  needs 
D)  food 
E)  physical resources

Question 19

Voluntary exchange results in mutual gains.

Accepted Answer

A) True 
 B)False

Question 20

A rational decision is one that

Accepted Answer

A)  satisfies all desires. 
B)  avoids the intentional allocation of resources. 
C)  assigns available resources in the manner most preferred by decision makers. 
D)  assigns available resources to the uses with the lowest opportunity costs. 
A)  satisfies all desires. 
B)  avoids the intentional allocation of resources. 
C)  assigns available resources in the manner most preferred by decision makers. 
D)  assigns available resources to the uses with the lowest opportunity costs.

Efficiency is defined as minimizing waste.

Which of the following quotations best captures the idea of opportunity cost?

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

A market society will always protect the natural environment.

In the 1960s,the lyrics of a rock song asked,"Did you ever have to make up your mind to say yes to one and leave the others behind?" What economic principle was demonstrated in the song? Explain.

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

The concavity or bowed-out shape of the production possibilities frontier is the result of

Figure 3-2 -In Figure 3-2,the production possibilities frontier has a bowed-out shape because of the law of

An optimal decision is one that chooses

A point lying inside (under)a production possibilities curve indicates that

A normal production possibilities frontier has a

Specialization of labor makes sense only if there is some means of exchange.

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

If the economy of Gwondanaland is growing more rapidly than the economy of Japan,most likely

According to the law of comparative advantage,a doctor who is also a talented auto mechanic should

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

From a society's viewpoint,when all resources are fully employed,a decision to have more of one thing means we must give up some of another thing.

Which of the following is considered by economists to be the most fundamentally scarce?

Voluntary exchange results in mutual gains.

A rational decision is one that

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

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Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Efficiency is defined as minimizing waste.

Which of the following quotations best captures the idea of opportunity cost?

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

A market society will always protect the natural environment.

In the 1960s,the lyrics of a rock song asked,"Did you ever have to make up your mind to say yes to one and leave the others behind?" What economic principle was demonstrated in the song? Explain.

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

The concavity or bowed-out shape of the production possibilities frontier is the result of

Figure 3-2 -In Figure 3-2,the production possibilities frontier has a bowed-out shape because of the law of

An optimal decision is one that chooses

A point lying inside (under)a production possibilities curve indicates that

A normal production possibilities frontier has a

Specialization of labor makes sense only if there is some means of exchange.

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

If the economy of Gwondanaland is growing more rapidly than the economy of Japan,most likely

According to the law of comparative advantage,a doctor who is also a talented auto mechanic should

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

From a society's viewpoint,when all resources are fully employed,a decision to have more of one thing means we must give up some of another thing.

Which of the following is considered by economists to be the most fundamentally scarce?

Voluntary exchange results in mutual gains.

A rational decision is one that

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